(Welcome to Loose Cannon, a staff-written editorial focusing on issues of interest to the direct marketing community. To respond to this week’s editorial via e-mail, please send your message to [email protected].)
As reported last week in DIRECT Newsline, Postal Rate Commission member Ruth Y. Goldway has proposed privatizing the U.S. Postal Service and selling shares in it. It is an interesting but flawed idea. Not only could privatization place a valuable audience out of reach of direct marketers, it may not realize the financial returns Goldway anticipates.
These inaccessible consumers live in far-flung, lightly populated C and D census tracts. There are three principal reasons marketers have turned their attention to them. First, although they are rural, they are not necessarily poor. Second, they have been (and in some cases still are) under-targeted by catalogers and direct mailers. Finally, the level of Internet service available to these remote locations lags behind most other areas: Online shopping is less of an option for them.
With the USPS in private hands, there is a very real possibility that direct mail deliveries to these consumers will be compromised, or rates for service increased, especially if postal management is beholden to bottom-line-driven shareholders.
Goldway’s proposal calls for a strong regulatory commission to oversee a privatized postal service. This commission would also “be empowered to provide funds for subsidizing and guaranteeing universal service if that should prove necessary.”
Which it would, once management determined that service cutbacks to sparsely populated areas were needed. Such subsidies would eat into the $4 billion in federal and state tax revenue Goldway anticipates a privatized service having to pay.
Goldway also contends that sale of the postal service could bring in $100 billion. She bases her figure on the recent offering by United Parcel Service and also factors in “real estate in the best parts of every city, a universal delivery network, and a solid brand name.”
Two of these valuation propositions are suspect: post office locations range from the sublime to the ridiculous. As for a solid brand name, UPS’s brand equity far exceeds that of the post office, both due to the quality of its service and its ongoing advertising efforts.
The USPS gets a “pretty good” at best on its service — anyone that disagrees has only to contemplate sending essential documents through untrackable mail — and a “fair” on its brand equity. I will upgrade this assessment if anyone sends me a postal ad campaign that rivals UPS’s “We run the tightest ship in the shipping business”.
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