Major Mailers AssociationOctober 4, 2012

Gary ReblinVice President

Domestic ProductsU.S. Postal Service

2

USPS Product Performance

FY12 August YTD Revenue–Variation to SPLY (%)Notes:International Mail includes all In/Outbound Mail and International Ancillary/Special Services.Some First-Class Mail and Marketing products have been included under Shipping Services on this chart.

-3.6% -3.9%

8.6%8.1%

-0.8%

First Class Mail Marketing Mail

Shipping Services International

Total

$26.7B $16.8B

$10.4B$2.5B

- 0.4% 1.5%- 3.3%

0.4% 0.1%- 3.3% - 2.8%

5.5%

- 2.0% - 1.5%- 5.9%

- 18.8%

- 12.4%- 8.9%

- 13.7%

- 7.3%

- 14.1%- 17.4%

- 7.4%

- 22.8%

- 15.0%

- 5.5%

- 25%- 20%- 15%- 10%- 5%0%5%

10%15%

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug

First-Class Mail Volume(% Change over SPLY)

Total Presort Letters and Cards Total Single- Piece Letters and CardsLinear (Total Presort Letters and Cards) Linear (Total Single- Piece Letters and Cards)

Volume Trends of Single-Piece and Presort are IMPROVING!

First-Class Mail

Transaction Mail

Transaction Mail

25.5

12.07.5

22.0

8.15.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Bills/Stats (-14%) Bill Payments (-33%) Other (-22%)

Billi

ons

of P

iece

s

2002 2010

Statements = less than half the rate of decline compared with bill payments!

75% of consumers request bills and statements in print First-Class Transaction Mail 95% open rate

5.9% 5.5% 4.9%

17.7%

14.2%

2.6%

10.1%11.2%

4.5%

15.1%

- 0.6%

7.9%

- 5%

0%

5%

10%

15%

20%

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Total

Standard Mail Saturation and Simplified FlatsFY12 / FY11 % Change (Revenue)

Saturation and Simplified Flats

+$108M Incremental Revenue so far in FY’12…

18.3%14.5%

20.2%19.7%

32.8%

24.6%

19.7%21.0%

13.0%16.9%

19.9%20.0%

0%

5%

10%

15%

20%

25%

30%

35%

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Total

Lightweight Portfolio Revenue Performance(% Change over SPLY)

Lightweight Shipping

+$354M Incremental Revenue so far in FY’12

7

Mail Evolving & Adapting

DigitalDiversion

MobileExplosion

Ecommerce Growth

Small Business

• 80% look at their mail daily – as a valuable news resource

• 75% like to see what’s in the mail• 63% of mail is kept at least 2 days

Insight:

Mail is still highly valued

Source: USPS 2011-2012 Mail Moment Survey

People are bombarded with media messages and ads! Avg. person is exposed to

2,904 media messages, pays attention to 52, and remembers 4*

Avg. household gets 2 pieces of Direct Mail vs. 157 emails daily

e-mailradioso

cial

med

iate

xts

webmob

ileThe Media Explosion!

television9

10

Mail breaks through the

clutter!

11

Mailing & Shipping Strategies

Shape the Future

First-Class Mail

Marketing Mail

Shipping Services

•Slow diversion by differentiating hard copy from digital

•Embrace new opportunities from digital and social media

• Simplify using marketing mail

• Promote emerging technologies

•Develop solutions for growing ecommerce market

12

2nd Ounce Free!

Permanent price change Strengthen customer

relations Advertise brand Sell additional services Turn mail from cost

to profit center

Building New Value

13

Commercial Single-Piece Rate

Establish rate for commercial Single-Piece non-automation letters up to 2 ounces

Responds to feedback from First-Class Mail customers on 2nd Ounce Free

Designed to simplify preparation for residual First-Class Mail letters

Under consideration for January 2013

14

Digital-to-print apps Apple Card mobile app (iPhone, iPad) SendOut Cards 5M pieces Facebook

Picture Permit Imprint Indicia Prime “real estate” Advertise, build brand Product live June 24

Hallmark Alternate Postage pilot Payment triggered w/IMb scan

Harnessing Digital/Social

Permit No. 1234City, State, Zip Code

US POSTAGE PAID

FIRST-CLASS MAIL PRESORTED

New TechnologyCreating Opportunity& Excitement

15

In the US: 8.2% Internet traffic driven by

non-computer devices 25% web users are mobile only More smartphones purchased

than PCs in 2011

DesktopMobile

US mobile internet users will grow at a rate of

16.6% between 2010 and 2015

Mobility Trends

Sources: On Device Research via MobiThinking, comScore Device Essentials Dec 2011 and IDC Worldwide New Media Market Model, MobileFuture 16

Mobility Trends

Source: Cisco, DigiTimes

Devices are rapidly shrinking in size while the number of mobile connections per person rises dramatically

20036.3B people

500M connected devices

0.08 devices per person

20106.8B people

12.5B connected devices

1.84 devices per person

20157.2B people

25B connected devices

3.47 devices per person

20207.6B people

50B connected devices

6.58 devices per person

Devices have gone from “movable” to “mobile” to

“pocketable”

U.S. Market ‘Mobilizing’

45% use mobile marketing 70% say mobile budgets will increase Most popular applications:

Quick response codes (79%) Mobile websites (70%) Mobile applications (55%)

StrongMail April 2012 18

Survey 800 Executives

Mobile Barcodes

Opens web page when scanned by mobile device equipped with reader application:

Open-sourced barcodes (QR Code®, Datamatrix) Proprietary barcode or tag (SnapTags, MS Tags) Image embedded with a digital watermark Image utilizing intelligent print recognition

19

20

NFC

Near Field Communications (NFC) enabled devices (smartphones)

Mailers encode “tags” or “chips” to deliver information Tap mailpiece to download coupons Use mailpiece in to activate personalized offers Track responses

201210-15%

devices enabled

20111%

devices enabled

Authentication

Picture / Face

Voice

Iris

Fingerprints

Veins, Hands, etc.

DNA

AreCell Phones

Pin GenerationTokens

Digital Certificates

Smart Cards

Mail

HaveUser Names

Passwords

Shared Secrets

“Out of Wallet”

Know

Level of Security

Mobile phones can serve as a method of authentication by confirming something you:

Choosing the right level of authentication depends on…

Population Cost/Benefit Security Support Publicity Privacy/Policy

• New Promotions• New Products• New Pricing

Creating Opportunity& Excitement

22

Embrace technology, encourage mail integration

Drive long-term product valueRelevanceEffectiveness/ResponseEngagement

Drive InnovationAccelerate best practices

Drive awareness andengagement

ConsumersResidents

MarketersBusiness

Gov.

USPS Strategy

23

Call to Action Capture

Mobile-on-Mail

Mobile-on-Mail campaigns requires a call-to-action, specific technologies to capture it, and a value added result

ScanQR Code, SnapTag, Watermark

TapNFC

DialPhone Number, Star-Star Dial

Feature Phone Dialer, SMS

Smart Phone/ TabletCamera, Applications (3rd Party, Retailer or USPS)

LearnInstructions, Reviews, Information, Augmented Reality

SaveCoupon, Loyalty Card

ShareSocial Media, Blogs, Email, Pinterest

TextShort Code

Next Gen DeviceNFC Chip, In2Pay iCAISSE

Pay Purchase, Bill Pay, Donation, Postage

ContactCustomer Service, Confirm Receipt of MailPlaySweepstakes, Games

AuthenticateSignature, Account Login

24

25

2012 Holiday Mobile Shopping

Short-term promotion Nov. 7-21, 2012 Build mobile-on-mail connection

during holiday shopping season Lead to Black Friday, Small Business

Saturday, Cyber Monday Two opportunities to save:

1. 2% discount on First-Class and Standard Mail with mobile barcode enabling mobile shopping

2. Retailers using Priority Mail to deliver merchandise may receive additional 1% discount on mail (not parcels)

US Mobile Commerce

sales will grow 98.6%

over 2011 to reach

$20.85B

Internet Retailer Sept ‘12

Lead Industry & Encourage Best Practices

2013 Promotions Calendar*

APRIL-JUNEEarned Value Reply Mail -Financials, Catalogers, Publishers

MARCH-APRIL• Mobile Coupons

-Local & national retailers & businesses

• Click-to-Call -Insurance, Financial

NOVEMBER-DECEMBER• Mobile Buy-It-Now - Retailers, e-tailers & catalogers

AUGUST-SEPTEMBER• Emerging Technologies -Retailers, e-tailers & catalogers• Product Samples -CPGs, Retailers• Picture Permit -Existing customers

26*PRC approval pending

27

Mobile Coupon and Click to Call*

Mobile Coupon: Mail contains mobile technology that delivers a coupon redeemable in-store or online when scanned

Click-to-call: Mail links directly to a mobile optimized website with a “click to call” or brings up a phone number automatically in the users phone

Registration Period: Jan. 15 - April 30, 2013 Program Period: March 1 - April 30, 2013 Discount: Upfront 2 % postage

*PRC approval pending (all dates subject to change)

28

Earned Value Reply Mail*

Mailers earn credit for BRM and CRM counted during normal mail processing

Registered permits and Mailer IDs required Credit applied post-promotion to Permit Imprint account for

future mailing Registration Period: Jan. 1, 2013 - March 31, 2013 Program Period: April 1 - June 30, 2013 Credit Amount: $0.02 per mailpiece scanned

*PRC approval pending (all dates subject to change)

29

Emerging Technologies*

Near-Field Communication: Mail contains NFC smart tag or RFID chip enabling info transmission to mobile device

Augmented Reality: Mail facilitates a user experience combining virtual & real time interactive, registered in 3-D

Identification Component: Mail enables user to complete identity/authentication process

Registration Begins: June 1, 2013 Program Period: Aug. 1 – Sept. 30, 2013 Discount Amount: 2% of eligible postage

*PRC approval pending (all dates subject to change)

30

Picture Permit*

Mail contains customized permit indicia area with company logos, trademarks or brands (color images only)

Pre-testing and design approval required Registration Begins: June 1, 2013 Program Period: Aug. 1 – Sept. 30, 2013 Discount Amount: Per piece fee waived

*PRC approval pending (all dates subject to change)

31

Product Samples*

Standard Mail® regular and Nonprofit marketing parcels containing product samples

Trial size product (or other item) to incite recipients to purchase a product/service, form a belief/opinion, or take an action

Registration Begins: June 1, 2013 Program Period: Aug. 1 – Sept. 30, 2013 Discount Amount: 5% off eligible postage

*PRC approval pending, promotion will include new Product Samples offering available Jan. 2013 (all dates subject to change)

32

Mobile Buy It Now*

Mobile barcode or similar print technology takes consumer to mobile optimized site for product purchase

Tangible items that can be shipped via USPS products (delivery by the USPS not required).

Registration Begins: September 15, 2013 Program Period: Nov. 1 – Dec. 31, 2013 Discount Amount: 2% off total postage

*PRC approval pending (all dates subject to change)

33

“The USPS seems to have changed the way merchants look at QR codes as a part of their

marketing campaigns.”

MultiChannel Merchant, Outlook 2012-13: Ecommerce

Thank you!

34