June 18, 2001

The Direct Marketing Association (The DMA)released an economic impact study showing that the steady increase in commercial mail volume enjoyed by the United States Postal Service (USPS) over the past 15 years will be crippled if Congress passes stringent data restrictions.

The study, entitled "The Likely Impact on USPS of Restrictions on Free Flow of Information," revealed the following key findings:

According to the study, rapid advances in computing, communications and database marketing technologies during the past 15 years have helped make mail a relatively efficient medium for targeted direct marketing. Information is the key component of effective targeting.

Without access to robust consumer information, postal becomes less cost efficient as a marketing medium.

Direct marketers, who spent almost $45 billion in direct mail advertising in 2000, will migrate their ad spending to other media as a response to burdensome privacy legislation.

The USPS cannot expect to survive, as we know it, if major marketers abandon the mail system for more cost-effective and reliable measures to reach their customers, the study concluded.

"We are concerned because the USPS is in a dog fight just to remain competitive and relevant, as it is. The last thing the Postal Service needs is another legislative nail in its coffin that will drive away its biggest customers," said H. Robert Wientzen, president & CEO, The DMA.

If commercial mail volume decreases because of new legislative and regulatory burdens that restrict the use of marketing information, then the USPS will have to have to find another way to finance its costs. Under the current 31-year-old law that governs the USPS, its principal method for raising cash is raising rates.

"If an opt-in-style privacy bill were to become law, it would force companies to redirect limited advertising revenue away from the USPS," said Michael Turner, PhD, executive director of the Information Services Executive Council (ISEC), an arm of The DMA that conducted the study. "Rather than market their wares through the mail, these companies will get their message out through alternate channels like cable television and print media, such as newspapers and magazines."

"In light of this study, Congress and the Administration need to view the Postal Service as a potential, unintended victim of legislation that restricts marketing information," Wientzen said. "They should not assume that the American economy, consumers and businesses will forever tolerate rate increase after rate increase.

Other looming trends, such as the rapid erosion of prompt postal delivery and a series of additional postal rate hikes, will also cut into commercial mail volume, the study revealed.

"These ‘supply-side shocks’ diminish the role that the Postal Service can play as a marketing tool," said Turner.

For more information at http://www.the-dma.org

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