February 24th, 2001

Postal Service is Putting its Stamp on Ads to Pay Bills

By Edmund Sanders
Los Angeles Times

Neither rain nor sleet nor snow will keep the U.S. Postal Service from delivering the mail, and under a new policy, the agency will also be delivering the advertising messages of big companies willing to pay the price.

Stung by budget deficits and growing competition from e-mail and private delivery companies, the postal service is accelerating its aggressive campaign to sell advertising space on the sides of its delivery trucks, collection boxes, priority envelopes and in post office lobbies.

Stamps are not for sale, but the covers of stamp booklets are up for grabs. The postal service might even allow advertisers to include their message on postmarks, such as the "Happy Who-lidays" postmark that was tested last Christmas to promote Universal Studios’ "The Grinch." 

Critics lament the trend toward commercializing government property and wonder where it will all end. But postal officials say the marketing deals could reap as much as $ 200 million a year, reducing the need to hike prices of first-class stamps.

After test trials last fall and winter with Universal and Visa USA, the postal service cut its first deal in December with Internet giant America Online, which currently leases space on about 10,000 delivery trucks in 11 major markets, including Los Angeles, San Francisco, Chicago, New York and Washington. The ads include AOL’s familiar slogan, "You’ve got mail."

Other deals are expected to be announced soon, according to postal officials, who say they hope to compete with traditional media outlets for the advertising dollars of Fortune 500 corporations.

"We want to show that you can put more than a picture of an eagle on the side of a postal vehicle," said John H. Ward, vice president of core business marketing for the postal service. "By using our assets creatively, we hope to bring in additional revenue and keep prices low."

The postal service’s army of 200,000 delivery trucks will likely generate about half the expected revenue, though only about 25,000 vehicles currently circulate in neighborhoods or business districts that are busy enough to support ads, Ward said. That boils down to about $ 330 a month per truck, or less than the cost of buying a placard on the side of most city buses.

Ads on about 40,000 collection boxes in large cities and high-traffic areas will appear as soon as next month, though Ward declined to name potential advertisers or say how much the ads would cost.

Gary Ruskin, a frequent critic of the commercialization of public property and proliferation of advertising, said it is inappropriate for the government to help hawk soda pop and credit cards, despite the potential profits.

"The government should not be for sale," said Ruskin, director of Commercial Alert in Washington. "How far will this go? It’s a slippery slope. Will the postmaster general allow some advertiser to tattoo a message on his forehead for $ 100,000?"

The postal service is not alone. Numerous state and local government entities have leveraged public assets in recent years through corporate sponsorships and naming-rights deals for sports stadiums, convention halls and subway stations. But such programs are frequently met with public backlash.

Last year, schools in California destroyed thousands of schoolbook jacket covers donated by Philip Morris Cos. when it was discovered that the tobacco giant’s name was printed on them. San Franciscans revolted against a short-lived plan to hang banner ads on the Golden Gate Bridge.

Ruskin worries that some consumers might mistakenly believe that a product or service advertised on a postal truck or mailbox has the government’s blessing. The partnerships could backfire for the postal service too, if advertisers later land in legal or public relations trouble.

"What if the government is seen as tacitly endorsing a company that then turns out to be a polluter or a monopolist?" Ruskin asked.

Ward stressed that the postal service would carefully screen potential advertisers, refusing to accepts ads for tobacco, alcohol and firearms. Competitors such as FedEx will also be banned.

"We’re going to make sure it’s done tastefully," Ward said, noting that advertising on public buses has been accepted for years. "We’re not going to be selling it like classified ads."

Though officials sweated the potential for customer backlash, surveys showed that consumers were willing to accept ads if it meant that prices could be kept low, Ward said.

But price hikes may be needed in any event. Faced with a $ 200-million deficit in 2000--its first deficit in six years--the postal service is scrambling to finds ways to cope with the slowdown in first-class mail delivery, its bread-and-butter business.

Growing use of the Internet and e-mail is contributing to what could be the first decline in first-class mail volume. Experts say volume will fall an average of 3.6% a year beginning in 2004. In 2000, the growth rate slipped to just 1.3%, or half of what the postal service had projected.

Even with the 1-cent rate hike earlier this year, the postal service faces an "uncertain future as competition increases in the communications and delivery services sector," according to a January report by the General Accounting Office, the investigative arm of Congress.

The GAO noted that nearly two-thirds of government-issued checks, such as Social Security and tax refunds, were sent electronically in 1999 rather than by mail. As consumers shift to electronic bill paying, banks also are mailing fewer bills and credit card statements. The trend could cost the postal service more than $ 8 billion a year.

Without drastic changes, some are questioning whether the postal service can continue to afford to provide delivery service six days a week to all addresses.

The advertising program was born last fall amid the search for new sources of revenue. A previous marketing program--in which companies such as Sears and Home Depot paid the postal service to insert their ads into Mover’s Guides mailed to relocating consumers--had netted the agency $ 29 million.

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