Valassis to roll out its weekend ad package

Jan 2, 2013

By Tonda F. Rush
CEO and General Counsel | NNA
WASHINGTON—Direct mail and newspaper insert company Valassis Inc., is expected to roll out its new weekend mailed advertising package January 2013, trying to position itself to take advantage of the 22 percent to 35 percent postage discounts the U.S. Postal Service has offered.
In December 2012, the company disclosed in its public meeting with shareholders and industry analysts that the new package would be called Red Plum Spree, and that it would be tested in the market before revenue projections would be estimated for investors.
Newspaper industry analysts have said they expect the test markets to be Phoenix, AZ, and Atlanta, GA.
Under a Negotiated Service Agreement with USPS, Valassis can target durable and semi-durable goods advertisers with retail locations in at least 30 states for the new weekend package. If it can produce an additional 1 million mail pieces for USPS in a year, it can earn the postage discounts in the form of a rebate. The degree of discount depends upon the mail sortation level entered at USPS entry post offices and sectional centers. The rebate would be provided at the conclusion of a year after the additional mail volume is measured.
In its call with investors, Valassis President and Chief Executive Officer Rob Mason made clear that the company is finding declining newspaper circulations to be a barrier to its growth, and gave a hint of how the company intends to deal with the decline, which is primarily in the large circulation metropolitan newspaper markets that are most visible to the investing world.
“We remain committed to our newspaper-delivered product segment, especially given the opportunity it represents to shift business to Shared Mail when paid newspaper circulation is no longer the best option,” Mason said.
The company said that about 22 percent of its freestanding insert volume today is delivered through the mail. Mason predicted continued growth of mail usage and of new digital products.
The Negotiated Service Agreement that provides the incentive for Valassis to roll out Red Plum Spree as an alternative to newspaper distribution is the subject of litigation between National Newspaper Association and the Postal Regulatory Commission. NNA contested the proposed agreement before the commission. When the PRC ruled that the agreement was permitted under the law, NNA joined a lawsuit at the U.S. Court of Appeals that was initiated by Newspaper Association of America. It, too, opposes the agreement. A decision from the court is expected mid-2013.