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Operators Lukewarm On USPS '2nd Ounce Free' Offer

The U.S. Postal Service, desperate for revenue, is trying to encourage more businesses to send direct-mail first-class by letting them send 2-ounce letters for the rate of a 1-ounce mailing -- an offer cable, satellite and telco operators are greeting with a collective shrug.

Last month the USPS announced the "2nd Ounce Free" pricing, effective the week of Jan. 23, available to high-volume commercial mailers using first-class presorted automation. The Postal Service said it's trying to "add value to the mail" by giving business customers new targeted marketing opportunities with bill stuffers and "onserts" (promotions added at the end of a statement).

"With 2nd Ounce Free, companies have greater flexibility to offset mailing center costs by including additional promotional offers with bills, invoices and statements," USPS vice president of domestic products Gary Reblin said in a statement. "2nd Ounce Free also provides business mailers with the option of using higher-quality paper stock or larger envelopes to create greater impact."

According to the USPS, bills and statements sent first-class are opened more than 95% of the time and recipients spend two to three minutes with each piece on average.

But while TV and broadband providers said they are evaluating the USPS offer, many said it probably won't have much bearing on their marketing strategies.

An issue is that today, most direct-mail pieces are sent at lower rates, not first class. Moreover, cable and satellite companies -- as in other industries like financial services -- are trying to enroll subscribers in autopay plans and paperless billing, to reduce costs and improve cash flow. According to billing-systems provider Amdocs, its pay-TV customers have an average of 15%-17% of subscribers who opt for e-billing, a range that has stayed steady for the last several years.

"I doubt [2nd Ounce Free] has any serious impact on our strategy," said one MSO executive, speaking on background. "But anything that helps us do things more efficiently is always welcomed."

Others were more upbeat, but still noncommittal. "We'll definitely want to take a closer look at what we're currently mailing to see how this could be beneficial to us," Bright House Networks vice president of communications and Web strategies Kimberly Maki said. "It may provide us and other companies an opportunity to possibly get even more creative with our direct mail efforts."

Eclipse Marketing Services, a firm that produces direct-marketing materials, believes pay-TV providers are sitting in front of a huge opportunity with 2nd Ounce Free. Warren Zeller, Eclipse's director of strategic partnerships, described it as a windfall to the industry worth more than $400 million in postal fees.

"Maybe the USPS is in deep trouble and this does not increase their revenue shortfall at all, but as a direct mailer, this is a huge opportunity for cable and satellite marketers," Zeller said.

On Wednesday, Eclipse sent a promotional email to service-provider customers -- not via the U.S. Postal Service, it's worth noting -- touting the new opportunities available through "2nd Ounce Free." Eclipse's clients include Comcast, Time Warner Cable, Cox Communications, Charter Communications, Suddenlink Communications and NCTC.

The USPS lost $5.1 billion for the fiscal year ended Sept. 30, 2011. Last December the Postal Service said it would eliminate next-day delivery of first-class mail after shutting down 252 of its 487 mail-processing facilities nationwide.