Let’s just go ahead and get this out of the way: We love the United States Postal Service (USPS). And we’re not the only ones. In a recent Pew Research Center survey, 90 percent of respondents said they hold a favorable opinion of the USPS, making it America’s Favorite Government Agency. It employs more than 600,000 people, serves 160 million homes and businesses, and during the COVID-19 pandemic, the USPS valiantly continued delivering mail despite the very real dangers involved.
However, the agency now acknowledges that the pandemic also threatened demand and revenue, straining its already fragile finances. Unlike some other government agencies, the USPS generally receives no tax dollars for its operating expenses. Instead, it relies on revenue from postage sales, products, and services. In other words, it’s run like a business. And, as a business, it needed to make some changes.
Earlier this year, the USPS released its ten-year plan detailing operational changes it needs to make to achieve financial stability and improve service. Part of this plan includes price increases for Market-Dominant products, which the Postal Regulatory Commission approved to take effect on Sunday, August 29, 2021.
This post will tell you everything you need to know about the USPS rate changes, why rates are increasing, how these increases differ from those seen in other digital marketing channels, and what all this means for the future of Programmatic Direct Mail.
On Sunday, August 29th, 2021, USPS postage rates will increase for Market-Dominant mailing services. Market-Dominant mailing services include:
- First-Class Mail
- Marketing Mail
- Package Services (such as Library Mail)
- Some Extra Services (such as Certified Mail)
Overall, this will increase Market-Dominant product and service prices by an average of 6.9 percent.
Why are rates increasing?
The USPS receives no direct taxpayer funding for its operations. Instead, it is primarily funded by revenue from postage sales. Over the past few decades, with declines in First-Class letters, increases in the volume of small parcel deliveries, and high demands for eCommerce, particularly during COVID-19, the USPS has struggled to maintain its service standards. The agency revealed it has not met “First-Class Mail service targets in eight years, which is due to both unattainable service standards and a lack of operational precision.”
Therefore, to overhaul USPS operations, it will implement cost-cutting tactics coupled with a new fee structure, including this current price increase for Market-Dominant mailing services. These rate changes align with the ten-year plan released in March 2021 by Postmaster General Louis DeJoy. It outlines how the agency will improve service standards and achieve financial sustainability.
While no one likes a price increase, these changes are necessary for the agency’s future financial solvency. Without these changes, the USPS anticipates net losses in excess of $160 billion over the next decade. However, these rate increases are projected to contribute about $40 billion for investments in technology and infrastructure and are designed to modernize and improve the USPS’s operations.
Does this mean I have to worry about Programmatic Direct Mail prices being as unpredictable as other digital marketing channels?
Nope. Overall, programmatic direct mail pricing remains stable because postage rate increases are generally predictable, occur annually, and align with inflation. Typically the USPS announces price changes in October then implements them in January of the following year.
However, the 2020-21 time period was anything but typical, and the USPS’s decade-long strategic plan reflects this period, which we can all agree is one for the history books. Thus, in the wake of the COVID-19 pandemic, the USPS is changing the way it operates, and increasing postal rates is part of this effort.
Postage rates are also regulated by a federal oversight agency. The Regulatory Commission is an independent agency providing transparency and accountability for the USPS. Composed of five Commissioners, they oversee rate changes, negotiated service agreements, classifications of new products, post office closings, amendments to international postal treaties and conventions, and other issues.
Conversely, other digital marketing channels lack transparency. Instead, they are subject to the whims of individual media owners, market demand, and other obscure factors. Without regulation, security, or oversight, pricing tends to be volatile, fluctuates drastically, and is overly complex. For example, advertising trend projections show that digital CPMs will continue to increase. We’re not even in the holiday season yet, when we have historically seen the highest CPMs.
For marketers, this means direct mail has a massive advantage over all other digital marketing channels because, unlike digital media, Programmatic Direct Mail pricing is stable and transparent.
What does this mean for your brand’s Programmatic Direct Mail program with PebblePost?
PebblePost remains committed to minimizing the impact of any postal rate changes. We continue to offer our all-inclusive cost-per-piece pricing at the most competitive rates resulting in the highest performance for our brands, powered by our market-leading Programmatic Direct Mail® platform.
Additionally, we’re adding several new benefits to offset this change and ensure no material impact on your brand’s marketing performance. [link to a blog explaining this]
As always, working with PebblePost means you have an entire team of PDM® experts at your disposal. In addition, your account team will schedule time with you over the coming weeks to talk through these opportunities in more detail so you are enabled to continue hitting your goals and driving profitable growth.
It is still early, and more details will arise, so rest assured PebblePost is on top of this and will continue to deliver updates and improve its services to ensure business continuity and your brand’s marketing success.
We know price changes can be complicated and frustrating. Fortunately, at PebblePost, our expertise and partnership with USPS mean we are well-equipped to help you navigate this change.
Now that you know everything about the USPS rate changes, you’re ready to continue expanding your brand’s reach with Programmatic Direct Mail.
Still, have questions?
Talk to us directly. We’d love to show you how to put Programmatic Direct Mail to work for your marketing program.
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