CKET SECTION
SMC-T-1
EEi>EI’;C’[j
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D. C. 20268-OOOfic 3d 1 50 P/j
‘=:i,;! ):.‘,”S(’.y ~,’*;
POSTAL RATE AND FEE CHANGES,
1997
Docket No. R97-1
1
DIRECT TESTIMONY
OF
HARRY J. BUCKEL
ON BEHALF OF THE
SATURATION
Communications
MAIL COALITION
with respect to this document
should be sent to:
John M. Burzio
Thomas W. McLaqhlin
BURZIO & MCLAUGHLIN
1054-31st Street, N.W.
Washington, D.C. 20007
Counsel for the
Saturation Mail Coalition
December
30, 1997
‘$7
TABI F OF CONTFNTS
AUTOBIOGRAPHICAL
SKETCH ...............................................................................
1
.....................................................................................
3
THE SATURATION
MAIL COALITION.. ....................................................................
3
THE SATURATION
MAIL INDUSTRY .......................................................................
4
PURPOSE
OF TESTIMONY..
MAIL CUSTOMERS ...........................................................................
6
MEDIA INC. - SHOPPERS .....................................................................
8
SATURATION
NEWPORT
THE NEED FOR AFFORDABLE
SATURATION
SATURATION
MAIL COMPETITION
MAIL ADVERTISING..
......................................................................... 13
THE NEED FOR A LOWER, MORE REASONABLE
CONCLUSION
.............. 11
POUND RATE. ................... 14
..............................................................................................................
Saturation Mail Coalition Members.. ...........................................................
Appendix
16
A
TESTIMONY
OF HARRY J. BUCKEL
My name is Harry J. Buckel.
I am Chief Executive Officer of Newport Media,
Inc., the publisher of several shopper publications
in Long Island, New York.
have held this position since 1996 when I purchased
4
involved in the community
5
twenty years.
6
7
8
9
10
11
newspaper
the company,
and advertising
I have been
shopper industry for over
I received a BSBA Finance from Xavier University in 1966 and an MS degree
in Regional
Economics
from Michigan State University in 1970.
From 1970-72, I served as Assistant to the President and Vice President for
Finance and Development
From 1972-1978,
Corporation
for the Michigan Chamber of Commerce.
I held several management
involving the publication
positions for the Panax
of various community
newspapers:
12
Director of Marketing;
13
14
General Manager of the Communitv
(100,000 circulation);
15
Group Vice President,
16
Vice President,
Corporate
17
Vice President,
Publisher of the Miami Beach Sun Reoorter
18
I
I joined Harte-Hanks
19
following
positions
20
shopper
in Southern
Southeast
Michigan
Detroit
Newspapers;
Staff and Assistant to the President;
Communications,
prior to becoming
News of Suburban
Inc. in 1978 and served in the
President of the PennySaver,
California:
21
President
and Publisher, San Francisco
22
President
and Publisher,
23
President
and Publisher, Glouchester
Yosilanti
Progress
Press
Countv Trmes
a Harte-Hanks
1
2
President
Ohio
and Publisher,
Journal Publishing
Company,
Hamilton,
3
In 1982, I became Publisher of the PennySaver,
4
left the company to form Newport Media, Inc. In addition, I served as a Corporate
5
Vice President
6
1996; 1991-96)
7
and Senior Vice President of Harte-Hanks
Throughout
8
shopper
9
Postmaster
a position I held until 1996 when I
and President
of Harte-Hanks
Shoppers
my career, I have participated
industry affairs.
Communications
(1987-1996).
actively in advertising
In 1989, I served as Industry Co-Chairman
General’s Worksharing
Task Force.
10
Chairman
of the Third Class Mail Association
11
Chairman
of the Advertising
12
In addition,
I presented
13
Harte-Hanks
Shoppers
14
involved in forming and organizing
15
with other saturation
and
of the
I served as Executive Vice
from 1989 to 1991, and as
Mail Marketing Association
from 1991 through
testimony to the Postal Rate Commission
in Dockets R90-1 and R94-1.
mailers.
(1986-
the Saturation
Recently,
1993.
on behalf of
I have been
Mailers Coalition, working closely
-3-
PURPOSE
1
OF TESTIMONY
I am testifying on behalf of the Saturation Mailers Coalition, a recently-
2
formed coalition of local, regional, and national companies
3
saturation
mail advertising
4
proposed
rates and rate structure for Standard A Enhanced
5
Mail. The purposes
6
*
7
8
*
Carrier Route (ECR)
of my testimony are to:
Describe the Saturation
Mailers Coalition and the characteristics
Describe the nature of the saturation
customers
10
*
Describe the highly competitive
relation to non-postal
*
mail advertising
our industry serves, particularly
that use and depend upon saturation
12
13
The Coalition supports the Postal Service’s
of its
members;
9
11
business,
involved in the
Explain the importance
market and the
the many small businesses
mail to reach their customers;
nature of our business,
particularly
competition;
to our industry and our customers
affordable
15
Service’s proposal to moderate the current high pound rate for ECR
16
mail.
In addition, my testimony
18
including
19
competitors;
20
markets.
its production
mail, and the benefits of the Postal
describes the operation of Newport Media inc.,
and distribution;
and the significance
the markets it serves, its customers
and growing success of alternate
I have long believed that mailers in the saturation
23
being competitors
24
issues, both as an industry and as representatives
25
advertising
mail industry, despite
with one another, have strong common interests on postal
customers.
and
delivery in our
ITI
p
TH
21
22
postal rates for saturation
of maintaining
14
17
in
of our small business
Over the last several years, I and other leaders in the
-41
industry have informally discussed
2
participate
3
to a meeting of industry representatives
4
Coalition.
5
Mail Marketing
6
Flyer in Tampa, Florida.
7
the idea of forming a coalition to cooperate
in postal matters of mutual interest.
The Coalition is co-chaired
These discussions
ultimately
earlier this year and formation
led
of the
by Norman Schultz, President and CEO of
Systems in Jessup, Maryland, and Richard Mandt, owner of The
Currently the Coalition has 36 members, listed in the appendix to my
8
testimony.
The membership
9
publishers
of free community
10
programs,
companies
11
whose members
12
many of the members
13
distribute a portion of their circulations
via private delivery.
14
reflected in the sizes of the members’
programs and their markets,
15
large national or regional mailers like Advo and Harte-Hanks
16
metropolitan
markets and provide total weekly circulation
17
households,
down to small local mailers like the Antigo Shoppers
18
Wisconsin
19
households.
reflects the diversity of the industry.
papers and shopper
that also do solo saturation
are primarily interested
publications,
mailings,
in saturation
It includes
shared mail
and organizations
mail issues.
Although
operate programs that are 100% mailed, a number also
The diversity is also
ranging from
who serve major
to millions of
Guide in Antigo,
who serve rural markets with weekly circulation to less than 20,000
THE
20
21
and
SATURATION
From my experiences
MAIL
with Harte-Hanks,
INDUSTRY
mailer trade associations,
22
prior postal cases, I am aware of the common misperception
23
mail industry consists of only a few large mailers.
24
diversity of companies
25
virtually every household
26
of advertisers,
27
local businesses
including
and
that the saturation
In fact, the industry has a great
offering a variety of mailing programs that, in total, reach
in the nation,
The industry serves hundreds
of thousands
not only large national retailers but predominantly
and individual
entrepreneurs
throughout
the nation.
small
-51
There are more than a thousand
2
and shopper publications
3
households.
4
mailed at Enhanced
5
advertising
6
announcements,
7
These publications
8
also carry preprint advertising
9
local and regional free community
in the United States, serving over 50 million
Roughly half are distributed
by mail, and of those, virtually all are
Carrier Route rates. Although many of these are 100 percent
publications,
many, like ours, contain local community
and other non-advertising
news, free
reader services and editorial matter.
typically have a newspaper
The saturation
tabloid or booklet format, and many
inserts.
mail industry also includes many saturation
programs.
11
markets, there are a number of others that serve local or regional markets
12
throughout
13
programs
14
national
15
16
While Advo is the largest of these, with programs
shared mail
10
the country.
Regardless
in major metropolitan
In addition, there are a number of saturation
serving local markets, either independently
franchise
papers
or through
coupon
regional or
programs.
of the type or size of their programs,
share many common
all saturation
mailers
market characteristics:
17
18
The focus of all saturation mail programs, even those of regional or
national companies, is on individual local markets.
19
20
21
All are geared toward serving local retailers, service businesses, and
other advertisers who need to reach potential consumers who reside
near their stores or businesses, typically within a radius of 2-5 miles.
22
23
24
25
The primary advertising appeal of saturation mail programs is for goods
and services with potential appeal to a broad segment of consumers,
such as groceries, fast food, local retailers, auto sales and services, and
home-related
services.
26
27
Small local business advertisers are an essential
mailers’ success, and vice versa.
28
29
30
All operate in a highly competitive market, competing with each other,
and with newspapers and private delivery companies for distribution of
retail preprint inserts.
element
of saturation
-61
2
3
4
5
Saturation mail programs are mailed on a regular, predictable
usually weekly or monthly, and are highly workshared.
l
Postage is typically their largest single cost item, and affordable
rates play an important role in their ability to survive and grow.
l
The essential
common element of saturation
6
offer accessible
7
small local businesses
a
many small businesses,
9
as a cost of doing business.
10
schedule,
businesses
advertising
targeted by geographic
mail programs
the cost of advertising
Saturation
is that they
area, at affordable
that do not have cost-effective
postage
prices, to
media alternatives.
For
is second only to the owner’s
mail is a vital component
draw
for small
that need to advertise their goods and services.
11
12
Saturation
mail customers
represent
a wide range and size of businesses
13
They include a mixture of many small local service and retail businesses
14
have limited advertising
15
chains who have a number of competitive
16
inserts, or even non-print media.
17
one saturation
18
specific markets it serves, this blending of large and small business
19
characteristic
20
resources
and alternatives;
alternatives
of saturation
The customers
common objective:
22
makeup of these customers
23
local businesses,
24
individual
25
businesses
for distribution
to reach consumers
that constitute
will vary from
on the nature of its program and the
mail, regardless
advertisers
of size, all have a
that live near their businesses.
is quite diverse, but consists predominantly
If viewed as a pyramid, the foundation
service providers,
of preprint
mail programs.
that use saturation
21
and larger regional or national
While the precise mix of advertisers
mailer to another, depending
who
entrepreneurs,
of saturation
The
of small
mail is
and small “mom and pop” service
60 to 80 percent of all saturation
mail users:
is
-7-
Chain Retailers
Local Retailers
Small Service Businesses
individuals and Entrepreneurs
1
The next tier is small to mid-size local retailers, such as local grocers, fast food
2
and restaurants,
3
percent of all saturation
4
national, constitute
5
broad advertising
6
saturation
7
perhaps
8
advertisers,
9
distribute
10
hardware,
and auto dealers and services, that comprise
mail users.
Larger chain retailers, both regional and
5 to 10 percent of saturation
mail users, but be,cause of their
coverage and frequency they are oflen critical to the success of a
mail program.
The final category of saturation
less than one percent of total saturation
primarily food and consumer
mail users, comprising
advertisers,
is national
product manufacturers
Losing the mail to
coupons.
The small business focus of saturation
11
programs.
.I2
individual entrepreneur
13
area around a single location.
14
zones (less than 60,000 households),
15
typically
16
15 to 20
mail is reflected in Newport
The core of our business is the small retailer/service
Media’s
provider/
trying to sell goods or services in a limitecl geographic
The majority of our ads are mailed to five or fewer
reflecting the fact our advertisers
are
small businesses
In a typical week, a single zoned edition of our book will carry over 600
17
advertisements,
adding up to more than 12,000 ads weekly across all our zones.
18
Although display ads account for more than half of the pages in our books, they
19
represent
less than 20% of our total advertisers.
Even our full-pa,ge display
-81
advertisers
tend to be independent
local businesses
2
grocery stores and car dealers, rather than national chain stores
3
display advertisers
4
contractors,
are even smaller businesses,
dry cleaners,
Our partial-page
like local home improvement
and auto repair businesses,
The smallest of our customers
5
such as neigihborhood
-- classified advertisers
-- account for more
6
than 80% of the ads we carry.
Our classified ads include employment,
7
auto, personals,
8
and small entrepreneurs.
9
and garden services, gutter, window and chimney cleaning, tree services, trash
and our largest single advertising
category,
hauling, moving and storage, professional
11
improvement
12
these ads are from the smallest of small businesses,
13
trash hauler whose livelihood depends
14
publication.
to handymen.
individuals
on business generated
MEDIA
lawn
services, and every variety of home
and repair services from general contractors
NEWPORT
16
set-vice businesses
This latter category is a small business potpourri:
10
15
real estate,
INC.
Many of
like a one-truck
by ads in our
- SHOPPERS
Newport Media Inc. was formed in August of 1996. We are located in a
17
single plant in Hicksville, New York, with five sales and marketing
locations
18
throughout
We have now
19
acquired
20
shoppers.
21
publications
22
mailed.
23
Carrier Route saturation
24
the market area, currently employing over 650 people.
six publications,
five of which are home-delivered,
Four of those publications
saturation-targeted
are mailed, one is delivered
reach over 2 million households
by hand.
Our
weekly, of which 1.6 million are
Our total annual mail volume is over 80 million, all mailed1 at Enhanced
Our shopper
rates.
publications
are local saturation
advertising
25
(and in some cases hand delivered) to 2 million addresses
26
Metropolitan
and Southern
booklets
mailed
in the New York
New Jersey markets, reaching approxilnately
98% of
-9Our market covers Nassau and Suffolk Counties
1
the homes in the areas served.
2
on Long Island, Brooklyn, Staten Island in New York, and the counties of
3
Burlington,
4
Philadelphia.
5
Camden and Gloucester
in southern
Cur market is divided into 150 zones,
6
12,000 residences.
7
week.
8
zones, or all 150 zones.
9
New Jersey, acro:ss from
Each zone contains approximately
A separate and unique book is printed for each zone each
An advertiser can choose to run an ad in any one zone, any combination
of
The content of our books is about 90% advertising, with 10% devoted to free
10
community
announcements,
11
horoscope,
crossword
12
the form of display ads (picture ads) or reader ads (comparable
13
The mailed books measure
14
weight of about 2.6 ounces.
15
“retail preprints”
16
about 3 to 4 preprint inserts per book, mostly light-weight
17
local or regional advertisers.
18
Our operations
personal financial advice and history columns,
and other puzzles, and reader contests,
Ad!vertising is in
tc’ classified
ads).
11 x 7 inches and average 68 pages, ,with an average
Preprinted
advertising
circulars, commonly
or “preprint inserts,” are also inserted in the books
begin with the solicitation
called
We average
l-4 page inserts from
of advertisements
by our sales
19
force.
We then prepare the graphics and layout work to design each zoned version
20
of the books, and do our own printing.
21
of our plant where the appropriate
22
books are then strapped in bundles of 25, each with a facing slip denoting the
23
carrier route number, the bundle number, and the total number of bundles and
24
pieces for the route.
25
by the Postal Service.
26
for each zone are placed with the corresponding
27
placard containing
The books then go to the distribution
area
preprint inserts for each zone are inserted.
The bundles are placed on wheeled
Trays of carrier walk sequenced
identifying information
containers
detached
containers,
The
as required
address labels
togetller
with a
required by the Postal Service.
We then
-lO1
truck the mail directly to the destination
2
delivery, using our own transportation.
3
post offices, stations and branches
The services that we provide go far beyond simply taking an order for
4
advertising
5
their small size and limited resources,
6
expertise.
We work closely with them to define their marketing
7
objectives,
to target their advertising
8
ads to maximize effectiveness
9
and producing
mailings.
have little or no advertising
coverage and frequency,
due to
or marketing
needs and
and to design their
and response.
First, we help our customers
zones.
The great majority of our customers,
understand
and define their targeted
10
marketing
11
advertising
12
areas where most of its past business
13
obtaining
14
from sales,
15
marketing
16
customer’s
17
other factors such as locations of the customer’s
18
potential
19
for
We look at the nature of the customer’s
business
in relation to
needs. We review the customer’s sales records to determine the
additional
has come from, and recommend
ways of
sales data such as recording address or ZIP code information
We use maps and demographic
area surrounding
business
data by zone to identify the primary
the customer’s
characteristics
business
to demographic
location,
maitching the
data, and taking into account
competitors
and areas for
market expansion.
Second, we help to design an advertising
20
needs and resources,
21
require different ad frequencies
22
recommend
23
season, such as leaf, mulching,
24
small painting business
25
a less expensive
26
display ad. Conversely,
27
monthly display ad may be the better choice.
additional
program tuned to the customer’s
A lawn service with a seasonal business,
and messages
fior example,
may
during the year, and we will even
services that they might offer and advertise during the offand winter landscaping/cleanup
services.
For a
that needs a steady stream of jobs, we may recommend
but weekly classified ad rather than a more expensive
for a construction
monthly
contractor that does larger projects, the
-ll1
Third, we help our customers
create a strong advertising
2
consumers
that will drive a good response.
3
offering small discounts
4
of “$10 off on any shoes” would generate greater sales.
5
ads focused
6
their much higher-margin
7
higher profits.
8
how offering super-bargain
9
traffic and sales.
generate
12
diminishing
specials on
car services (oil changes and lube jobs) would generate
prices on selected items could generate
business
evening dinner business,
from senior citizens and price-conscious
their evening
Like all saturation
more store
we
“early bird” specials for its off-peak 5-7pm period would
diners without
business.
mail programs, we know that our success
14
is linked to the success of our customers,
15
and effective their advertising
16
as a business,
18
For a tire store whose
tires, we showed that advertising
For a restaurant with a successful
11
THE
offer
For a small grocer whose ads offered modest specials, we showed
showed that advertising
17
In the case of a shoe !store that was
on selected shoes, we showed them that a stronger
on sales of low-margin
10
13
message to
and vice versa.
as a business
The more affordable
is, the better their chances are to survive and grow
and to continue or expand their use of saturation mail advertising.
NEED
FOR AFFORDABLE
Over my years in the saturation
SATURATION
MAIL
ADVERTISING
mail business, I gained a growing
19
appreciation
for the importance
of affordable
saturation
20
businesses.
Now that I am running my own company,
21
our customers
22
advertising
23
of our advertisers
24
handyman,
25
briefcase” entrepreneurs,
26
modest business
advertising
for small
I have more contact with
and have seen even more closely how critical our form of
can be to the small business person or struggling
are one-person
or the entrepreneur
service businesses
trying to get started.
entrepreneur.
Many
like the gutter cleaner or the
These are not “pinstripe and
but hard working people trying to make a living. Their
is their primary or sole source of income.
For them, effective
- 121
advertising
2
“affordable”
3
can be the difference
advertising
has a real pocketbook
Unlike larger businesses
advertising
between success or failure, and the term
meaning.
with multiple locations,
budgets,
and advertising
high sales volumes,
4
substantial
5
business,
6
Broad coverage
7
retailer with stores through the market area, but not for the typical small business
a
whose potential customers
9
service provider needs to generate nearby customers,
the great majority of our customers
competitors
clamoring
have limited advertising
for their
choices.
mass media like television and radio may work for the large
reside within a few miles of the store.
Even the small
as the time lost in traveling
10
to jobs across the metro area increases costs and limits the number of jobs that
11
can be done in a day. Similarly, advertising
12
subscribers,
13
finely enough to match the business’s
14
Many of these individuals
in newspapers
omitting an important segment of consumers,
may only reach
and may not be zoned
primary market area.
and small businesses
need to aclvertise
15
frequently.
The freelance
16
customers,
perhaps four or five each day. Every day without work is a day without
17
pay. The cost of advertising
18
major financial
19
advertising
20
small display ads may spend $10,000 to $12,000 annually.
21
substantial
amounts for such small businesses.
22
advertising
expenditures
23
business.
24
decision.
plumber doing small jobs needs a steady flow of
on a regular weekly or monthly basis becomes a
Our typical small commercial
classified
weekly, may spend $3,000 to $4,000 annually.
with our publications
ad customer,
A busi,ness using our
These are very
For many of our customers,
their
are their single largest cost of doing
In a broader sense, the ultimate customers
of our mailing programs
25
consumers.
I know that our publications
26
independent
surveys, over 70 percent of adults in our New York market area read
27
our publication,
a readership
are highly valued by recipients.
are
that is higher than our competitors.
Based on
This readership
- 131
is also confirmed
2
and promotions
3
acceptance
is advertising
4
consumers
do use and respond to the advertising
5
significant
repeat business from our existing customers
6
customers
is the best indication
7
by the high response we get from recipients to various contests
that we run in our publications.
response.
The value to consumers
8
conscious
consumers
9
middle-income
The ultimate test iof consumer
We know from our customers
of consumer
in our programs.
11
and services that are located in or near their neighborhoods,
12
for many time-pressed
It also offers consumers
Although
the benefit of finding goods
a convenience
MAIL
small business advertisers
COMPETITION
are the heart of our publications,
15
long-term
16
extent to which we can compete for distribution
17
competition
18
newspapers,
19
nonsubscribers
20
competitors,
21
in a number of markets, including the New York and Philadelphia
22
serve.
23
that
is as valuable as a bargain price.
SATURATION
14
For value-
mail is an effective way to comparison
shop and find good values.
consumers
to ads.
far more than jlJst lower and
10
13
to our product,
goes beyond simply responding
saturation
The
and growth from new
responsiveness
(which today encompasses
households),
that
viability of our industry and customers
depends
in large measure
of retail advertising
for these larger, highly sought retail advertisers
the
on the
preprints.
The
is fiercie. Daily
most of which offer total market coverage (TMC) programs to reach
via mail or private delivery, are generally the dominant
although
private delivery companies
The single largest and dominant competitor
are also significant
competitors
markets we
for insert business
in the
24
Boroughs
of New York is Distribution
25
(alternate
delivery) program which distributes to over 6 million households
26
New York Metropolitan
area.
Systems of America (DSA), a hand delivery
Every major retail preprint customer
in the
in the market (K-
- 141
Mart, Sears, all retail food and drug, etc.) delivers their preprints to households
2
the Boroughs
3
1987 postal rate increase, there have been no weekly or monthly saturation
4
programs
5
private delivery program and a significant threat to direct mail programs
6
cost is dramatically
7
of New York through this program, 99j in the mail. In fact, since the
serving the New York City boroughs.
This is a growing
since its
lower than the use of mail.
In the Philadelphia
market, there is a combination
of direct mail and hand
delivery (the hand delivery portion is growing) again offering significant
9
advantages
cost
to the advertiser, to the detriment of the mail. Like the New York
10
market, virtually all retail, food, drug and hard goods retailers inserts in the
11
Philadelphia
12
south Jersey market also has three suburban
13
the Gloucester
14
New Jersey edition of the Philadelphia
16
THE
market are delivered by a combination
NEED
dailies, the Camden
County Times, and the Burlington
FOR A LOWER.
The cost disadvantage
of hand delivery and mail. The
Courier Post,
County Times, as well as the
Enquirer -- all with strong TMC programs.
MORE
REASONABLE
of mail distribution
POUND
delivery services is due largely to the current rate structure for Enhanced
18
Route mail, specifically
19
Under current rates for Saturation
20
breakpoint
21
doubling as the weight doubles,
22
cannot imagine that postal handling costs above the breakpoint
23
related, or even anywhere
increases
RATE.
vis-a-vis newspa,per or hand-
17
24
mail
and vibrant
8
15
in
the high pound rate above the 3.3-ounce
Carrier
breakpoint.
ECR mail, postage for pieces above the
in a direct l-to-l
ratio with increased
Although
weight, with postage
I am not a postal costing expert, I
are purely weight-
near the steep slope of the current pound rate.
The effect of this high pound rate on our ability to compete for inserts is
25
dramatic.
Unlike preprint insert rates of our non-postal
26
only moderately
as preprint weight increases,
competitors
that increase
rates for mailed inserts must
-151
increase steeply with weight to cover the high linear pound rate postage cost, The
2
Postal Service’s proposed
3
disparity.
4
of the major retail preprints carried in newspapers,
5
would still leave us priced out of the market.
6
would at least enable us retain the preprint business we currently have and help
7
us compete at the margin for some portion of the lighter-weight
8
particularly
9
For traditional
pound rate will moderate,
but not eliminate,
retail preprints, such as a 2-or-more-ounce
circular typical
even the lower pound rate
The lower pound rate, however,
preprint business,
under l-ounce.
I know from discussions
with others in the saturation
10
high pound rate is an impediment
11
expanding
12
inserts is often a critical “go or no-go” factor in expanding
13
this
circulation
mail industry that the
not only to attracting insert volumes but to
in existing and new markets.
The ability to generate
or opening new markets.
I also believe that reduction of the pound rate to a more reasonable
free community
papers and shoppers
preprint
level will
and perhaps even newspaper
14
encourage
15
TMC programs that are currently hand delivered to consider returning to the mail.
16
Ironically,
17
delivery previously
18
The 1987 postal rate increase, in particular, had a dramatic impact on the
19
saturation
20
mailed newspaper
21
delivery, and rapid growth of private delivery operations.
22
programs that shifted to private delivery were those with piece weights above the
23
3.3-ounce
24
spread between
a number of shoppers
and free community
papers that use private
used the mail, but were driven away by increased
mail business.
That increase caused the diversion
TMC programs
breakpoint,
postal rates.
of many previously-
and shoppers from the mail into private
Most if not all of the
where the high pound rate created an artificiially high cost
mail and hand delivery.
- .l61
2
LUSION
The Postal Service faces growing competition
3
business,
4
Class mail, the competition
5
technologies
6
be a decisive factor.
7
postal pricing.
8
including
saturation
mail.
for many segments
In other segments,
of its
such as portions of First
comes primarily from new communications
that offer greater speed or convenience,
where price is less likely to
In the case of saturation mail, the competition
The Postal Service’s future in the saturation
is a function of
mail market depends
on postal
9
pricing decisions.
The current saturation
10
taken for granted.
Without affordable rates that allow mailers to compete in the
11
marketplace,
12
newspaper
13
Existing mailers may also be forced to shift to private delivery, just as occurred
14
following the Docket R87 rate increase.
15
growth from existing mailers, and from former mailers that previously
16
private delivery due to increased
17
offset declines
18
mail volumes and contribution
cannot be
the Postal Service risks losing this price sensitive volume to
competitors
and to new or expanded
businesses
20
Commission
21
and competitive
With affordable
postal rates (particularly
rates, saturation
and individuals
to recommend
advertising
Mail Coalition and the hundreds
that use saturation
mail advertising,
rates that will enable saturation
medium.
mail
switched
to
the high pound rate), can
in other volumes due to changes in communication
On behalf of the Saturation
19
private delivery operations.
technology.
of thousands
of
I urge the
mail to remain a vital
Appendix
A
Page 1 of 2
Mail South, Inc.
Arizona Pennysaver
Helena, AL 35080
Group
Tempe, AZ 85281
Tucson Shopper
Tucson, AZ 85745
Hart@-Hanks Shoppers
Brea, CA 92621
ValuMail, Inc.
Hartford, CT 06103
ADVO, Inc.
Windsor, CT 06095
The Flyer
Tampa, FL 33619
Today’s Advantage
Alton, IL 62002
PennySaver
Tinley Park, IL 60477
Publications
National Mail It
Shreveport,
Action Unlimited
Concord, MA 01742
Berkshire Penny Saver
Lee, MA 01238
Market America Corporation
Baltimore, MD 21244
Impulse Publications
Bel Air, MD 21050
The Maryland Pennysaver
Hanover, MD 21076
Mail Marketing Systems, Inc.
Jessup, MD 20794
Target Marketing Maine, Inc.
Rockland, ME 04841
Metro Marketing Associates
Eagan, MN 55121
Alliance of Independent Store
Owners and Professionals
Minneapolis,
Advertising
Jackson, MS 39289
Preprint Distributors
LA 71118
MN 55402
Appendix A
Page 2 of 2
Saturation Mail Coalition Members
Advantage
Mail Network
Charlotte, NC 28208
PAGAS Mailing Service, Inc.
Tarboro, NC 27886
Focus On Results
Weddington,
Eastern Marketing Services
Durham, NH 03824
Target Direct NH, VT
North Havehill, NH 03774
independent
Pompton Lakes, NJ 07442
News
Decker Advertising,
Inc.
Newport Media
Yorktown
Delhi, NY 13753
Hicksville, NY 11801
Pennysaver
Rural Advertising
NC 28173
Group
Mail
Yorktown
Heights, NY 10598
Philadelphia,
PA 19134
Market Select Inc.
Reading, PA 19605
The Reminder
Coventry, RI 02816
CAP Medica Network
Memphis, TN 38018
Coupon Concepts
Waco, TX 76702
Winmill Publishing Corp.
Brattleboro,
Antigo Area Shoppers Guide
Antigo, WI 54409
VT 05302
CERTIFICATFOFSFRVICF
I hereby certify that I have on this date served the foregoing document upon
all participants of record in this proceeding in accordance with section 12 of the
Rules of Practice.
December
30, 1997