Money-back guarantee for US advertisers to try direct mail

The US Postal Service is hoping to win a bigger slice of the $90bn US media advertising market by offering some of the nation’s top advertisers a money-back guarantee to test out direct mail campaigns. From as early as next month, it will be offering 16 major advertisers the chance to try out direct mail in a market trial called “Mail Works Guarantee”.

The companies will be those spending at least $250m a year on advertising, but do not currently use the mail for a significant amount of promotional activity – those where postage represents less than 0.36% of their advertising budgets.

The companies taking part in the Mail Works Guarantee trial, which could last up to two years, will each be expected to mail between 500,000 and a million mailpieces of First Class Mail or Standard Mail.

Should the direct mail campaign to achieve a number of agreed targets, the USPS would provide a refund of postage costs, up to a maximum of $250,000.

Targets might include an increase in store traffic for large retailers, an increase in web traffic for e-commerce companies or an increase in sales for a product or goods supplier.

Refunds would not cover print and production costs, and would be paid out as credit, according to documents filed with US regulators on Friday.

The USPS said it believes there is “huge revenue potential” in boosting its current 3.1% share of America’s media advertising market, which currently translates to about $3bn a year in revenues.

Filing with the Postal Regulatory Commission, it said: “This will create new volume for the Postal Service. Each of the companies selected will pay the list prices for current products just like any other mailer and will only receive a refund if their use of the mail does not result in a specifically defined benefit to their company.”

The new Mail Works Guarantee initiative comes as part of efforts by the US Postal Service to counter declining First Class Mail volumes and bring in additional revenue to turn around its multi-billion dollar annual losses. The business-to-consumer channel is one of the key priorities for Postmaster General Pat Donahoe at the moment.

Depending on the results of the Mail Works Guarantee market trial, the Postal Service said it could seek regulatory approval to expand the trial to additional companies.

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