USPS To Give Publishers a Break on Ride-Alongs

The Postal Service has decided to liberalize the “ride-along” rules that have  prevented product samples and certain other advertising gimmicks from running in U.S. magazines, sources said today.

The new regulations would reduce the postal cost of many of those advertising pieces by 90% or more.

To understand the significance of the change, note the recent cover of an L.L. Bean catalog, which includes a small fabric sample on the first page that pokes through a die-cut hole in the cover, with an invitation to "feel the softness." Bean has used such fabric samples several times in its catalogs, but never in its magazine advertising.

The reason is simple: In a Periodicals-class mailing, the fabric sample would be considered a ride-along, for which the Postal Service charges 16.5 cents apiece. But the only postal charge for putting the fabric sample into the Bean catalog (Standard class mail) was a bit of additional weight, resulting in a postage cost of only a tiny fraction of a cent per catalog.

One source said the decision by postal officials, which will supposedly be spelled out soon in the Federal Register, was announced at an Idealliance postal seminar in New York today. Many items now subject to ride-along charges will instead be treated like regular advertising pages in magazines or newspapers, though CD’s will still be charged ride-along rates.

The idea behind ride-along rates was to prevent Periodicals from being used to cannibalize other, more profitable classes of mail. But the high price and the limit of one ride-along per publication have blocked many high-impact advertising ideas that included seed-impregnated paper, band-aids, refrigerator magnets, and small product samples that would have virtually no impact on the Postal Service’s costs.

See Postal Service May Boost Ride-Alongs for more information about the thinking behind ride-along liberalization and what it might entail. And Catalog Prospecting: Thar's gold in them thar pages notes L.L Bean's use of magazine advertising to prospect for new customers.

Postal Service May Boost Ride-Alongs

The U.S. Postal Service is preparing some price breaks for the money-losing Periodicals class, sources tell Dead Tree Edition.

The most likely change to the Periodicals class, which is used by magazines and newspapers, seems to be a revamping of the “ride-along” pricing and regulations. Ride-alongs are items not eligible for Periodicals treatment on their own, such as product samples and catalogs, that are mailed along with a Periodicals publication.

Postal officials are likely to allow more than one ride-along per publication and to lower the prices for them, especially for ones weighing less than an ounce, sources say. Although USPS is losing money on the Periodicals class, attracting more ride-alongs would be profitable for the agency because including one in a publication hardly changes the Postal Service’s handling costs.

The rate was originally set at 10 cents per ride-along because of concerns that the Periodicals class would cannibalize the more profitable Standard class. Postal officials feared, for example, that cataloguers might just enclose items with magazines rather than mailing them separately.

The arcane formula that was established for setting the ride-along rate has caused it to rise much faster than the rate of inflation, to the current price of 16.5 cents per piece. That has kept annual volume low – fewer than 100 million pieces in the 12 months that ended in September 2008 and probably even lower this year.

It also turns out that the main interest in ride-alongs is for innovative advertisements and single-advertiser supplements, not for catalogs and other items cannibalized from Standard mail. Publishers cite advertising proposals involving seed-impregnated paper, shampoo samples, magnets, and Band-Aids as among those that have been nixed by the high cost of ride-alongs.

There has also been talk of special rates to help Periodicals publishers attract new subscribers, according to one source, but there are questions about whether to help grow a class on which USPS loses money. Some point out that Periodicals’ profitability problem is mostly a matter of fixed costs, and perhaps of a flawed USPS system for allocating costs, so additional newspapers and magazines are likely to be profitable for the Postal Service.

Since not many publishers are increasing their ratebases these days, it seems likely they would use a new-subscriber program not to grow their circulation but to displace non-mail sources of new subscribers. Some publishers tell Dead Tree Edition that they are planning to use this year’s Summer Sale on Standard Mail to obtain new subscribers who might normally come from subscription agents.