Utilizing a Total Media Approach in a Technologically Challenging Marketplace

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1 Utilizing a Total Media Approach in a Technologically Challenging Marketplace 2013 National Postal Forum San Francisco, California Steve Mitzel, General Manager Shared Mail/SVP

2 USPS Hurdles While fighting to remain relevant as mailers, our USPS supplier has many hurdles to jump over on a daily basis: $15.9 billion loss in 2012 Damaging Congressional mandates Handicapped by over-regulation Mail volumes down 8 billion from 2011 No real flexibility in pricing Slow to react to changing marketplace dynamics Operationally-driven business model, not conducive to innovation

3 Solutions Total Media Approach While maintaining relevancy is an ongoing battle for mailers, innovation is occurring within both the USPS and the mail industry, including: Negotiated Service Agreements Every Door Direct Mai l (EDDM) Postal Technology Discounts Digital Integration 1:1 Personal and Variable Marketing

4 Negotiated Service Agreements ( NSA s ) Current Postal Law (PAEA) allows for the USPS to negotiate with mailers or potential mailers Negotiated Service Agreements. In the past 5 years two market dominant NSA s have been negotiated and approved by the PRC. Both Congress and the PRC are encouraging more NSA s to drive increased postal volume. Typical NSA requirements include: 1. Must result in a substantial, measurable net benefit to the Postal Service, as well as to the customer. 2. Cannot unduly discriminate against or adversely affect any customers. 3. Must be approved by the USPS Board of Governors and then again approved by the PRC, through a publicly litigated process.

5 Negotiated Service Agreements ( NSA s ) In August 2012, the PRC approved the first market dominant NSA with Valassis. The goal of the Valassis NSA is to drive additional piece volume by migrating or augmenting circular distribution of large, national durable good retailers (e.g. Best Buy, Home Depot, Macy s) into the mail. The Newspaper industry vehemently opposed the NSA. Hypothesis of main distribution vehicle for circular distributions (paid Sunday newspaper subscribers) continues to decrease, leaving retailers looking for additional and/or better and more consistent distribution. Strict limitations on client eligibility and mailer requirements.

6 Every Door Direct Mail (EDDM) Every Door Direct Mail, or EDDM, service from USPS is a program that promotes saturation advertising mail. EDDM is aimed at encouraging small, local businesses to use direct mail to advertise. The program allows mailers to: Mail to an entire postal carrier route (~400 households) without the need for a mailing address list. Mail an advertising piece without a personalized name or actual street address on the mailing piece. Use a flat size mail dimension piece as defined by USPS guidelines. Target the geography desired via an online tool designed for small localized businesses to use.

7 Postal Technology Discounts Over the last two years the USPS has offered postage discounts for mailers who incorporate technology into their mail piece: In July Mobile Commerce & Personalization promotion In November 2012 Holiday Mobile Shopping promotion In 2013 there are 6 promotions including: Direct Mail Mobile Coupon and Click-to-Call Emerging Technologies Mobile Buy-it-Now The goal of these incentive discounts is to start to incorporate online technologies into offline media vehicles.

8 Digital Integration Convergence of physical and digital worlds Incorporating digital into the mail on a more regular basis Integrating display advertising into the direct mail buy Using mobile integration to push offers from direct mail Augmented Reality Usage of PURL s/gurl s

9 Case for Customizing Your Media Mix Eating Out Adults Adults Adults 55+ Print 27% Digital 14% + Mobile 7% = 48% total media influence Print Highlights Print 34% Digital 12% + Mobile 4% = 50% total media influence Digital Highlights Print 41% Digital 10% + Mobile 3% = 54% total media influence Print is strong for all three targets Adults 55+ use the most newspaper Coupons have the highest print influence for all three groups Adults use the most coupons Ad Inserts are most popular with Adults 55+ All three groups use Direct Mail equally Digital is the third largest influence, behind Print and Brand Familiarity Instant messaging and blogging are much more influential to younger adults Adults and 55+ are the MOST likely of all groups to be influenced by Source: Prosper Inserts & Analytics, Dec 2011

10 1:1 Personal and Variable Marketing Talking to an individual consumer on a 1:1 basis is growing marketing trend Ability exists to create a personal, targeted and variable message or image Increases ROI Personalization increases response over 44% Customer Dan Reed. Recent purchase Dog Food. Non Customer Smith Family. Dog Owners Non Customer Lucille Moran. Homeowner. Income >$150k. Home +2,500 sq ft. Dog owner Non Customer: Steve DeLucia. Homeowner. Home 2,000+ sq ft. Income >$150k Dog Owner. Non Customer Cody Johnson. New Mover. Customer Sheila Eisenberg. Purchase within last year Cat Food. Non Customer Bill Munson. Income >$150k. Home 3,000+ sq ft. Dog owner Non Customer Evan Hailey. New Mover. Non Customer Maria Albornoz. Dog Owner Spanish Speaking. Customer Chris Lutz. Loyal customer. Frequent purchases.