DMA Disappointed By Postage Rate Decision

Washington, DC, June 20, 2007 —The Direct Marketing Association (DMA) expressed its disappointment today at the failure of the Governors of the US Postal Service (USPS) to provide relief for the millions of commercial mailers who are being hit with massive, unplanned increases in postage costs.

DMA President and CEO John A. Greco, Jr. warned that the Governors’ ultimate rejection of any rate reduction for flat-shaped mail will have a severe impact on the mailing community. "America’s mailers sent a clear message to postal officials that the surprisingly high increases in flat mail rates will lead to significant cuts in mailing volumes, and a long-term downward spiral in postal revenues."

After meeting yesterday, the USPS Governors announced this morning that they have rejected the temporary rate reductions for Standard Mail Regular and Nonprofit Flat prices that were recommended by Postal Regulatory Commission (PRC) in its reconsideration of rate increases that were originally recommended on February 26, 2007, and implemented on May 14, 2007.

"The Postal Governors made a bad call yesterday," said Greco. "It was a bad decision in February when the PRC made its recommendations for rates far in excess of what the Postal Service originally requested. Now by refusing to make the much-needed corrections, the Governors have all but assured a decrease in mail volume that will be felt for years to come. It is a sad day that both the Commission and the Governors are so out of touch with the business realities facing catalogers and other flat-shaped mailers."

"We are extremely disappointed and frustrated by the latest decision from the Postal Governors," said Jerry Cerasale, DMA’s senior vice president for government affairs. "After recognizing that the PRC’s original recommendations would have been detrimental to many of its commercial customers, the Governors asked the PRC to reconsider. And while DMA was not completely satisfied with the scope of the PRC’s revised recommendations and offered a practical and legal long-term solution in our June 4th comments to the USPS Board of Governors, we are even more unhappy today that the Governors have made a ‘do-nothing’ decision that offers no help at all for their mailing customers."

Cerasale noted that the ripple effect is already being felt by flat-shaped mailers, as well as the downstream companies that provide mailing services and supplies. "Hundreds of our DMA members let postal officials know that these outrageously high rates would force them to cut mailings by 10 percent, 20 percent, or even more. We have already heard that many paper suppliers are planning a 15 to 18 percent reduction in coated paper production because they expect a significant drop in orders as catalogers reduce volume due to these higher rates."

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Founded in 1917, DMA today represents more than 3,600 companies from dozens of vertical industries in the US and 50 other nations, including a majority of the Fortune 100 companies, as well as nonprofit organizations.

In 2006, marketers — commercial and nonprofit — spent $166.5 billion on direct marketing in the United States. Measured against total US sales, these advertising expenditures generated $1.93 trillion in incremental sales. Last year, direct marketing accounted for 10.3 percent of total US gross domestic product (GDP). Today, there are 1.7 million direct marketing employees in the US alone, whose collective sales efforts directly support 8.8 million other jobs. That accounts for 10.5 million US jobs.