Quad Announces New Postal Optimization Program for Mailers Impacted by USPS Postage Rate Hikes

Rhea-AI Summary

Quad/Graphics, Inc. (NYSE: QUAD) introduces the innovative Household FusionTM solution, a co-mailing option to reduce postage costs. The program combines various marketing mail into one recyclable polybag for households, driven by Quad's proprietary software. This cutting-edge solution aims to counteract rising USPS rates and offers significant cost savings for publishers, marketers, and retailers.

Insights

Market Research Analyst

The introduction of Quad/Graphics, Inc.'s Household FusionTM solution represents a strategic response to the rising costs of postage, which have reportedly increased by up to 60% for some clients over the past three years. This innovation may have a significant impact on the company's competitive positioning within the marketing and logistics industry. By leveraging its proprietary software to create a dynamic postal optimization program, Quad/Graphics is potentially setting a new industry standard that could reshape the economics of direct mail marketing.

From an operational standpoint, the ability to combine mail from different brands into a single package directly addresses a major cost component for marketers and publishers—postage, which can account for 60-70% of production budgets. By optimizing mail delivery and reducing costs, Quad/Graphics could attract new clients while enhancing loyalty among existing ones, translating into potential revenue growth and margin improvement. The solution's phased rollout through early 2025 suggests a long-term strategic plan that could incrementally build market share and influence the stock's performance over time.

Supply Chain Management Expert

Quad/Graphics' innovation in mail optimization reflects a broader trend in supply chain management towards sustainability and efficiency. The use of a recyclable polybag and the consolidation of mailings not only reduce postage costs but also align with increasing consumer and regulatory demands for environmentally responsible practices. This could enhance the company's brand reputation and appeal to ESG-focused investors.

Furthermore, the operational efficiencies gained from address commonality analysis and volume-based logistics optimization are key differentiators. These could lead to improved delivery times and customer satisfaction, which are critical factors in retaining and growing a client base in the logistics sector. The technology-driven approach to solving a traditional industry challenge showcases Quad/Graphics' ability to innovate within its supply chain, which can be a compelling narrative for investors evaluating the company's long-term value proposition.

Technology Analyst

The proprietary software that powers Quad/Graphics' Household Fusion solution is a noteworthy development in the intersection of technology and direct marketing. It signifies an advancement in data analytics capabilities, as it must process complex variables like mail type, volume and geographic delivery to uncover co-mailing opportunities. The software's ability to accurately divide postage costs among clients is a technological feat that could lead to additional applications beyond postal optimization.

As Quad/Graphics scales this solution, the technology could become a significant intellectual property asset, potentially opening up licensing opportunities or partnerships. The emphasis on technology in their service offering could also position Quad/Graphics as a leader in data-driven marketing solutions, which is a rapidly growing segment. Investors might view this as an indicator of the company's ability to drive future growth through innovation, potentially impacting the stock's appeal to tech-savvy investors.

Innovative Household Fusion^TM solution is a first-ever co-mailing option that combines multiple pieces from different marketing or periodical mailers, reducing escalating postage costs

SUSSEX, Wis.--(BUSINESS WIRE)-- Quad/Graphics, Inc. (NYSE: QUAD) (“Quad”), a global marketing experience company, announced a first-of-its-kind, dynamic, postal optimization program that outpaces current industry offerings.

The new Household Fusion mail-packaging solution was created to offset continued U.S. Postal Service rate hikes by combining into one recyclable polybag various catalogs or marketing mail from different brands or various magazines from different publishers that are destined for a single household. The solution, which exemplifies the company’s commitment to relentless innovation, is powered by proprietary software created by Quad. Household Fusion mail optimization also includes separately printed direct mail pieces as well as onserts that can be placed on top for maximum visibility.

“Quad has always helped brands make more direct consumer connections, and that has made us a leading expert in mailing to households across the country. We also have innovation in our DNA. Our Household Fusion offering combines these powerful dimensions of Quad’s expertise and underscores them with our unmatched technology, production and delivery capabilities,” said Don McKenna, Chief Administrative Officer for Quad. “This new mail optimization service is the latest example of Quad’s robust capability for bringing brands closer to their target audiences – efficiently and effectively.”

“We signed up as one of the first users of the Household Fusion solution because we could immediately see the benefit in terms of potential savings on postal costs,” said Brittany Rose, Distribution Project Manager of PWX Solutions, a full-service direct response and publishing services organization. “Another key component of our decision to start offering Quad’s latest mail-optimization program to our publishers was our long-term relationship with the company. We know Quad is always looking out for everyone’s best interests. The trust we have and the significant savings have made it easier for us to bring on publishers who might otherwise be reluctant to co-mail with their competitors. The Household Fusion program is really paying off.”

Quad products reach up to 89% of households in any given United States ZIP code through direct mail, catalog and periodical print and logistics solutions. The company’s print production volume and operational scale create efficiencies, such as revealing address commonalities, that can be leveraged through Household Fusion optimization.

Quad’s proprietary mail optimization software, which is the technological engine behind its Household Fusion offering, uncovers co-mailing possibilities regardless of mail types. Quad specifically built the software for its clients to accurately divide postage, ensuring precise execution and providing savings for publishers, marketers and retailers.

“Our Household Fusion program was engineered to counteract industry-wide impacts from continuous USPS postage rate hikes, which force mailers to allocate 60-70% of their total production budgets just for postage. In the last three years alone, some of our clients have experienced up to a 60% increase in postage costs,” McKenna continued. “We always have our eyes on the market, and we innovate solutions to address the obstacles that get in the way of our clients’ success. Household Fusion mail optimization not only removes friction from the marketing process and reduces costs from one of a marketer’s biggest budget lines, but it also charts a path for the future of all kinds of mail – which we are confident is here to stay.”

The Household Fusion solution, which will be rolled out in phases through early 2025, is Quad’s latest postal optimization innovation for clients. Quad uses factors such as mail type, volume and geographic delivery region to determine which solution will create the greatest end-to-end efficiencies and savings for clients.

The most recent USPS rate hike took place in January 2024 with another one planned for July 2024.

About Quad

Quad (NYSE: QUAD) is a global marketing experience company that helps brands make direct consumer connections, from household to in-store to online. Supported by state-of-the-art technology and data-driven intelligence, Quad uses its suite of media, creative and production solutions to streamline the complexities of marketing and remove friction from wherever it occurs in the marketing journey. Quad tailors its uniquely flexible, scalable and connected solutions to clients’ objectives, driving cost efficiencies, improving speed to market, strengthening marketing effectiveness, and delivering value on client investments.

Quad employs approximately 13,000 people in 14 countries and serves approximately 2,700 clients including industry leading blue-chip companies that serve both businesses and consumers in multiple industry verticals, with a particular focus on commerce, including retail, consumer packaged goods, and direct-to-consumer; financial services; and health. Quad is ranked as the 14th largest agency company in the U.S. by Ad Age (2023), and the second-largest commercial printer in North America, according to Printing Impressions (2023).

For more information about Quad, including its commitment to ongoing innovation, culture and sustainable impact, visit quad.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240327266483/en/

Media Contact

Jennifer Wasmer, Director of Communications, Quad

203-522-1699

jawasmer@quad.com

Source: Quad/Graphics, Inc.

FAQ

What is the innovative solution introduced by Quad/Graphics, Inc. to reduce postage costs?

Quad/Graphics, Inc. introduced the Household FusionTM solution, a co-mailing option that combines various marketing mail into one recyclable polybag for households.

How does the Household FusionTM solution aim to counteract rising USPS rates?

The Household FusionTM solution aims to counteract rising USPS rates by offering significant cost savings for publishers, marketers, and retailers through efficient mail optimization.

What technology powers Quad's Household Fusion mail-packaging solution?

Quad's Household Fusion mail-packaging solution is powered by proprietary software created by Quad, enabling efficient co-mailing and postage savings.

What is the key benefit of Quad's Household Fusion program according to Brittany Rose from PWX Solutions?

Brittany Rose from PWX Solutions highlighted the potential savings on postal costs as a key benefit of Quad's Household Fusion program.

How does Quad's Household Fusion solution help in bringing brands closer to their target audiences?

Quad's Household Fusion solution brings brands closer to their target audiences efficiently and effectively through innovative mail optimization.