Royal Mail price hikes expected to hit DM budgets
Price hikes proposed by the Royal Mail prior to a privatisation next year will hit agencies' direct marketing budgets, according to direct mail specialists Post Switch.
Royal Mail: proposed price rises spell concern for direct marketers
In October, the Royal Mail asked regulator Postcomm to approve a price hike for business clients in an attempt to raise £100m, prior to a privitisation in 2011.
Postcomm has provisionally approved the proposal, which would see bulk prices rise by some 7% in the second quarter of 2011. The Royal Mail made a £157m loss on such "access' activities, where collections are made by rivals such as TNT, but delivered by the Royal Mail.
According to James Campbell-Clause, head of sales and marketing at post brokering firm Post Switch, which specialises in direct mail campaigns, the increase has been targeted to close a gap in the Royal Mail's two main delivery options – the standard seven to 10-day delivery and premium two to three-day delivery.
Competitors can fulfil orders in two to three days using the Royal Mail's sorting network, but compete on price with their standard sven to 10-day service. Hiking bulk prices will remove much of the price advantage for competitors and raise costs for DM campaigns.
Campbell-Clause said: "Over the past two years, we have been working hard to reduce the costs for direct marketing campaigns, and the Royal Mail hiking prices will undo all that hard work.
"For agencies, direct marketing is still one of the best ways to acquire customers, although the internet is good for retention. Hiking direct marketing costs will effectively hit marketing departments where it hurts."
The Royal Mail plans to raise its prices in the first quarter of 2011, and the new Bill to privatise it is likely to pass through parliament within a year.
Retailers are trialling an evening delivery service within the M25 in an attempt to give customers greater choice.
This article was first published on marketingmagazine.co.uk
Latest jobs Jobs web feed
- Account Director- Exciting Online Content Marketing Company- Up to £70,000 plus OTE Cedar Scott Up to £70,000 basic (up to £90,000 OTE) plus share options, Central London
- Category Manager Pearson Competitive salary & performance related bonus & benefits, Central London
- Global Product Manager Evans Taylor c£50k - c£60k p.a. plus car, bonus and benefits, North East of England or Central London
- Brand Manager Radisson Blu Edwardian, London Competitive , South Kensington, London
- ACCOUNT DIRECTOR/SENIOR ACCOUNT DIRECTOR - BTL/SP/Brand Experience - London - £45 - £55k plus bonus Judi Patton £45K-55K plus bonus, London/Greater London
- Senior Planning Director, International Agency, London, to £120k Fill Recruitment Ltd to £120,000, Central London
Integrated digital marketing offers huge opportunities to engage, servic...
Mobile marketing is coming of age, and the pace of change is now exponen...
With UK consumers spending an average of £1,083 a year online, int...
Conversational Mobile Marketing: Engage Customers and Empower Advocates (Expert Reports) External website
The pressure is on for marketers and mobile operators to embrace a strat...
As a nation, the UK is media and technology obsessed with over half of t...
All customers have the potential to become your brand advocates, driving...