Money-back guarantee proposed for direct mail ads

AP News
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Posted: Apr 20, 2011 4:27 PM
Money-back guarantee proposed for direct mail ads

How sure is the post office that direct mail advertising works? So sure it's willing to offer a guarantee.

The Postal Service wants to launch a test in May, encouraging more direct-mail advertising by offering refunds to companies if their sales effort isn't successful.

Faced with heavy losses as people turn to the Internet to send letters and bill payments _ at the same time the recession discouraged advertising mail _ the self-supporting agency is looking for ways to increase its business.

"The top advertisers in America represent $90 billion in total expenditures for media advertising," the post office noted in its proposal for the test. Of that, the post office currently gets about 3 percent, meaning there is a "huge revenue potential for the Postal Service."

So it is proposing a test, called Mail Works Guarantee, in which it would offer 16 companies a money-back chance to boost their sales by mailing ads. The proposal is under consideration by the independent Postal Regulatory Commission, which has to approve the test before it can begin.

Under the proposal, the post office would pick 16 businesses that each spend at least $250 million a year on advertising but use direct mail for very little of it.

The offer would go to a cross section of companies, including retail, fast food, automotive and consumer products among others, with mail ads designed to accomplish such things as improving product sales, increasing store traffic or bringing more people to web sites.

In the test, the Postal Service would help design individual direct-mail campaigns and each company would agree to mail between 500,000 and 1 million first-class or standard mail items at regular prices.

The company and the post office would work out in advance what the goal was and how success would be measured, and if the results failed to reach that level the company would be entitled to a credit of up to $250,000 for its postage expenses. The refund would not cover printing or production costs.

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Online:

Postal Service: http://www.usps.com

Postal Regulatory Commission: http://www.prc.gov