USPS Suggests Publishers Take A Hike
In a time when cost savings and technological improvements have been encouraging print publishers to turn their focus toward the Web, add one more reason to the mix: postal hikes. With one hike earlier this year and the latest proposed hike of 11.4 percent for periodicals and 8.5 percent for standard mail, circulation directors have to rethink their strategies and brace for financial decisions that could be made by higher-ups.
Evelyn Adenau, circulation director for 115,000-circ San Francisco, already budgeted for the first raise in U.S. Postal Service rates, but admits that she, along with many others, did not see this second proposal coming.
“The post office is always raising the rates,” she says, “so you plug in a certain percentage for the next year, assuming there will be a rate change. This second one is surprising … I think it could ultimately cost them in lost shipping more than they gain in the extra income.”
Eric Rutter, American Business Media circulation chair and vice president, controlled circulation, for Reed Business Information, says we can expect direct mail efforts to further decrease.
“We had a lot of incentive to go with the Internet beforehand,” he says. “This just makes traditional mail seem like that much more a thing of the past,” he says.
Patrick Hainault, consumer marketing director for Inc. and Fast Company, sees this not just affecting marketing, but the whole publication. “You have a choice to push more online digital editions, and I think you’ll see more small publishers going that route,” he says. “Every time you do the economics, online wins. The post office has done nothing more than just drive that point home.”
Adenau believes those who don’t decrease their print presence may decrease paper quality and size.
“We actually increased to 10 [inch] by 12 [inch] paper size recently and also went with heavier paper,” she says. “We would have liked to have foreseen the postal situation when making that decision. One possibility is following a magazine like Yankee, which now has two out of its 12 issues only available online.”
Hainault also sees fulfillment joining the online fray.
“We’ll have to push for more cover wraps and using the magazine itself to piggyback on the postage being paid,” he says.
A Forecast For The Forecast
While there’s still a little time until the 2007 forecast, there’s no question that the circulation budget strategy has to change. Hainault says he’ll be adding 3 percent to 5 percent to his forecast budget of last year.
Adenau will also be planning for a boost.
“I’ll have no choice but to plug in a few more percentage points when it comes to postal next year,” she says. “But I’m also going to be ready for other possibilities. One would be manipulating the postal license. I’d ask myself whether the paper and cover stock can be downgraded without sending away readership. Also, you have to look at reducing copies on the comp list and for the audience that doesn’t need to have the magazine. You’d look for alternative ways to keep advertisers and also check out verified distribution, looking at the public place alternative.”
Adenau also points out that there are efficiency improvements that have always been available that circulation directors don’t fully implement.
“We can do a better job of mining through carrier routes … going beyond ZIP-code plus four and doing the work to get to the true carrier route level. Drop-shipping instead of multiple entry points could also save permit fees.”
Hainault says by teaming up with other publishers through technology to comail will have deeper penetration into certain postal areas by getting ZIP code discounts.
“If we bundle together sequentially on what’s going to the same areas, the post office runs more efficiently than disparate mailings,” he says. “You can also consider the hygiene of the addresses. The cleaner your files are, then the less it costs the post office for tracking people who have moved. You save the post office the address-forwarding charge for their operation costs, and it saves you too.”
Hainault also feels that more information has to be out there when it comes to the steps publications are taking to save the U.S. Postal Service money and how the postal system wants to work with publishers.
“I see a lack of communication between the two, when they should be partnering together,” he says. “Many publishers seem to feel like not trying that hard in their circulation practices because they feel like the hikes are coming no matter what. This hike only exacerbates that feeling.”
Rutter sees the U.S. Postal Service as comparable to City Hall—you can’t fight it, so why try?
“There’s no way to predict how high the hikes to follow will be after what they’re talking about now,” he says. “No one is happy about it, but we’ve been working with and lobbying the post office for years without a lot of success. It won’t affect our budget that much because we’ve already been limiting what we do with the post office. Other companies should do the same.”
One ray of postal hope is the possibility of the “forever stamp,” a locked-in postage rate that could be purchased now (at 42 cents if the Postal Service proposal is approved) and used forever, no matter the rates of the future. But with this still in the concept stage, most circulation directors would rather budget for probabilities than what-ifs. Regardless, Adenau says the second postal hike proposal has taught her to prepare for anything with the U.S. Postal Service, and she’s even learned to see its side of things.
“It’s similar to the gasoline hikes,” she says. “The prices we’re upset about are the same ones Europeans would be thrilled with. You can see why the post office went this way because they’re quasi-privatized and have been losing money for years. I guess they feel it’s our turn.”
Eric Butterman is a New York-based writer and creator of the seminar “Better Business Writing: From E-mails To Everything That Makes You Money.” He can be contacted at ERICBUTTERMAN@YAHOO.COM.
Publications like San Francisco will have to rethink their circulation strategies due to the unexpected rate hike.