Royal Mail unveils payment-by-results initiative for direct mail competitiveness

The Royal Mail intends to introduce a payment-by-results scheme for its direct mail service in a bid to ensure that it remains cost-effective in relation to other forms of advertising such as digital and TV.

According to Marketing Week, details of the initiative are still being worked out, but it is likely to be based on a ‘risk reward’ model to try and boost take-up. The move would mean that car dealers would pay fees on the basis of how many new cars they sold, while charities would pay according to how many new donors they attract.

Royal Mail’s media director Mark Thompson told the publication that the offer would be a "real statement of intent" to marketers who were considering using direct mail for the first time or returning to the channel.

The move follows Postcomm’s decision last month to relax price controls during 2011/12, which have to date enabled the postal operator to impose price rises on bulk mail of up to 19%.

Royal Mail has just announced that prices for mail services and higher volume business packets will increase by an average of 10% from 9 May. But it has also just launched a new offering called Advertising Mail, which means that some regular direct mail customers will be charged only 2% more.

The postal operator is also exploring whether to provide direct mail and data service bundles, which would include using mail redirection information to generate leads for brands.

Thompson told PrintWeek: "Royal Mail is committed to promoting the role of direct mail as a standalone advertising activity or combined with other channels. In recent years, we have invested in new mail and data solutions to help advertisers get even more from their direct mail campaigns. We will continue to do that."