An NTMC Webinar 9/15/10. Keith Gilpin, Vice President Advertising Distribution & Operations, Orange County Register Welcome to our first NTMC webinar!

An NTMC Webinar9/15/10

Postal Alternatives and Rates

Keith Gilpin, Vice President Advertising Distribution & Operations, Orange County RegisterWelcome to our first NTMC webinar!All panelists audible, attendees muted.Attendees encouraged to submit typed questions.We will have Q&A for each panelist, but no more

than ten minutes total for each segment. Final Q&A following at end will be available for

additional questions.Assisting today: Philip Brown, NTMC Executive

Director and Program Organizer – will manage slides, the clock and field questions from attendees.

Your moderator:

Jim Hart, President, Integrated Advertising Solutions

Duff Heyl, TMC Sales and Operations Manager, Arizona Republic

Ernie Chenault, TMC Manager, The Virginian-Pilot

Perry Corsetti, Director of Customer Relations, Philadelphia Inquirer

Paul Boyle, Senior Vice President / Public Policy, Newspaper Association of America

Your panelists:

Jim Hart, President,

Integrated Advertising Solutions

Impact of postal rate increases on newspaper TMC programs

A 6-year trend…

2011 USPS Increase

Standard Flats up to 3.3oz.

Standard Flats up to 3.3oz.

Proposed 2011 Increase

Standard Flats Piece/Pound

HD DDU 2005-2011

CPI 2005-2010 +12.6%

GDP 2005-2010 +17.7%

Where you really need to be ……..…

SAT DDU 2005-2011

SAT DDU 2005-2011

SAT DDU 2005-2011

Compound Problem?

Newspaper TMCs

Our competition

Jim [email protected]

623-261-6709

Duff Heyl, TMC Sales and Operations Manager, Arizona Republic

Arizona Republic 100% mail delivery…

Product overview:Branded as Buyer’s Edge8-page tab, 100% advertising Zoned into 15 geographical zones Not bagged


Product image:

Arizona Republic - 100% mail delivery…

1. What is your current mail footprint mail? 1.3 million packages mailed each week to non

subscribers via USPS Mail

2. What do you see as benefits for staying in the mail?

Proven Distribution ModelProven SuccessConsumers ExpectationsClients NeedsLocal Competitive Landscape


3. What are your factors for staying in the mail?

Continued Success Established Marketplace

Consumers & Clients Expectations Targeting Strong Brand/Distribution Model

High Density vs. Saturation Levels Higher Levels of Saturation Future Incentive Programs

Controlling Non-Postal Costs Vendors/Printers Leveraging Products to Offset Postage Increase Footprint Changes


4. What concerns do you have for the future of USPS Mail Delivery?

Future of rate increases Sustaining Future Rate Increases on our Clients

Controlling costs/margins What will Advertisers/Consumers want in the

future? Will they prefer Mail vs. Alternate Delivery vs.

what? Ever changing competitive landscape

What will future competition look like?


5. Have actions or communication from the post

office influenced your decision to stay in the mail?”

No one key past action/communication – but future actions are key.

Future Rate Increases. The incentive plans (Current & Proposed).Flat Sequencing System.


6. Are you considering a rate increase next year

as the postal rates go up? Considering a rate increase – but not impose

across the board. Strategically look at accounts/products to help

offset any postage rate increase. Ultimately will depend on the PRC’s decision in

October. 7. How often are you evaluating staying in mail?

Constantly looking at our overall costs & margins.



Duff [email protected]

m 602-444-4586

Ernie Chenault, TMC Manager,

The Virginian-Pilot

The Virginian-Pilot Hybrid mail and alternate delivery …

Product overview: “Hampton Roads Savings Weekly”

Broadsheet product, printed on regular newsprint Strong grocery content Inside advertising is b/w classifieds.

No editorial content. It can run a maximum of 10 pages, which happened a few times a few years ago before recruitment dropped off.

Mailed copies are delivered to the Post Office flat, while the alternate delivery copies are bagged.


Product image:


1. How many pieces did you convert to carrier delivery?

Approx 105,000

2. What percentage was that of your total delivery?

Approx 55%

3. When did you do it? Two stages:

the majority in March, 2010 an additional 15,000 in May, 2010.


4. What prompted you to make this decision: Expense reductionSome issues with timely postal delivery.

5. What has the customer commentary been like: Some smaller customers dropped out citing

declining returns.

6. What has the consumer commentary been like: Many complaints with driveway delivery the first

month;Complaints have declined over time.


7. How do you handle mixed delivery system complaints?

Because we don’t split zip codes between mail and alternate delivery, we can quickly pinpoint the distribution method for each household.

Complaints from homes receiving the TMC via the USPS are handled internally.

Complaints from alternate delivery households are directed to circulation who forward them to alternate delivery vendor.

We provide advertisers information on which geographies are mailed and which are alternate delivery.


8. What benefits have you seen from your mixed delivery system:

Significant expense reduction offsetting higher postal rates.

More consistency on delivery dates.

9. What negatives have you seen from your mixed delivery system:

Homeowners prefer to get unsolicited packages through the mail.

Handling consumer complaints are often time consuming and frustrating.


10. Have you altered your pricing strategy as a result of the changes?

No, we had an internal alternate delivery system several years ago and our pricing has historically been low from a CPM basis.

We did raise rates when we moved to mail a few years ago, but not significantly enough where we felt our prices were too high for alternate delivery.


11. What will make you consider moving more pieces from the mail to alternate delivery or from alternate delivery back to the mail:

We would consider returning to the mail if the two primary reasons we left were resolved: Elevating costs and timely delivery

If not, we will likely continue to move pieces tactfully to alternate delivery over time.

We will be careful to make sure we are still able to provide approx 90% overall penetration and minimize any concerns from advertisers.



Ernie [email protected]

757-446-2030

Perry Corsetti, Director of Customer Relations, Philadelphia Inquirer

Philadelphia Newspapers100% alternate delivery…

Product overview:TMC product called My Community TrendTab paper with editorial content Averages around 28 to 32 pages46 geographical zonesBagged every week


Product image

(Bucks):


Product image

(NJ):


Philadelphia Newspapers 100% alternate delivery…

1. How many copies converted to carrier delivery?

983,672 copiesPennsylvania - 39 zonesNew Jersey - 21 zones

2. When did you do it? September 2008.18 different phases.

3. What prompted you to make this decision? Strictly expense reduction.


4. What has the customer commentary been like? Some advertisers pulled out of the paper.Other advertisers had concerns but were willing to

give carrier delivery a chance.

5. What has the consumer commentary been like? Complaints usually first few weeks of each phase.Notification ads in paper.More editorial content help eased concerns.


6. How did you handle complaints with a carrier delivery system?

Circulation customer Service Department.Complaints then forwarded to email list.

7. What benefits have you seen from your complete conversion from mail?

Significant expense reduction. Increased insert business.


9. What negatives have you seen from your complete conversion from mail?

Lost circulation.Lost Advertising accounts = less revenue with some

accounts.

10. Have you altered your pricing strategy as a result of the changes?

Yes for insert business. No for ROP Advertising, with some exceptions.

11. How often will you evaluate your change to ADS?

Annually.



Perry [email protected]

215-854-5881

Paul Boyle, Senior Vice President / Public Policy, Newspaper Association of America

NAA update: proposed postal rate increase and other dialogue with the U.S.P.S.

Newspaper Target Marketing Coalition - WebinarSeptember 15, 2010

Paul J. BoyleSenior Vice President / Public Policy

Postal Alternatives and Rates

(What We Will Cover)

• Postal Reform Law – Rate Setting Process

• Mailer / NAA Opposition

• Possible Outcomes in Rate Case

• Status of the Elimination of Saturday Delivery

• NAA Postal Activities in 2011

Rate Setting ProcessPostal Accountability and Enhancement Act

• Rate Cap to Force Cost Discipline

• Rate Cap Tied to CPI

– Negative CPI in 2009; No Increase in 2010

– + 0.58% CPI in 2010

• Exception in Law for “Extraordinary or Exceptional Circumstances”

• USPS Says Volume Decline (36 billion pieces/ ’07-’09) = “Extraordinary Circumstances”

Opposition in Precedent Setting Case

• Affordable Mail Alliance (1,000 mailers across classes)

• NAA Files Separate Comments – Downturn in Economy Not “Extraordinary

or Exceptional”

– Support Standard Volume Incentive Program (13-22% per piece rebate/ volume > 105 percent)

– Support Legislative Remedies for USPS Financial Problems

• PRC Decision by October 4

• What if USPS Wins Rate Case?– Lawsuit by Mailers

• What if USPS Loses Rate Case?– Leverage with Union in

Negotiations– Pressure on Congress to Enact

Remedies

Possible Outcomes in Exigent Rate Case

Saturday Postal Delivery?

• What are the chances that the USPS will eliminate Saturday mail delivery in an attempt to reduce expense and improve their operating margins?

NAA Activities in 2011

• Rate Changes to Win Back Newspaper TMC Business?

• Guard Against Service Discrimination

• Guard Against New Revenue Proposals (Digital)

• Monitor FSS Policy Changes as Flats Volume Declines

Paul [email protected] 571-366-1150

Final questions from audience?

Final comments from panelists?

Special thanks to all our panelists and attendees,

and especially

Keith Gilpin, Susan Duchin and Jane Comfort

for their contributions and encouragement

that made our first webinar program possible!

Documents

An NTMC Webinar 9/15/10. Keith Gilpin, Vice President Advertising Distribution & Operations, Orange County Register Welcome to our first NTMC webinar!