Introduction

2. Introduction • Review Customer and Mailer Survey Data • Review Direct Mail Economics • Review Postal Implications and Strategic Options • Review Business Positions Initiatives and Developments

3. 11-15% Broadcast Website Direct Mail Advertising Social Media S.E.O Publications Events & Sponsorship Email & SMS Directories Banner & Click Pay Outdoor Media Choice • Harte- Hanks 2000 the benefits of direct mail • Consumers are targeted based on knowledge • Messages personalised and differentiated • Tailored call to action drives a specific response • Campaigns have measurable ROI • Captured responses add to knowledge • Creates a one to one relationship with consumers

4. 10 Trends on Consumer Communication Sentiment fast.MAP8th Annual Marketing-GAP Tracker

5. Observations • There is a gap between marketers perception and desire to move communication into a social mobile world and the preference of communication for more traditional relationship based pushed information • Consumer-preference and behaviour data needs to be used to maximise restricted budgets. • Consumers’ preference is for mail and email. • A small but growing minority are receptive to mobile and social-network contact and permission-based contact with these as part of a multi-media campaign can generate improved results • The percentage of those who open direct mail is still high compared to ,acceptance of mobile, SMS and social media • Marketers miss these current facts and pushmobile , social media and Twitter. • Customers and prospects can be alienated if thesemedia are used . • Consumers are becoming steadily less willing to divulge personal information • 97% redeems coupons but relevance rather than value drive use . • Since 2006, marketers have underestimated the motivational power of coupons. • Targeted promotion has a big impact on consumer spend . • There remains opportunity for Direct Mail to win share in the marketing mix but knowledge relevance targeting and ROI have to be proven to counteract the digital bias fast.MAP8th Annual Marketing-GAP Tracker

6. Economics of Direct Marketing • ROI is key to campaigns ( driven by product contribution and conversion rate) • 1:1 Breakeven • 3:1 Expected • 5:1 Great Campaign. • Product price and contribution aligns DM to certain sectors e.g. Financial Mail Order, Automotive • Conversion rates and cost per sale key to media choice Source: TNS Consumer Panel

7. Mailer s Future Sentiment on Advertising Spend & Mailing

8. Response Analysis Create Data Customer Interaction Engine Execute Analyse Data Plan Target Market Direction- Interactive Data Over Multiple Channels The management of data will be at the heart of future DM. Critical success factors will be single customer view, data quality, targeting, personalisation & behaviour identification Customer Identification & Segmentation The Customer Interaction Engine Wave 4 Wave 3 Sophistication Wave 2 Wave 1 Customer Knowledge

9. Postal Implications and Strategic Options • Mail will have a smaller share in the wider marketing mix • Need to educate market and close gap between receiver sentiment and mailer intention • Data and targeting of both senders and customers key to improve response rates • ROI is the critical driver of media choice • Lower prices to impact ROI • Enhance relevance of campaigns • Support data management to impact ROI • Integrated direct and interactive marketing media solutions

10. Potential Postal Positions

11. Post – Future Potential Services Interact Respond Find Understand Plan Make Distribute Retain The Strategia Group

12. Direct Marketing will be increasingly data driven and multi- media.Post option is either to seek to dominate an increasingly price sensitive and at best a relatively decling market or participate in the wider market Acquiring the Competences for Diversification NEW COMPETENCE HISTORIC COMPETENCE Build Acquire Partner

13. Bring Development of Multi Media Marketing Creation of Bring Dialogue through acquisition – a specialised business unit (140 employees) responsible for direct marketing. Key focus is to create & manage multichannel campaigns across physical, mobile, web, email & social networks

14. Deutsche Post Direct Marketing Goal is to increase position in the growing internet advertising market. The Nugg acquisition signals continued growth in this area & the implementation of the E3 strategy - providing marketing solutions using digital channels & cross-media target groups

15. E-Commerce and Digital Marketing – GSI Marketing Services Division Comprises 8 specialist companies, employs 1,100 employees across 6 US offices, London & Singapore with revenues $150M ($49M margin), positioned to capture offline-online shift in marketing & advertising spend

16. Marketing : Smart Delivery Innovation Premium Leaflets is an outsourced marketing system which refreshes the leaflet market and makes it interactive

17. Conclusions • Direct Mail is still valuable but needs to compete with other media and perception • Improving accessibility to direct mail can widen the market • Understanding and Improving the economics is a prerequisite critical features: production and mail costs, conversion rates, cost of sale, contribution and ROI • Post who simply stay only as deliverer of physical items will face at best relative loss of position and revenue in the advertising market • Post can seek positions in wider interactive marketing through developing a range of services around data, integrated media and interactive response