USPS Spending (ESPN article)

[DirtyWorks]

While I can not remember the sources, I actually remember reading an article specifically about the USPS sponsorship and how they measured success. And (at the time), they cooperated and were very willing to go on-record saying that it was more than just successful.

It came down to their main objective. Press hits. Their service's name being mentioned in the European press. They add up the total number of press hits (there are consulting services out there that offer this service) and then look at how much it cost them to get these press hits. Their main European objective was to increase brand awareness of the USPS global service offerings in the European market. This sponsorship was a small part of that objective.

In their view, according to the article, the sponsorship provided a phenomenal value in terms of cost per media mention. The numbers that I seem to remember were $75-125MM in press-hit value, for a cost of $8-10MM.

The article also mentions their stated reason for the ending of the sponsorship: Goal achieved. Brand awareness in Europe was firmly established. Need for further action no longer required. On to the next marketing objective.

I recall reading something similar too. For anyone *still* trying to argue the wisdom of sponsorship, just let it go. Someone at USPS right now is collecting stats on USPS mentions on the web and excitedly reporting a huge spike in mentions even though it's attached to Tailwind's fraud. Good news, bad news, doesn't matter. The act of people writing about the USPS is what matters.

ROI is the sum of largely meaningless numbers in Marketing. Marketing ROI is always positive, except when you are on the other side of the argument. Then it's always negative. Marketing ROI is meaningless.

 

[thehog]

It's fairly simple. When you advertise or sponsor you look at your current sales and then forecast where you'd like to be. You then base and target your sponsorship around those objectives. To check whether your campaign is having the desired effect you check the sales at at milestone points. Were you up? Were you down?

USPS became a basket case post 2002. How in the life of me they can suggest that they made 100m from the sponsorship is beyond me. What they're saying it without the 30m investment they would have been 100m down?

The bottom-line is sales figures. You can't get away from it. The company wasn't producing or sending more - it was doing essentially the same job but it waas finding itself almost a billion in the red. What happened?

We as humans are the same. If there's not extra money in your pocket you don't count it. Thats the bottom line. Despite what Lance thinks about 300% profit figures!

 

[BotanyBay]

I recall reading something similar too. For anyone *still* trying to argue the wisdom of sponsorship, just let it go. Someone at USPS right now is collecting stats on USPS mentions on the web and excitedly reporting a huge spike in mentions even though it's attached to Tailwind's fraud. Good news, bad news, doesn't matter. The act of people writing about the USPS is what matters.

ROI is the sum of largely meaningless numbers in Marketing. Marketing ROI is always positive, except when you are on the other side of the argument. Then it's always negative. Marketing ROI is meaningless.

I should know. I've had to write a great many powerpoint decks that turned shiite into shiny gold. Duds into diamonds. It's easy for a marketing exec to spin the USPS sponsorship into a win (if they want to). And to those of you who do not work in marketing... these people only make decisions in groups (in unison). If something fails, no single person is ever to blame. So you will find no one at USPS that will ever be willing to say that this was a fail.

And Lance will call plenty of key people up to bat who'll defend their group decision to love (and keep loving) the Tailwind team.

I'm not saying it's right, but it's what will happen. Go ahead, call the USPS PR department about USPS' opinion about the sponsorship. They'll either not respond, or they'll say good things. It's called covering the posterior.

 

[Dr. Maserati]

I know, but are Novi and his prosecutor buddy allowed to claim on USPS' behalf that the USPS was "injured" by this?

It's one thing for a government agency to front millions of dollars for a new spy plane, and people misappropriate the money and buy a new S-class with it, but this is a sponsorship agreement. I'm not sure what kind of latitude they have after they money goes out (do they?). They're not building highways or developing tanks. This is a "get me some of that" kind of thing.

Don't get me wrong on my intention here. I just remember reading how happy the USPS said they were 5-6 years ago. Can a prosecutor come back later and tell them that they're not really happy?

Novitzky? He will not be interested or care for USPS and sponsorship.
He is chasing the PEDs and the money trail.

 

[DirtyWorks]

Awareness has to be translated into revenue.

Dave, we agree on the general issues, just picking nits now.

In business plans, awareness translates to revenue. Advertising does not translate into revenue in the real world. The oldest complaint about Advertising is it's only 50% effective. Which 50% no one knows.

The OIG report provided the bottom line. Actual revenue generated was less than what was being spent to create it. Forget about margin or profit, the revenue didn't even justify the expense.

On the analytical side, it never does. Ever. The best you can ever say about advertising is 'it helps.'

It would be interesting to see these marketing reports - and who provided them. With that kind of return, the cycling team should have had potential sponsors lined up around the block.

It would be a waste of your time. Every sponsorship package has pie-in-the sky numbers. Just like every business start-up has a revenue chart going up, up, up. The numbers are mostly made up just to help sell their deal.

DirtyWorks, you are incorrect when you state that: "The modern USPS is better described as a public/private enterprise"

The USPS is, officially, an "independent establishment of the executive branch". It is not even a true corporation. And, because it reports through the executive branch - with the President appointing the directors - Congress has little to do with its operation or governance.

Dave.

Ok, thanks for the clarification. It's probably not the only public/private service run by the Executive branch. Congress has a few of their own public/private entities. There are still enormous common sense inconsistencies and few people interested in the details of government services.

 

[BotanyBay]

It's fairly simple. When you advertise or sponsor you look at your current sales and then forecast where you'd like to be. You then base and target your sponsorship around those objectives. To check whether your campaign is having the desired effect you check the sales at at milestone points. Were you up? Were you down?

USPS became a basket case post 2002. How in the life of me they can suggest that they made 100m from the sponsorship is beyond me. What they're saying it without the 30m investment they would have been 100m down?

The bottom-line is sales figures. You can't get away from it. The company wasn't producing or sending more - it was doing essentially the same job but it waas finding itself almost a billion in the red. What happened?

We as humans are the same. If there's not extra money in your pocket you don't count it. Thats the bottom line. Despite what Lance thinks about 300% profit figures!

What you fail to realize is that "big-time marketing" like this usually involves a broad strategy that involves a great number of individual tactics. This sponsorship is likely just one tactic (of many) that supports the overall strategy. But you can't use the overall strategy as the definition of success and then place one tactic up against it. It sounds like that's what is happening here. People are reading the part about USPS' European objective and applying this strategy's results to it and calling it a fail.

I think you know I'm on the same team as you, but I have experience in these kinds of programs. I'm not certain we're seeing the right data being measured against the right data.

 

[DirtyWorks]

The bottom-line is sales figures. You can't get away from it. The company wasn't producing or sending more - it was doing essentially the same job but it waas finding itself almost a billion in the red. What happened?

We as humans are the same. If there's not extra money in your pocket you don't count it. Thats the bottom line. Despite what Lance thinks about 300% profit figures!

Hog,

On the human level, we agree. But the USPS level is accounting/financing art and politics mixed together. The intellectual distinction is important.

 

[thehog]

I disagree with both you.

I understand if you're trying to break into the European market then taking a "hit" for long term good then fine. However you cannot get away from the fact if USPS was a shareholder company it would no longer be here. They are so far gone its not funny. It doesn't get anymore simple than that. Of course the cycling sponsorship is not the direct result of their failure. None the less it's the sign of how the company was run. 122m on the 92 Games, 2m per year on the Yankees, 30m with a cycling team and you get the picture.... there's 200m right there.

You seriously telling me the company knew how to run it's sports sponsorship program for gain?

 

[MacRoadie]

The Actual OIG Report

In case anyone is actually interested in what the OIG report really says, including what the USPS was really expecting from the sponsorship, here is the report in question:

Audit Report – Postal Service’s Involvement in Sponsorships
(Report Number OE-AR-03-003)

(Note, this is the redacted FOIA version)

Here is the most-often quoted excerpt from that report:

The Postal Service was unable to fully validate over $130 million in revenue claimed from two sponsorships. Based on interviews with sales representatives and national account managers, combined with financial analyses, we verified only $698,000 of the $18 million claimed by the Postal Service over a 4-year period as revenue generated as a result of the Pro-Cycling team sponsorship.

And there is also this nugget:

As a result, for ten of the sponsorships and the first 5 years of the Pro-Cycling team sponsorship, the Postal Service had not measured and/or quantified benefits or return on investment of these initiatives. Consequently, there is only a limited basis on which to build a business case that warrants the initiation or continuation of sponsorships.

We did find, however, that the Postal Service had an evaluation performed to determine the exposure value of the Pro-Cycling team for the year 2001. The study concluded that the value of domestic exposure was three times its contract cost for that year. The analysis arrived at this figure by assigning a value to the exposure, media coverage, promotional activities, and intangible benefits that are included in the sponsorship. However, according to best practices, media exposure can be a distraction to what really matters, which is how the sponsorship impacted sales, shareholder value, and return on investment. Furthermore, the study did not cover the specific fiscal year 2001 monetary goal of increasing revenue by $20 million.

 

[BotanyBay]

You seriously telling me the company knew how to run it's sports sponsorship program for gain?

No, not at all. I'm just saying that if we're going to use numbers to tear them apart, then we've got to use the right numbers, the right way.

I think using a cycling team as a way to inform the European businesses that the USPS offers global services, was a foolhardy venture, and it probably had more to do with a few "key" people in the organization being cycling fans as opposed to an objective business decision. And you are correct, a public company would have been faster to dispose of these marketing schlubs.

 

[DirtyWorks]

Of course the USPS should be able to deliver better than any private company.

This kind of reasoning is weak. What makes the USPS eligible for the distinction of always doing better than a private company? Working for a government bestows upon an organization NO special powers.

All of the questions you provided in your rant are well documented and pre-digested for you many times over. With the Internet, you don't even have to leave your parent's basement to find the answers.

I see this caliber of reasoning all of the time and it just makes my head explode.

 

[thehog]

No, not at all. I'm just saying that if we're going to use numbers to tear them apart, then we've got to use the right numbers, the right way.

I think using a cycling team as a way to inform the European businesses that the USPS offers global services, was a foolhardy venture, and it probably had more to do with a few "key" people in the organiza
tion being cycling fans as opposed to an objective business decision. And you are correct, a public company would have been faster to dispose of these marketing schlubs.

Agreed.

....

 

[BotanyBay]

Agreed.

....

I could have done far better with half the money and a really high-quality direct-mail mailing list. And that figure would include ME going to Paris and partying. On my own dime, of course.

What cycling does a poor job of doing for potential sponsors is showing how one of these teams can be used to SUPPORT a much larger marketing effort. Few teams do a good job of that.

 

[MacRoadie]

I'll also go on record as stating, contrary to what some have said here, that the USPS is HORRIBLE for sending anything internationally, even to our neighbors just to the north.

The problem lies in their lack of control of the item during the entire course of transit, from pickup to delivery.

With UPS and FedEx, while common carriers may or may not be used at some point during transit, a FedEx/UPS employee will still perform the actual pickup and delivery. The company maintains control of the package throughout.

With the USPS, only pickup is controlled. Delivery is still at the mercy of the destination country's own postal service.

 

[Polish]

In case anyone is actually interested in what the OIG report really says, including what the USPS was really expecting from the sponsorship, here is the report in question:

Audit Report – Postal Service’s Involvement in Sponsorships
(Report Number OE-AR-03-003)

(Note, this is the redacted FOIA version)

MacR, there was a lot of discussion of that report in the Cycling Press when it first out. If I recall correctly, the conclusion reached was that cycling was being picked on waawaa.

I think using a cycling team as a way to inform the European businesses that the USPS offers global services, was a foolhardy venture, and it probably had more to do with a few "key" people in the organization being cycling fans as opposed to an objective business decision. And you are correct, a public company would have been faster to dispose of these marketing schlubs.

I believe the USPS Sponsorship was a "dream" sponsorship. winwinwinwinwin.

But to those who feel the sponsorship was not worth it....

1) Is it because cycling itself is not worthy of sponsorship?
2) USPS did not reap the benefits compared to other cycling sponsors?
3) hater hater pass the potater?
4) What gives?

 

[BotanyBay]

This kind of reasoning is weak. What makes the USPS eligible for the distinction of always doing better than a private company? Working for a government bestows upon an organization NO special powers.

All of the questions you provided in your rant are well documented and pre-digested for you many times over. With the Internet, you don't even have to leave your parent's basement to find the answers.

I see this caliber of reasoning all of the time and it just makes my head explode.

It also doesn't hurt USPS's competitive position when they will not allow UPS or Fed-Ex to deliver to PO boxes, forcing many to reluctantly utilize the services of USPS. Also, few know that the USPS has a legal monopoly for delivering letters. You're not "technically" allowed to deliver letters using Fed-Ex or UPS (but there's no way of knowing what's inside the envelope).

 

[DirtyWorks]

No, not at all. I'm just saying that if we're going to use numbers to tear them apart, then we've got to use the right numbers, the right way.

I think using a cycling team as a way to inform the European businesses that the USPS offers global services, was a foolhardy venture, and it probably had more to do with a few "key" people in the organization being cycling fans as opposed to an objective business decision. And you are correct, a public company would have been faster to dispose of these marketing schlubs.

I agree with your idea that the OIG's metric is using different assumptions.

Mac Roadie and The Hog, this is a bit of a dead-end for you guys as the business environments I have worked in generally fit what BotanyBay is describing.

The most relevant part lost in the thread may be the clause stipulating limits on bonus amounts and Pharmstrong's bonuses way, way out of those limits. This wouldn't be the first time a clause has been violated like that with no consequences following.

 

[D-Queued]

Dave, we agree on the general issues, just picking nits now.

In business plans, awareness translates to revenue. Advertising does not translate into revenue in the real world. The oldest complaint about Advertising is it's only 50% effective. Which 50% no one knows.

On the analytical side, it never does. Ever. The best you can ever say about advertising is 'it helps.'

It would be a waste of your time. Every sponsorship package has pie-in-the sky numbers. Just like every business start-up has a revenue chart going up, up, up. The numbers are mostly made up just to help sell their deal.

Ok, thanks for the clarification. It's probably not the only public/private service run by the Executive branch. Congress has a few of their own public/private entities. There are still enormous common sense inconsistencies and few people interested in the details of government services.

Hi DirtyWorks,

I don't believe that we are completely out of harmony, but these points are not nits.

Old jokes about ad agencies and ad budgets are funny, but misapplied to the situation. You are wrong when you state, "On the analytical side, it never does. Ever."

One of the reasons for Google's astronomic success is that the Ad campaigns can be directly tied to results. The return on investment is clear.

All those telemarkting calls are evaluated based upon their return on investment. TV ad impact can be measured by sales, calls, web hits generated, etc. Magazine impressions should produce trackable sales bumps.

Any decent ad agency or marketing firm knows that they need to have systems in place to measure the success of what they are promoting. This is why there are such things as 'Coupons', 'Promotion Codes', different offers by media channel, etc. All of that so that you can track the particular campaign and its success.

Aided and unaided awareness help tell you if the message is being heard, but did it lift the 'share in the shampoo market'? That absolutely can be measured. Companies like Proctor & Gamble have this down to a fine science. As does WalMart obviously.

Businesses (perhaps even the USPS on day) are in the business of making money. The finance department is always on the look out for spending that can be curtailed - that is how they get their bonus checks. Ill-justified ad campaigns are easy targets for the corporate axe.

Even in a pseudo government business like the USPS some sort of rationale and ongoing justification is required for marketing spend.

The $104m touted is out of sync with the actual USPS benefit, or the lack thereof.

This $104m may represent a simple 'number of impressions' x 'impression value' calculation. But, that 'impression value' obviously didn't match the real-world USPS experience and actual revenues. Where did the proposed 'impression value' come from?

Perhaps Lance and co. can provide us with the name of the fictitious company that could have received $104m in bottom line benefit. Perhaps then they can justify why they didn't approach the kind of company that could have received $104m benefit and why they couldn't keep USPS and then had to work so hard to land Disco and even Astana.

Otherwise, this looks like bad team management.

Dave.

 

[MacRoadie]

Mac Roadie and The Hog, this is a bit of a dead-end for you guys as the business environments I have worked in generally fit what BotanyBay is describing.

I think you are missing my point entirely. My point goes to the impression within the USPS regarding the sponsorship CONTEMPORANEOUS WITH the sponsorship.

As far as how effective the marketing strategy was, or which metric is most appropriate to valuing that sponsorship, those are different questions.

There have been two arguments raised that are separate but not mutually exclusive. The first is that the USPS enjoyed the benefit of the contract/sponsorship which is debateable and is likely an analysis that needs to include subsequent years after termination of the sponsorship.

The second argument is that the USPs was happy, AGAIN CONTEMPORANEOUS WITH THE SPONSORSHIP, and that they FELT they were benefiting from the sponsorship. Based on the audit, the answer to that is no.

The decision to drop the sponsorship was a direct result of this audit. It had nothing to do with anyone else's subsequesnt analysis, or the business environments worked in by anyone else.

THAT is what I'm trying to hammer home. In March 2003, the USPS (rightly or wrongly) felt they were not getting their mony's worth and as such discontinued the sponsorship of pro cycling. The potential for that decision to subsequently be proven wrong or short sighted has no bearing on the decision making process at the time the deal was terminated.

There have been numerous posts in this thread and others, suggesting that the USPS as a whole was quite pleased with the pro cycling sponsorship, and that just wasn't the case. Did they, in fact, enjoy the benefit of the contract? Quite possibly, but that is another argument.

 

[DirtyWorks]

It also doesn't hurt USPS's competitive position when they will not allow UPS or Fed-Ex to deliver to PO boxes, forcing many to reluctantly utilize the services of USPS. Also, few know that the USPS has a legal monopoly for delivering letters. You're not "technically" allowed to deliver letters using Fed-Ex or UPS (but there's no way of knowing what's inside the envelope).

I won't deny there are some problems with the USPS, but you are ignoring how good USPS is compared to other private or public services. Maybe there's an opportunity to provide private mail box service that accepts both in your area?

 

[BotanyBay]

One of the reasons for Google's astronomic success is that the Ad campaigns can be directly tied to results. The return on investment is clear.

Back to assumptions again. Assuming that paying for a "click" is an indicator of success. Google gets paid even if no one buys the thing being advertised. But Google most certainly DOES deliver many eyeballs to many simplistic advertisers with simplistic goals. A lot of people are overpaying Google for their traffic, but you can't look good at the Toastmasters event if you aren't throwing around "Adwords" around as a "must-have" for your business.

I'm often flabbergasted at what some people are willing to pay for a click that came from a fairly generic search string result. But hat's off to Google for convincing the world that they're required equipment for being in business today. Even if they had presses, they couldn't print money any faster than they earn it today.

 

[BotanyBay]

I won't deny there are some problems with the USPS, but you are ignoring how good USPS is compared to other private or public services. Maybe there's an opportunity to provide private mail box service that accepts both in your area?

Actually, I'm always satisfied with everything except their CUSTOMER service. The post office front desk staff is usually horrible. But they deliver when they say they'll do it, so that's good enough for me.

 

[Dr. Maserati]

I agree with your idea that the OIG's metric is using different assumptions.

Mac Roadie and The Hog, this is a bit of a dead-end for you guys as the business environments I have worked in generally fit what BotanyBay is describing.

The most relevant part lost in the thread may be the clause stipulating limits on bonus amounts and Pharmstrong's bonuses way, way out of those limits. This wouldn't be the first time a clause has been violated like that with no consequences following.

You are correct that the most relevant part of the contract are not being discussed (that USPS had included a doping clause)- but Lance's bonus was not part of the USPS agreement.

In the ESPN documents it showed an 'invoice' from CSV (Capital Sports Venture) to Tailwind for payment of the bonus. Tailwind had a separate deal with numerous insurance companies (Lloyd's, Chubb) to cover that.

 

[BotanyBay]

The second argument is that the USPs was happy, AGAIN CONTEMPORANEOUS WITH THE SPONSORSHIP, and that they FELT they were benefiting from the sponsorship. Based on the audit, the answer to that is no.

Reminds me of a significant other who won't tell you anything's wrong until she has her suitcase packed. There is plenty of documented material out there that will say that USPS maintained that they were always happy. At least they said so DURING the sponsorship.

Personally, I don't think these kinds of organizations belong sponsoring private ventures like this one.

 

[D-Queued]

Back to assumptions again. Assuming that paying for a "click" is an indicator of success. Google gets paid even if no one buys the thing being advertised. But Google most certainly DOES deliver many eyeballs to many simplistic advertisers with simplistic goals. A lot of people are overpaying Google for their traffic, but you can't look good at the Toastmasters event if you aren't throwing around "Adwords" around as a "must-have" for your business.

I'm often flabbergasted at what some people are willing to pay for a click that came from a fairly generic search string result. But hat's off to Google for convincing the world that they're required equipment for being in business today. Even if they had presses, they couldn't print money any faster than they earn it today.

I hate to argue with those with whom I am in regular agreement.

But, you absolutely can see what you pay for with AdWords. That doesn't mean that PT Barnum was wrong about suckers being born every minute and that people will not do stupid things, of course.

What is the value of a qualified lead? Not trying to promote Google, but the tangibility of the benefit is considerable as is the trackability of the lead and what the lead responded to. It doesn't work for all products, but where it does work, it is an enormous improvement.

I have never had difficulty demonstrating this to a Board - and ad dollars are invariably difficult to justify.

Dave.