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Hamilton Davison: Catalogers, Unite!

Do you work in the catalog industry, or do you work for a vendor supporting the catalog industry? If so, check out the American Catalog Mailers Association, and consider getting your company involved.

Earlier this week I caught up with Hamilton Davison, ACMA’s Executive Director. Check out the podcast for some of the good things for catalogers Hamilton and his team are stirring up on Capitol Hill.

Listen to podcast: rkgblog_interview_Hamilton_Davison.mp3

ACMA member list: current-members-2008-02-02.pdf


Alan Rimm-Kaufman: I’m here with Hamilton Davison, the Executive Director of the very new trade association, the American Catalog Mailers Association. How’s it going, Hamilton?

Hamilton Davison: It’s going great, Alan. Thanks.

Alan: Just what is the American Catalog Mailers Association?

Hamilton: We are a new 501 (c) 6 trade association registered in Washington DC, created in April of 2007.

We provide advocacy for catalog companies and any supplier that has a significant economic interest in the future of catalog mailing and catalog success generally.

washington dc

Alan: Why do the catalogers need our own trade association? There’s the National Retail Federation and the Direct Marketing Association — what’s new and different about AMCA?

Hamilton:
Well, there are some great associations that have catalogers among their members.

But all of them are broad based associations that can’t focus on catalog specific issues.

And sometimes there are issues or opportunities that come up that need advocacy on behalf of catalogs that really are opposed, in some cases diametrically opposed, to the selfish best interests of other membership groups of those broad based existing organizations. It’s pretty hard for them to take a strong position when they have different membership interests in different camps.

Alan: You guys have been pretty busy since your founding, it looks like from your newsletter.

unite!

Can you describe some of the things that the ACMA has accomplished for catalogers so far?

Hamilton: It has been a very intense time. We have established our operations and our association and all the back office departments. We have built our membership to 60 companies strong, and it’s continuing to grow.

We have established ourselves as a credible voice in the national postal policy debate meeting with a number of people at the US Postal Service including the Post Master General, who I had a great visit with about a month and a half ago, and the Postal Regulatory Commission, who actually spent an entire day with us touring through a catalog operation and learning about the catalog business model.

And testifying in front of Congress, as we described in another newsletter. We testified in front of the House Oversight Committee, which is the group that is in charge of postal matters in Washington.

Alan: And what was the bottom line impact of all these meetings and all these conversations?

Hamilton: Well, there was just an announcement of a rate adjustment by the USPS, which was to our consent very favorable to catalogers. It was about half the rate levied on everyone else. It was placed on catalogers, which I think is in important signal to the catalogers that the USPS understands the economic duress that they’re under right now.

As a matter of fact, I specifically asked Jack Potter to send the catalog industry a strong signal in this next rate adjustment.

And while I fully appreciate that it doesn’t begin to address the magnitude of the horrendous increase that we got effective 2007, it is a good start and things are starting to come together within the Postal Service to understand that they need to manager our segment of mail differently if they’re going to keep us going in the mail.

And you know, we’ve actually been a huge component of their volume growth over the past ten years or so.

And the USPS desperately needs additional growth so it’s a good alignment between the catalogers and the Postal Service.

But they’ve got to manage us in a different way than we’ve been managed here to fore.

Alan: That’s interesting. You send out a really great email of what your trade association’s doing. In that February 14th email, you had an interesting quote where you said, “Most see rate setting – postal rate setting as a zero sum game.” What do you mean by that?

Hamilton: Well, each mailing interest has historically participated in dialog with the Postal Service and until recently in litigation before the PRC, the former Postal Rate Commission, now called the Postal Regulatory Commission. To try to carve up the pie of the USPS overhead to different rate classes. The United State Postal Service is 70 to 80% fixed cost or fixed overhead, as you would say in the business community. In postal speak it’s called “institutional costs.”

printing

And it’s always a bit of a contention as to where those institutional costs are going to be allocated.

Does first class pay the freight?

Do the catalogers pay the freight?

Does standard mail in general pay the freight?

So each group of mailing interests, and there must be 30 or 40 of them, has historically gotten involved to advocate for their class of mail and make an argument that the greater share of institutional costs should be born by other mailers and other mail groups.

So in postal rate setting it’s been historically a zero sum game.

Some have thought that with the passage of postal reform or the postal accountability and enhancement act that was passed in December of 2006, that that would no longer be the case.

That rates would be only governed by market factors, but there’s still a very strong cost component.

The law says that each class of mail must bear it’s own costs, its direct costs as well as its fair portion of the institutional costs.

So we still have a little bit of a vestige of a zero sum game plus there’s certainly opportunity to get services and enhancements and policies and technical regulations that are favorable to catalog mailers or for that matter any other mail group.

Alan: I think it’s fantastic that you and your association are up on the Hill fighting for catalog postage rates. I feel like for decades the catalog industry in specific has rolled over on its belly and let postal rate setting folks just trash catalogers. Our industry hasn’t been as well represented as some of the other types of mailers.

Beyond postage though, what’s ACMA doing in other areas of cataloging?

What about Catalog Choice and the industry wide opt-out organizations?

Hamilton: We’ve been very active in do-not-mail.

About 60 or 90 days ago our board of directors asked us to form a task force to study do not mail from the cataloger perspective.

And while there’s lots of people out there active in that issue on behalf of the mailing industry, nobody was really taking a cataloger only focus or cut at what some of the issues are.

And I think that’s been no more dramatically highlighted than by the incredibly rapid growth of this group called Catalog Choice.

We decided we were going to first study all of the people, all the major players that were in the space.

We’ve had extensive discussions with DMA and Mail Moves America, but we’ve also had a lot of discussions with Catalog Choice.

We want to know who they are, what they’re trying to accomplish, what their source of funding is, what the technology is, and start understanding some of the messages that they’re sending out to the consumer community.

Alan: What have you learned?

Hamilton: If you’ve been following the blogs it’s been very vociferous.

There’s lots of internet posts about Catalog Choice and the direct marketing industry.

What we’ve learned is that the DMA “just say no to third party” suppression position is not a sustainable one from the catalogers’ perspective.

As a matter of fact, it puts catalogers squarely in the middle because it Catalog Choice doesn’t get a catalog merchant to opt out according to the members that have registered for Catalog Choice and that consumer continues to receive a particular title. That consumer isn’t gonna be mad at DMA, is not gonna be mad at Catalog Choice or ACMA. That consumer is gonna be mad and take it out on that catalog title and catalog brand. And that represents the potential for real declines in revenue as groups of consumers start to get active and vote with their wallet.

Alan: And when you say that you’ve spent time researching this issue, my sense is you guys move pretty quickly. That wasn’t a two-year study or a year-long study, was it?

Hamilton: No, no, no. We actually have come to some conclusions and we’re actively involved in trying to get a resolution that suits the entire industry.

And I’m not going comment publicly on what that is right now, but I am cautiously optimistic that we’re going to be able to resolve this in a business like and reasonable manner.

We think that the approach of everyone can be brought together to find a realistic solution. Catalogers don’t want to see consumers get catalogs that consumers don’t want to receive.

We think it is reasonable to try to work to eliminate the waste of unwanted catalogs out of the system. But we also are concerned about some of the messaging and some of the public relations postures that are being taken by a variety of groups.

We want to see that moderated because we can win the battle of do not mail and lose the war in the court of public opinion for the hearts and souls and wallets of the American consumer. And nobody’s out there telling the story about the positive environmental impact of cataloging.

The national warehouse direct to end user is a very ecologically sound business model. The fact that catalog paper is able to be recycled six or seven additional times before it’s landfilled as tissue paper is not being told. The fact that catalogers have done a lot including the reduction of the basis weight of their paper and other things to reduce their carbon footprint in the environment. None of these things are being told. And the dialogue out there is really one-sided and that concerns us.

printing press

Alan: I applaud you guys for getting involved and moving so quickly. I think speed is really of essence. If you look at how quickly the national Do-Not-Call list was adopted and became basically universal — in a matter of months if not weeks — that shows that we have to support nimble organizations that can actually speak for the industry and do so quickly.

You guys got a really nice endorsement from NEMOA, the New England Mail Order Association, recently.

Hamilton: Yes, we did.

We were very appreciative of NEMOA’s time and attention.

They have, as a board, been actively following what we’re doing. Actually some of our members and even a director or two are in common with NEMOA. So they’ve had a good opportunity to have a bird’s eye view on our work and what we’re trying to accomplish.

And the NEMOA endorsement was an important one for us. It gave us an opportunity to point to a third party who had done due diligence and could certify that our intent is honest and our work to date is effective. There are a number of NEMOA members that are not ACMA members and we’re hoping that their endorsement will change that.

NEMOA does a lot of great work in education and outreach and networking.

But NEMOA clearly is not in the advocacy arena and as indicated they don’t plan to get in the advocacy arena. And their board has come to the conclusion that catalogers really need an advocacy organization that is out there looking after them.

Alan: Okay. So give us the pitch. If catalogers are listening out there and they want to get involved with ACMA, what do they do first?

Hamilton: Well, all they need is to fill out our membership form and sign up. Soon on our website they’ll be able to put a credit card in. Today we’ll need to get a check from them.

And the cost of membership amounts to one quarter of 1% of their 2006 postage spent.

This most recent rate case decision from the USPS that we had a great deal to do to influence represents at least, for all catalogers, at least a 1% improvement on the rates that they would have otherwise gotten.

So my calculation is that joining ACMA better than a 30% internal rate of return on the dues investment. And we’re just getting started!

We have the ability to affect the environment that controls cataloger bottom lines, but we must have the industry support to be able to continue that aggressive work.

Alan:
0.25% of your postage bill — that’s a tremendous pricing model.

And the url is catalogmailers.org if folks want to check you out.

Hamilton, thanks so much for taking the time today. Keep fighting the good fight.

Hamilton: Well Alan, thanks for your support and interest and we look forward to talking to you again.


Listen to podcast: rkgblog_interview_Hamilton_Davison.mp3

ACMA member list: current-members-2008-02-02.pdf

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  • Alan Rimm-Kaufman
    Alan Rimm-Kaufman founded the Rimm-Kaufman Group...
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