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Postal Savings Solution: The Pallet or the Web?



By Tony Silber
01/05/2006

Editor's Note: At the Folio: Show in New York in November, a session on postal rates produced a stark philosophical divergence that was unusual considering the topic. On the one hand, panelist David Straus, American Business Media Postal Counsel , focused on the process of creating rates and how magazine-mailers need to adapt in a changing world. On the other, however, Al DiGuido, CEO of Epsilon Interactive, argued that to focus on saving money through palletization discounts was to miss the point and ignore the spectacular changes occurring in media.DiGuido later restated much of his presentation in a column about the session for the search marketing Web site ClickZNetwork. Straus responded when

DiGuido's column appeared in the Bosacks e-newsletter. Both the column and the response appear here in edited form.

Al DiGuido CEO, Epsilon Interactive

In the early days of the Internet, I spoke to a group of circulation directors at a Magazine Publishers of America event about the urgent need to evolve subscription and renewal strategies to embrace the Internet, and e-mail specifically, as a channel. I was nearly escorted off the stage for suggesting print publications make such a move.

At the Folio: Show, I sat silently as proper stacking techniques to organize printed material for maximum cost efficiency were explained. Finally, the moderator asked for my thoughts. I launched into a diatribe about the incredible transformation and shift in human communication. Nearly 10 years ago, the Internet's rise heralded a new chapter in evolution of human interaction. It seems many in publishing have yet to open the book.

Publishers face declining newsstand and advertising sales, lower renewal rates, more costly print production, and now a double whammy: the U.S. Postal Service is hitting the industry with a significant increase in postal rates not only this year, but for the foreseeable future. Some believe the answer lies in better palletization and stacking techniques.

But today's consumer reality demands that the Internet, specifically e-mail, be embraced as the primary communications channel and renewal resource. A recent Forrester Research study indicates consumers spend upwards of 34 percent of their media consumption time online. Shifting consumer behavior, combined with the real-time nature, advanced testing capabilities, and cost efficiency of e-mail communications, is too powerful to ignore.

The Internet isn't only the newsstand but also the distribution network. Today's smartest marketers embrace e-mail's power and efficiency to drive new subscriptions and optimize renewal efforts. Leading publishers are beginning to understand the cost efficiencies and effectiveness of implementing fully automated subscription-renewal programs that utilize time-triggered e-mail offers and eliminate the need for expensive direct mail drops.

Aren't you convinced you should change;radically?

David Straus,
American Business Media Postal Counsel

I suppose that I am responsible to a substantial degree for the "charts, graphs and spreadsheets with all types of cost figures" that Al DiGuido found sedating. As the Washington attorney for American Business Media, I share Al's view that success in the publishing world may well require serious attention to new forms of marketing and, especially, to the Internet. But there was also a well-received panel discussion on co-mailing and co-palletizing at the ABM Top Management Meeting in Chicago in November, and it did not appear to the moderator of that panel;me;that audience attention was waning.

That may be because, as Al himself observed, "print publications aren't going the way of the dinosaur." Print publications remain an important part of a publisher's portfolio and postage continues to be a significant part of the cost of doing business for publishers. ABM member publications, with circulations averaging only about 60,000, spend approximately $300 million per year on Periodicals-Class postage. Controlling these costs requires attention to very detailed Postal Service regulations governing practices like "palletizing and stacking" and to potential changes in mail preparation.

Unfortunately, explaining these practices and changes at a level of detail that is meaningful is narcotizing, perhaps, but necessary. For those able to suffer through the details, the potential rewards are substantial. By changing the way that they "palletize and stack," smaller-circulation publications will be able to temper the impact of near-term postal-rate increases to a significant degree;probably in the neighborhood of 10 percent or more. By taking the appropriate action, the publisher of two 60,000-circulation monthlies could be looking at a saving of about $65,000 per year by modifying its mailing practices.

I have no disagreement with the content of Al's self-described diatribe. But it would be a mistake to focus exclusively on the exciting world of electronic communication to the exclusion of the mundane world of postage costs.
By Tony Silber
01/05/2006







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