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The Postal Accountability and Enhancement Act After 10 Years—Some Proposals for Reform Read chapter Read first chapter

2017 | OriginalPaper | Chapter

The Personalization and Volume Trade-Off: A Future Without Saturation Mail?

Authors : Michael D. Bradley, Adam C. Houck

Published in: The Changing Postal and Delivery Sector

Publisher: Springer International Publishing

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Abstract

High density, saturation advertising mail is a significant revenue source for the United States Postal Service (USPS), totaling $3.03 billion in Fiscal Year 2015. However, the revenue generated by these saturation products is at risk as they run contrary to the contemporary and cutting-edge marketing techniques that use analytics to send highly targeted messages to granular segments of individuals to maximize response rates per mail piece. Indeed, the future might demand quite a significant evolution from the imprecise, carpet-bombing approach of traditional saturation mailings.

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previous chapter An Examination of the Links Between Postal Price Constraints, Efficiency, Competition and Public Welfare
next chapter An Economic Perspective on Terminal Dues
Footnotes
1
EDDM generated $452 m in revenue from approximately 2.8 billion pieces in 2015 (USPS OIG 2016, p. 14).
 
2
“Other” standard mail includes Every Day Direct Mail and Standard Mail negotiated service agreements.
 
3
Standard Regular mail includes a small amount of parcels. They are excluded from our analysis.
 
4
A 2008 IBM study for the value of the USPS monopoly found that 40 % of Standard Mail would be lost to entrants; assuming that entrants would take the high density mail, we use this figure for our ‘saturation’ proportion in the scenario.
 
5
The equations in this section is derived from Bradley et al. (1997).
 
6
For an analysis of this approximation, see Bradley et al. (1997).
 
Literature
Bradley, M. D., Colvin, J., & Panzar, J. C. (1997). Issues in measuring incremental cost in a multi-function enterprise. In M. Crew & P. Kleindorfer (Eds.), Managing change in the postal and delivery industries (pp. 3–21). Dordrecht: Kluwer Academic Publishers.
Bradley, M. D., Colvin, J., & Panzar, J. C. (1999, July). On setting prices and testing cross-subsidy with accounting data. Journal of Regulatory Economics, 16(1), 83–100.
Bradley, M., Colvin, J. & Perkins, M. (2015). Targeting versus saturation: Derived demand for direct mail. In M. A. Crew & T. J. Brennan (Eds.), Postal and delivery innovation in the digital economy. Berlin: Springer.
Cowley, P., & Kavanagh D. (2016). The British general election of 2015. Houndsmills, Basingstoke, Hampshire, UK: Palgrave Macmillan Publishers Limited.
De Donder, P., Cremer, H., Dudley, P., & Rodriguez, F. (2011). Welfare and pricing of mail in a communications market. Review of Network Economics, 10(3).
Direct Marketing Association. (2015). DMA response rate report 2015. Web. March 21, 2016.
Holmes, E. (2014, April, 16). Why online retailers like Bonobos, Boden, Athleta mail so many catalogs. Web. April 18, 2014.
International Postal Corporation. (2011). Strategic perspectives on the postal market 2011. March 2, 2016.
Mobile Marketer. (2014, February 5). Report: Most digital ads aren’t cutting it. The digital marketing blog. Web. March 15, 2016.
Nice Branding Agency. (2015, February 26). Direct mail campaigns: Targeted mailing lists vs. every door direct mail. Web. March 28, 2016.
Parti, T. (2014, August 3). A throwback ploy survives the digital age. Web. June 5, 2016.
Siegel, E. (2013, January 22). Team Obama mastered the science of mass persuasion—And won. Web. June 6, 2016.
The Economist. (2007). Getting the message, at Last. Web. March 24, 2016.
Metadata
Title
The Personalization and Volume Trade-Off: A Future Without Saturation Mail?
Authors
Michael D. Bradley
Adam C. Houck
Copyright Year
2017
Book
The Changing Postal and Delivery Sector

Print ISBN: 978-3-319-46045-1

Electronic ISBN: 978-3-319-46046-8

Copyright Year: 2017

DOI
https://doi.org/10.1007/978-3-319-46046-8_5