US Postal Service notice

The USPS last week filed a request with the Postal Regulatory Commission for approval to test a guaranteed direct mail product, the “Mail Works Guarantee.” The program would offer companies that don’t already use direct mail a money back guarantee if their test marketing campaigns don’t produce results:

The United States Postal Service hereby gives notice that it intends to conduct a test of an experimental market-dominant product. The experimental product is the “Mail Works Guarantee.” The top advertisers in America represent $90 Billion in total expenditures for media advertising. The USPS share is currently 3.1% or about $3 Billion annually which represents a huge revenue potential for the Postal Service. Thus, this new product will be offered to a group of companies who spend a minimum of $250 Million annually on advertising as identified by Advertising Age magazine and for whom mail is not currently a large part of their advertising mix (postage is less than 0.36 percent of the company’s total spending on advertising). These companies will be offered a postage-back guarantee to test advertisements for their products through First-Class Mail and Standard Mail. The market test will begin on or shortly after May 16, 2011.

During the Mail Works Guarantee market test, 16 initial companies will be offered a postage-back guarantee to test the effectiveness of advertisements for their products using First-Class Mail and Standard Mail.

For each selected mailer, a set of unique metrics will be developed jointly with the Postal Service against which to evaluate the performance of a test Direct Mail campaign. For example, a retail company’s Direct Mail offer could be designed to increase store traffic, an e-commerce company’s offer could be designed to drive Web traffic, or a product goods company’s offer could be designed to promote increasing sales of a specific product. The threshold for determining success will be an agreed-upon percentage of increase in the uniquely established metric. Each participating mailer will be expected to mail a minimum of 500,000 pieces up to a maximum of 1 million pieces of First-Class Mail or Standard Mail. The Postal Service will provide assistance in developing the Direct Mail campaigns during the market test, as well as in the benchmarking and measuring the test metric.

If the Direct Mail campaign fails to meet the established metrics, as verified by a Postal Service representative, the Postal Service would only refund the postage paid during the market test, up to a total of $250,000, issued as a credit to the company’s Centralized Account Payment System account. Production and printing costs for the Direct Mail campaign would not be refundable.

Depending on the results of the test, the Postal Service may file a request with the Commission for approval to offer the Mail Works Guarantee to additional companies under the market test.

It is too risky guaranteeing increases of the clients. business. Much will depend on the products the mailer sells. This test market should only incorporate everyday products otjerwise the Postal Service is just allowing a new advertising avenue for potential mailers for free. The postage may be refunded but the wds stiill get out there.