Should the US Government Bail Out the Post Office?

Thanks to GH for forwarding the following story this morning:

USPS to propose 5-day mail schedule, major cuts

The most important quote:

“USPS posted a $3.8 billion loss in its 2009 fiscal year, the latest in a multiyear string of whopping losses. Mail volume was down 12.7% for the year, a trend the agency expects to continue over the next decade as more consumers opt for online bill payments and message delivery.  The Post Office was $10 billion in debt as of Sept. 30 — not far off from its $15 billion debt limit, which the agency expects to hit in its 2011 fiscal year.”

The USPS will require a bailout, count on it.   Is that a good idea?

Reasons that support a bailout:

1. The USPS is the second largest employer in the United States (behind Wal-mart) – a bailout would preserve much-needed jobs in an economy that is still on less-than-solid footing.

2.  ? (I’m sure there are other reasons that I’m missing..)

Reasons against a bailout:

1. Bailout money will be used to hold down postage prices for junk mailers – some of the largest companies in the world.  (Over 50% of mail volume is junk mail.)

2. Bailout money will increase and prolong the environmental impacts of junk mail.  (I’m not a dyed-in-the-wool green, but even I know that printing credit card offers on felled trees, and flying them all over the country is bad for the environment.)

We should also note the difference between a bailout and a permanent subsidy.  It’s probably a good idea to use government funds to cushion and ease the exit of an information distribution medium that, in the words of the Postmaster General, represents a “macro shift in society.”  It’s a terrible idea to use governments funds to artificially prop up a failing industry ad infinitum.

US Postal Service and Lottery Tickets

The USPS is becomingly increasingly, ahem, creative in their effort to close their multi-billion dollar budget gap. According to this post on the official blog of the US Postal Service Inspector General, the Postal Regulatory Commission is considering a USPS lottery as a potential source of much-needed funds.

Could Longer Lines Be Coming to Your Local Post Office…Lottery Lines?

I don’t know about you, but the phrase “grasping at straws” seems somehow appropriate…

Smart Ads Video

The incomparable Mitch Spolan, Yahoo!’s Vice President of North American Sales, put together this video for my product, Yahoo! Smart Ads. Mitch did the entire thing himself, and I have no idea where he finds the time. It’s not like hitting sales goals that have little words like ‘billion’ in them can be easy on the schedule. Anyway, hope you like the video. Thanks, Mitch!

Philly Fight Night 2010 – February 27

What do you get when you combine a student-run charity boxing match, the number one boxing venue in the world, 1600 cheering Wharton MBAs, and a little bit of intra-school rivalry thrown in? Philly Fight Night!

Since its inaugural event in 2005, Philly Fight Night has become one of the biggest events of the year for Wharton students. Rather than describe the event in even more detail, I’ll just link to this year’s promo video instead. You’ll get the picture.

Credit where it’s due: This event was the brainchild of David Birnbaum, Schuyler Coppedge, and R.T. Arnold, with the inimitable Greg Battle serving as the evening’s MC . I’m proud to say that all of these fine gentlemen were my classmates in the Wharton MBA Class of 2005. Five years later, and still going strong. Nice work, guys!

Teachers Unions

I’ve stayed mostly away from political discussion in this blog, but I suppose it was inevitable that we got there eventually….

Like many of my peers, I consider myself to be a social liberal and and a fiscal conservative. I choose to vote most often with the Democratic party because, generally speaking, questions around social values are the political issues that I personally care more about. (That said, fiscal concerns are making a strong comeback with me considering the current sad state of our economy.)

However, as with any coalition, there are elements of the Democratic party with whom I just cannot reconcile my own beliefs. Top of that list for me? Teachers Unions.

I read this New Yorker piece while on vacation in the Far East. It made me so angry that I wanted to fly back and start beating people about the head.

And then this afternoon, I read this opinion piece by Joe Klein.

I am struggling to keep an open mind here. Maybe these unions are being unfairly maligned…?

But I’ll tell you what – if half this stuff is true, then I’m ashamed to associate myself with these people. As incomprehensible as they are to me, at least the right-wing religious conservatives can claim that they are taking a stand for something they believe to be right. Whether or not I agree with them, I can at least respect their fidelity to principle – something that is increasingly hard for me to say about the apparent naked and destructive self-interest of the teachers unions.

So – members of the teachers unions out there – please, set me straight. What am I missing? Why is there more than meets the eye here?

Another Swan Song for Trucks and Trees: Direct Mail spend will shift online

A lot of attention has been placed recently on the demise of the newspaper as an advertising channel and what that means for marketers. At this point in time, the general consensus seems to be that this is now more a question of when, not if.

So let’s talk about something else.

I think that the $60 billion direct mail industry will soon undergo a similar shift.

Reasoning: direct mail is/will be under assault in two directions – cost and effectiveness.

I don’t know about you, but the amount of snail mail that I send has fallen to virtually nothing over the past few years. If you think about it, I’ll bet you’ll notice a similar decrease of your own. Personal correspondence is now almost exclusively via email (wedding invitations and holiday cards being the minor exception), and virtually all of my bills are now sent via email, and paid electronically.

This has two effects.

One, as mail volume continues to drop, the fixed costs of the postal system are spread out amongst the remaining participants. It’s a safe bet that this has played a huge part in the seemingly endless hikes in stamp prices over the past few years. Each time postage prices go up, it’s an irritation for the average consumer, but I’ll bet it’s a big problem for direct mailers, who have probably been pummeled by repeated increases in what has to be a major cost center. (I think I remember seeing that postage is about 40% of direct mail expenditure – someone correct me if that’s off.)

Two, as the amount of ‘good’ mail plummets, the ratio of junk mail goes up. In the real world, this means that I check my physical mailbox maybe once a week now. Why? Because there’s almost never anything of value in it. Result: direct mail is less effective than before because it’s not delivered amongst the mail that I actually do wish to receive.

Taken together, this means that direct mail returns are under siege on both the numerator and the denominator of the ROI equation.

As I said before, with costs going up and effectiveness going down, it’s only a matter of time until we start to see major shifts in spend. My bet is that the vast majority of that spend comes online.

Hope everyone had a great weekend!


Very, very interesting news today regarding upcoming integration between Yahoo! and Facebook.

I will look on with interest to determine if there will be any combination of targeting data.

Such a deal would combine the two greatest sources of online targeting data in the world – truly a combination to be reckoned with.

NYTimes on the Death of Traditional Publishing

The Fall and Rise of Media

Choice quotes:

“That feeling of age, of a coming sunset, is tough to avoid in all corners of traditional publishing. Earlier in November, the New York comptroller said that employment in communications in New York had lost 60,000 jobs since 2000, a year when the media industry here seemed at the height of its powers.”

“Few of us could have conceived that in the next decade some of the reigning titans of media would be routed. Profligate dot-com ad money that had fattened print went away in a digital wipeout, and when digital media came back, it was to dine on the mainstream media rather than engorge it.”

“So what do we get instead? The future, which is not a bad deal if you ignore all the collateral gore. Young men and women are still coming here to remake the world, they just won’t be stopping by the human resources department of Condé Nast to begin their ascent.”

I admit it. I’ve been more or less crowing about the opportunities in New Media caused by the death of Old Media. Now, a part of me just kind of feels depressed.

Ah well, I suppose I don’t have much to complain about. At least I’m not on the other side.

I love this quote

From Chapter 1 of The Effective Executive, by the godfather of management writing, Peter Drucker:

But there seems to be little correlation between a man’s effectiveness and his intelligence, his imagination, or his knowledge. Brilliant men are often strikingly ineffectual; they fail to realize that the brilliant insight is not by itself achievement. They have never learned that insights become effectiveness only through hard systematic work. Conversely, in every organization there are some highly effective plodders. While others rush around in a frenzy and busyness which very bright people so often confuse with “creativity,” the plodder puts one foot in front of the other and gets there first, like the tortoise in the old fable.