INFORMATION ABOUT

THE DIRECT MAIL ADVERTISING ASSOCIATION, INC.

The

Established in 1917, the Direct Mail Advertising Association (DMAA) is the world's largest and oldest international trade association representing firms involved in direct mail, the nation's third largest advertising medium. majority of DMAA's 2700 members, representing some 1600 individual companies, are suers of direct mail manufacturers, wholesalers, retailers, publishers, mail order houses, insurance companies, fund raisers, public utilities, financial services, etc. Those who produce or create direct mail are also members. Here we include advertising agencies, lettershops and printers as examples. Many firms which are suppliers to the medium, i.e., paper producers, envelope manufacturers, list brokers and compilers, etc., also belong to DMAA. We have members in forty-seven states and thirty-two foreign countries.

DMAA's headquarters is located at 230 Park Avenue in New York City and we maintain a full-time Government Affairs Office in Washington, D.C. (968 National Press Building). The Association has a library of Direct Mail Ideas in its New York Office. The samples of Direct Mail Ideas available in New York enables anyone interested in this dynamic medium to harvest a wealth of direct mail ideas.

The DMAA membership represents a true cross-section of American business, ranging from modest one-man operations to the largest corporations. Our members are users of all four classes of mail. They use the mails to reach pinpointed markets which is all but impossible with most mass media. They use the mails to deliver products, raise funds for churches and educational institutions, collect bills, renew contracts, and to get elected to public office. They use the mails to make available and sell all types of goods and services to all types of people in all parts of this country and the world.

The sales generated by the direct mail medium add significantly and directly to the economy, and the level of employment maintained one million persons directly employed, and in-directly providing jobs for millions of others most assuredly contributes to the economic health of the business sector.

Direct Mail is sometimes called an "industry" and it is sometimes called a "medium" as are other communications and advertising vehicles such as magazines, newspapers, television, radio, etc.

Regardless of how it's described, direct mail is a widely accepted tool for advertising promotion, education, fund raising, etc. As an alert national trade association, DMAA's every activity is dedicated to the more effective use of this tool. We do not have as a direct goal, increased mail volume. As a matter of fact, many of our members learn from our various meetings and conferences, advanced techniques on how to maintain their effectiveness by decreasing mailings so that they are more sophisticated in their approach.

Information About The Direct Mail Advertising Association, Inc.

Advertising as a whole is one of the country's largest industries and has been and is a significant contributing force to economic progress. Without advertising there would be little buying motivation...and without motivation, there would be little activity in the marketplace in all areas other than those dealing with life's bare essentials. In short, the country the government, if you will needs advertising.

Direct Mail In The Advertising Picture

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This year, U.S. businesses will invest nearly $2.9 billion to produce and create mail that promotes and sells a wide array of products and services, conservatively estimated to value more than $30 billion annually. Because the total amount of sales is difficult to pinpoint precisely, if could easily be $40 billion or perhaps $50 billion. In any case, the sales generated by mail are significant and contribute importantly to the Gross National Product.

As direct mail is a most competitive advertising medium, business mailers operate on a close profit margin. We point this out to scotch the fallacy that one can get rich quick in direct mail. It isn't so. Businessmen who use direct mail do not view it as a panacea, but rather as a sensible means to communicate their offers to many specific publics.

Although direct mail is generally regarded as an advertising medium, it actually becomes an essential part of all advertising. Almost without exception, companies use the mails to supplement and round out their sales promotion programs, often in ways that are especially valuable to them in getting the most out of their entire advertising program.

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There is another significant point about direct mail advertising it often is the only sales tool that small businesses can afford to use. When small businesses expand, they eventually are able to afford all forms of advertising and can integrate them successfully. Although the users of direct mail have been repeatedly confronted with postal increases and have survived substantial hikes it is quite likely that the limits are in sight insofar as financial feasibility is concerned.

"Partners In Postal Progress"

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There is one thing which sets direct mail apart from other media and that is its dependence on an efficient postal system. At this point it seems appropriate to call attention to DMAA's Guidelines for Ethical Business Practice. As much as, if not more than, anyone, DMAA is interested in making sure its members adhere to stringent rules of business practice in any and all so-called "sensitive" areas. DMAA is particularly proud of its long record of close cooperation with postal authorities at the national, regional and local level, perhaps best exemplified by the slogan our members try to live by: "Partners In Postal Progress".

The CHAIRMAN. Our next witness is Kenneth Peterson, legislative representatives of the International Labor Press Association, AFLCIO, accompanied by John Barry and Richard Howard. STATEMENT OF KENNETH PETERSON, LEGISLATIVE REPRESENTATIVE, INTERNATIONAL LABOR PRESS ASSOCIATION, AFL-CIO; ACCOMPANIED BY JOHN BARRY, SECRETARY-TREASURER, AND RICHARD HOWARD, MANAGER, LABOR NEWSPAPER Mr. PETERSON. Mr. Chairman, my name is Kenneth Peterson, and I am a legislative representative with the American Federation of Labor and Congress of Industrial Organizations.

With me is John Barry, managing editor of the AFL-CIO and the secretary-treasurer of the International Labor Press Association. On his right is Richard Howard, manager of Labor Newspaper, published by the 14 railroad unions.

We appear today on behalf of both the labor press, as represented by the International Labor Association, and the publishers of the labor press, primarily the AFL-CIO and its affiliated unions.

However, the facts we will present apply in equal measure to the periodicals of legitimate unions not affiliated with the AFL-CIO, and to a very considerable degree to all publications of nonprofit organizations that are distributed under second-class mailing permits. ILPA comprises some 400 magazines and newspapers issued by the AFL-CIO and its affiliated unions.

It represented those publications throughout the Postal Rate Commission proceedings, unfortunately without avail.

As a result of the Rate Commission's decision, many of those periodicals face drastic curtailment or even complete extinction; some curtailments have already taken place. Because the next step in a 10year series of increases is scheduled for early July, time is of the essence. It is our earnest hope that on the rate issue, your committee, and the Congress as a whole will move with all possible speed.

We believe we can say that our interest in this matter is identical with the public interest, and therefore with the interest of this committee. We submit that postal rates are at least as significant as speedy delivery in carrying out the public service principles upon which a Federal system for carrying the mails was originally established.

The first objective of the Founding Fathers, when they set up a postal system, was to facilitate the free flow of information, ideas and opinion. Very early in the process they established lower rates for newspapers; George Washington, who complained quite a lot about what the newspapers said, nevertheless thought they should be carried free of charge.

As times changed, a rate structure was developed that recognized these changes. A differential was established between editorial and advertising matter. A differential was established between commercial and nonprofit publications. And in recent years, a differential was established between the editorial and advertising content of nonprofit publications-a move which we heartily supported.

We want to make it clear that we have no concern over what the Postal Service asks or gets in the way of rates on advertising content.

Our concern is with the rates on the transmission through the mails of information, ideas and opinion. We are particularly concerned with the periodicals of nonprofit organizations that fulfill that function, for the mails are very often the only channel open to them. Against that background, let us briefly review the facts: ILPA's membership includes about 50 weeklies, 25 biweeklies, one triweekly, more than 200 monthlies, 30 bimonthlies, 30 quarterlies and a number of publications whose schedules are erratic. The figures are not precise because, as a voluntary association, affiliations change from year to year; and because trade union publications as a whole are so precariously established that their frequency of issue and, indeed, their very survival are sensitive to even the gentlest winds of change. Of the publications above, some 105 are produced by national and international unions affiliated with the AFL-CIO. Just under 80 are owned or sponsored by State or (mostly) city-county central labor bodies. The remainder are organs of local unions.

ILPA includes almost all the bona fide, printed periodicals of unions affiliated with the AFL-CIO.

All these publications have two characteristics in common.

First, they are small. A few magazines may run to as many as 40 pages. A few tabloid newspapers may reach 24 pages. But the median, regardless of format, is about the equivalent of a 12-page tabloid. Second, these publications are poor. Three-fourths of them are entirely financed by membership dues. Nearly 100 do accept advertising as a matter of necessity, but as noted later, few get much of it and nearly all of them are afflicted with chronic financial problems.

Unfortunately, the managers of the Postal Service appear to regard small, poor periodicals as nuisances to be eliminated. With the approbation of the Postal Rate Commission, it imposed upon them by far the heaviest proportionate rise for any type or category of mail. Here, in summary, is what happened:

Early in 1971 the Postal Service proposed to raise the minimum second-class rate for publications of nonprofit organizations by 750 percent over a 10-year period, with a 100-percent increase effective at once. This proposal was subsequently accepted without change by the hearing examiner and by the Postal Rate Commission.

Substantial increases were also promulgated for pound rates, which will bring about an overall rise in excess of 800 percent for some periodicals for example, about 815 percent for a typical eight-page tabloid newspaper.

These figures are not in dispute. On the contrary, the Postal Service seems to be rather proud of them.

The basis for this sensational increase is a per-piece surcharge, over and above any other postage rate paid by publications in the nonprofit, second-class category.

The smallest, lightest, thinnest-and, almost by definition, the poorest-publications traveled at a minimum rate of .2 cent a copy before. the rate proceedings began.

This minimum-according to the Postal Service-would not change a bit. Even after 10 years, the minimum per piece will still be .2 cent. This is what the Postal Service says, but the reality is quite different. The difference lies in a sort of superminimum in the form of a surcharge.

The surcharge started at .2 cent in July 1972 and will proceed in alternate steps of .1 cent and .2 cent until it reaches 1.5 cents in 1981. The next increment is due to fall in July of this year.

So the smallest, lightest, thinnest and poorest publication, the one that paid .2 cent in 1970, will be paying 1.7 cents a copy for postage in 1981-provided it survives at all.

This formula was described by the hearing examiner, in words warmly endorsed by the Postal Rate Commission, as "an imaginative and economically sound method" of improving the rate structure. From the viewpoint of nonprofit second-class publications, such a description makes the mind reel.

The idea of a surcharge is not novel. It was proposed, in one form or another, by various Postmasters General, four times in the last decade. Each time it was rejected by the Congress, and for excellent.

reasons.

The surcharge is a capitation tax, one that means very little to large taxpayers but is catastrophic to small ones.

As ILPA argued in the rate hearings, the result will be to silence minority voices unless they are rich. These minority voices have already been hit by the initial 100 percent increase in their minimum postage rate, and the second step next July will amount to 50 percent of the former minimum.

Not only trade union publications are bearing the brunt of this. Equally affected are church bulletins, and the college alumni newsletters, and the conservation people-and yes, the chambers of commerce. All of these, and many more, are part of the chorus of democracy. And all but the wealthy ones will be throttled by the postal rates presently scheduled.

The labor press-apart from its role as advocate and adversary, and that is enough to justify it-performs a great many nuts and bolts tasks, including some mandated by the Government of the United States. We believe its healthy survival is very much in the public interest.

The labor press is the principal line of communication between the union and the members-often the only one. It is where the members find out what is going on in the organization, and in the labor movement-information that is available nowhere else. And the labor press is the instrument-the virtually indispensable instrument-through which unions carry out obligations legislated by Congress in the Landrum-Griffin Act. Periodic financial reports, for example, and timely notice of elections are distributed to the members in the pages of the labor press.

Certainly, the dissemination of this information is not only in the best interests of the union and its members, but essential to the public interest as well. Yet the postal rate increases now being imposed will seriously impede union communications at every level.

We realize there are some who question the magnitude of the rate problem to trade unions generally. One of these questions is the ability to pay.

The first point to be considered in that connection is that unions are not in the publishing business. Their periodicals are simply instruments employed in carrying out their primary functions-even though, as noted, they are well-nigh indispensable within that range.