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Canada Post targets newspaper flyer business

Canada Post targets newspaper flyer business

Canada’s publicly owned postal service has taken direct aim at capturing the private sector newspaper industry’s advertising flyer business.

The Chronicle Herald has obtained an internal Canada Post Corporation document called Neighbourhood Mail 2.0 Launch that lays out the strategy. “This is a direct mail campaign targeting CPC’s top 100 retail customers … The new NM (Neighbourhood Mail) is very specific to retailer(s) who use flyers, so we are focusing on our biggest bets to see if we can convert them from newspaper to CPC distribution.”

One of the post office’s tactics is a new pricing structure that offers discounts of between 24 and 34 per cent off non-contract, standard per-unit prices.

The document laying out details of the campaign is dated Jan. 15, 2018.

Two years ago, the federal Crown corporation said it was prepared to displace commercially controlled newspapers as the primary carrier of advertising flyers, which is an important source of revenue for print media organizations in the light of declining volumes of classified and display advertising.

The Chronicle Herald’s parent company Saltwire Network is the leading flyer distributor in Atlantic Canada.

John Hinds, president and CEO of Toronto-based News Media Canada, which represents 800 private print and digital outlets across the country puts the campaign into perspective.

“Yes, Canada Post has been in the flyer business forever,” he said.

“But, over the past three-to-five years they’ve been doubling down in their efforts to target flyers, direct mail and parcel delivery as their core business in personal and letter mail drops.”

That’s a problem, says Hinds. “It’s really not a level playing field. Their flyers go into lock boxes in any condo or any apartment in Canada. We have no access to those.”

Price is the key, he says. “Traditionally, flyers in newspapers have been cheaper because Canada Post has had such a high rate-structure. What we have found lately — certain members say — is that in many cases Canada Post is delivering flyers at a cost that is not economically sustainable for anybody.”

If true, these are exactly the sorts of conditions that create a twisted marketplace, according to Alex Whalen, vice president of the Halifax-based Atlantic Institute for Market Studies.

“This is not the first time we’ve seen a proposal like this from Canada Post,” he says. “There is already the distortion caused by their existing monopoly on letter delivery. Now, this privilege is closing in on them because fewer and fewer people are sending letters. So, they’re looking for new lines of business. But do we, as taxpayers, need a Crown corporation in this space?”

Whalen isn’t a fan of the federal government’s recent $595-million plan to prop up Canada’s media sector. But he takes a dimmer view of funding Canada Post to undercut newspapers at the same time.

In a summary of its corporate plan for 2019-2023, Canada Post states that “while the operating environment for direct mail is challenging … the rate of decline has been much lower (for CPC) than for other printed media, such as newspapers.”

For its part, Canada Post rejects any notion that it is deliberately working to upend private flyer distributors. “I want to first be clear that there is no specific policy or program that supports (the) assertion,” states an email, signed simply “Media Relations, Canada Post”, sent in response to a request for an interview.

“Canada Post’s long-standing mandate is to serve all Canadians while remaining financially-viable. As part of this mandate, Canada Post has been in the flyer distribution business for many years.”

Canada Post said it has a small share of the market and denies undercutting on price. “Even with any trial discounts, our prices are still higher than the competition.”

Still, some question the post office’s assurances.

Ian Lee, associate professor of management at Carleton University’s Sprott School of Business and recognized authority on Canada Post, says get used to it.

“For the first 250 years of our history, Canada Post was the single most important instrument of nation building,” he says. “It was the single thing in existence. Now, it’s a totally different story.”

Lee is convinced the flyer push, while clearly contradictory as a matter of public policy, is part of a plan to become a “parcel-mail and e-commerce partner” to increasingly powerful digital marketing operators.