Tuesday, March 9th, 2010 by Al DiGuido
You know that slogan that has hung in USPS offices and depots around our country: “Neither rain nor sleet, nor gloom of night, nor hail shall keep the postman from their appointed rounds.” Well, it seems to be headed for the scrap heap.
Just this past week, the Postmaster General, John Potter, reported to a Washington meeting of congressional staffers a bevy of bad news. Seems that unless the congress acts quickly… the USPS is estimating that they will lose $238 billion dollars over the next 10 years. Yes, BILLIONS of dollars in LOSSES in the coming decade.
What is going on here?
Potter claims that in just the past year, the USPS has seen a drop in its signature product; first class mail down 26 billion pieces and, as such, that the agency has lost $3.8 billion during that period. The forecast is, according to the Postal Service, that the decline in first class mail volume will only grow steeper in the coming years. The agency finally admits that is it “unlikely” that mail volume will “ever” return to pre-recession levels. Potter does believe that he can turn things around with the help of lawmakers… who basically will allow him to change the game in terms of customer service and delivery. This includes an end to Saturday delivery… more layoffs … more postal office closings around the country, etc.
If there is any humor in all of this… it is the fact that the Postmaster General enlisted the help of Boston Consulting Group and McKinsey, spending $4.8 million for research to create “50 options” for turning the dire conditions at the Postal Service around. I don’t delight in the fact that taxpayer money is being used to overanalyze the current market conditions. Once again, there are groups of individuals in our economy that continue to act as if the digital age is a passing fancy, and govern as if there has not been a fundamental and irreversible shift in human communications. As much as some of us want to opine and reminisce about the nostalgia of yesteryear…the I ongoing belief system that communications of all kind, whether interpersonal or commercial ,will revert back to the 1980’s is foolhardy at best….dangerous in the most extreme.
The fundamental problem with the US postal service is that people just like you and I are joined with the majority of consumers who are paying most of our bills online. I can’t remember the last time I put a 42 cent stamp on an envelope and paid a bill. Technology has devastated the core of first class mail which has always been bill presentment and payment. The ease and security built into linking your checking account with online bill pay is not debatable. It is fact. If anyone believes that the generations to come are going to return to the old method of paying bills….it’s just not factually accurate. I know… I know… there will always be people who will challenge this view by saying “not everyone” uses an EZ Pass when paying bridge and tunnel tolls. Not everyone who smokes dies of cancer. Not everyone that eats too many calories gets fat, etc. However, I would believe that my friends over at Boston Consulting and McKinsey wouldn’t need to spend a lot of consulting time proving out that this trend away from print and postage is only gaining steam as we move forward into this decade.
The fact is, email and social media have had a profound impact on the postal service. Think about the number of emails that you send to friends and colleagues during the average day. It’s incredible. All of that traffic on Twitter and Facebook and other locations on the blogosphere that used to be postcards, greeting cards and letters from home that carried postage. Just think of the fortune it would cost you today to put a stamp on every communication you have with a friend, colleague and family member. ALL of those communications used to go thru the postal service. Now… communication is real-time…. 24/7 and accountable. No need to wonder whether the recipient received the message. Everything in the interactive age is instantly trackable.
Marketers are getting it as well. As costs of print and postage rise… and the data that documents the acceptance and preference for digital versions of catalogs and direct mail pieces mounts…a perfect storm has been created. In a challenging economy, and with tightening margins, marketers continue to work on innovative and cost efficient means to acquire, retain and build the lifetime value of their customers. With each passing year… their target customer becomes more of an interactive consumer. Yes, there are still folks who prefer printed catalogs and direct mail pieces. However these print vehicles delivered by the postal service are no longer the primary commerce connection. Direct marketers can simply not afford to continue to spend the money they do as their audience shifts away from this medium. Sending more into the postal service mail box has not proven to be cost-effective. Rising costs on postage and printing versus shrinking margins and a highly competitive marketplace mean cost cutting and more efficient media mix is in order…. now.
Sadly, I cannot offer any real solutions to the Postmaster General and the USPS. I believe that the best that they can do is right size their organization for the market reality. The discussions around closing down post office real estate around the country can do much to lower costs. Shifting the post office facility inside of supermarkets and other retail chains makes a lot of sense. Anything that can be done to make the services…more “self serve” would be a step in the right direction. I would accelerate those moves to save as much cost as can be. Arming more businesses with their own postal meters and machines makes a lot of sense. And while it might seem like heresy… I believe that with all of that cost cutting, the USPS needs to bring down the cost of first class postage as an incentive for a new breed of communicators to explore new ways to leverage this service in new ways. The USPS needs to join forces with the DMA to promote case studies on the power of postal delivery.
Do I think that any of this will work for the long term? I don’t. I believe that the paradigm shift in human communications that we are living in…is profound and irreversible. Yes… there will always be outliers to changes in behavior… but as marketers and business people, we need to store our Pollyanna memories of days gone by in the closet and confront the new reality. We need to lean in on the interactive tools that will allow us to build the businesses of the future in new and exciting ways. Instead of denying and bailing out… we need to go back to work in creating and innovating new ways for displaced employees and business models to remake themselves in the new world.
The end of Saturday delivery is only the beginning. It’s time that those in denial woke up… and started confronting the real issues of life after the postal service.
Al D
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Monday, March 1st, 2010 by Al DiGuido
I will always remember George Holtane. When offered the chance to work at Foster & Kleiser, a Metromedia company back then, I jumped. As a recent political science major, graduation meant a momentary celebration before the hard reality of work and the requisite need for money set in. Twelve thousand dollars a year was a lot of money. “We are going to teach you everything you need to become successful in the billboard advertising business,” said George. After a three-month indoctrination in Maspeth, Queens, mostly making leasing and roof leak calls, I was promoted to the Lexington Avenue New York office. At 485 Lex, the sales and creative team held court.
I remember vividly some of the tenured billboard sales guys…Joe Chizzini, Ray Amato, Bob Moran… telling me, ”Listen kid, keep your mouth shut and we will teach you this business. Don’t ask too many questions.” George Holtane and the cigar-smoking Dick Itanaga were two of the best creative directors in the billboard business. Dick was the brasher of the two, having little tolerance for sales types.
George had the dry humor and demeanor of Bob Newhart. Dick, George and I became fast friends. I guess because I wasn’t the typical know-it-all sales guy. I was just a “kid.”
I would love to spend time in their offices. In the days before computers, these guys were true artists, and their offices had the light boards, easels and clip art books to prove it. They made magic happen on a daily basis. George would lament to me all the time, “Those guys doing print advertising have a larger landscape to work with in order to get the job done. I have seven seconds.” He’d continue, “You are traveling down the freeway at 65 miles per hour and I have to grab your attention and sell you in seven seconds. “
“We get paid to sell stuff,” said George one day. “All of this creative work doesn’t mean anything… unless it sells.”
It was as if a light bulb went on in my head. If it doesn’t sell, it doesn’t work.
George never did win a heck of a lot of awards or accolades. He could have cared less. His creative work did sell A LOT of stuff for clients—and that was good enough for him. The many days following in my career placed me in midst of many creative agencies and directors. In all honesty… there have been times when I have found myself at odds with creative directors so obsessed with their craft that they miss the Holtane axiom. It’s not that I don’t appreciate theatre and humor in messaging. It’s just this peculiar problem that I have had all of these years. Seems like I am always questioning whether all of this creative design, copy writing, set design, etc., in the end actually rings the cash register.
I have also observed over the years that the mere thought of questioning most creative types in our industry was to be viewed as pedestrian. (“Surely you don’t understand the nuances of and the role of advertising.”) I have received more than a few “scarlet letters” as a result of having the audacity to question the performance of certain ad campaigns. Back in the advertising Stone Age, there was little measurement or analytics to measure effectiveness. Heck….in a thriving economy (remember those days?)…no one really cared a heck of a lot about performance metrics. Great campaigns were “worth the money.” Everything seemed to be selling—who cared whether or not it was because of a winning creative strategy.
There is no need to rehash the state of advertising and our economy in 2010. Suffice to say, this is age of efficiency, accountability and measurability in all aspects of advertising and marketing. To think that marketing and creative directors can perform their crafts ignoring performance metrics is foolhardy. And yet…I continue to get incoming from a band of creative directors who seem to be lost in a time warp.
Note to all you creative types out there: before you get all hot and bothered, please understand that I believe fervently that quality and relevance of messaging is central to selling more stuff for our clients. Back in the old days, creative directors were held in the loftiest of thrones within the advertising arena. Not only did they understand how to create engaging and entertaining campaigns regardless of medium, they seemed to be the only ones in the agency that knew anything about customer need. (I know that there are some of you folks who relish in the nostalgia of those days.)
In the world that we live in today, creating and designing campaigns with little or no desire to monitor effectiveness with the robust suite of analytic and performance tools available to you is criminal. We are here as professionals to provide our customers with superior service. We are charged with the responsibility of understanding our customer’s market sector, competitors and customers’ needs. Chief amongst all responsibilities is using client dollars in the most cost effective manner to “sell more stuff.”
Frankly…if it were me…I would have my analytics team sitting right next to the creative team. In the new world of advertising…your best partners would be this crew. A team that could provide historical insight on the effectiveness of various combinations of content, design, frequency and medium in moving the sales needle for your customer. Nothing wrong with being left-brain focused and high-minded about the creative process. This is in no way intended to limit the level of ingenuity and experimentation utilized in creating campaigns. It’s just that agencies need to be accountable in a new way for the bottom line inside our shops. The days of hiding behind industry plaques and awards given by other creative director associations are over. Awards are nice….but your customer wants results.
Perhaps the revolution needs to start in design and journalism schools. Courses that focus on leveraging customer profile and performance data as a foundation for creative development and execution. Reality demands a much tighter connection between analytics, design and performance. It’s pretty simple: leverage as much audience and historical data as a foundation for your messaging and design. Execute your campaign, and then be ravenous about analytic data about all aspects of the campaign’s interaction with your target customers and prospects. The tools are available today for real time performance updates.
Be in testing and tweaking mode continually, always monitoring performance and transforming campaigns to improve performance metrics. Imagine the day when you and your creative team make your next presentation to your client and demonstrate that you understand their success metrics in all areas of their marketing campaign. When you stand up and show the methodology and data that was leveraged to develop concepts as part of an ongoing learning and adjusting philosophy at your agency. The delight when you report that all of this hard work in learning and monitoring has resulted in a campaigns and executions that have sold the customer more stuff.
On that day….you will have known what George meant so many years ago.
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