USPS_HDS_FY08

This report documents the findings of the United States Postal Service’s Household Diary Study (HDS) for Fiscal Year (FY) 2008. The three main study purposes are to:

· Measure the mail sent and received by U.S. households,

· Provide a means to track household mail trends over time, and

· Make comparisons of mail use between different types of households.

The report examines these trends in the context of changes and developments in the wider markets for communications and package delivery.

Background

The Household Diary Study survey, fielded continuously since 1987, aims to collect information on household use of the mail and how that use changes over time. The survey collects household information on demographics, lifestyle, attitudes toward mail and advertising, bill payment behavior, and use of the Internet and other information technologies.

The FY 2008 report covers Government Fiscal Year 2008, with comparisons to 2006 and 2007.

The HDS collects information on household mail use and provides a look at how that use changes over time.

Overview

In 2008, U.S. households received 148.6 billion pieces of mail, and sent 21.3 billion, as seen in Table E.1. Mail sent or received by households constituted 81 percent of total domestic mail in FY 2008. Fifty-six percent of the mail households received was sent Standard Mail. Only four percent of household mail (and about three percent of total mail) was sent between households; the rest was sent between households and non-households.

Table E.1: Mail Received and Sent by Households (Billions of Pieces)

Mail Classification	Received	Sent
First-Class Mail	57.2	20.8
Standard Regular Mail	69.4	—
Standard Nonprofit Mail	13.6	—
Periodicals	6.4	—
Package & Shipping Services	2.0	0.5
Total	148.6	21.3
Household to Household	5.9
Total Mail Received and Sent by Households	164.0
FY 2008 RPW Total*	201.9
Non-household to Non-household Residual)	37.9
Unaddressed	3.9	—

Source: HDS Diary Sample, FY 2008.
*Does not include international mail.

Mail Markets

The Household Diary Study examines mail by the markets it serves. This design cuts across classes, but provides a foundation for understanding mail flows and the marketplace changes that affect them. Table E.2 shows the volume of household mail by market for 2006 through 2008.

Thirty-five percent of household mail contains correspondence and transactions, down slightly from 36 percent in 2007. In terms of volume, total correspondence fell 2.4 percent compared to 2007. However, longer term trends show that, over the past several years, correspondence fell more significantly. For example, since 2002 correspondence fell almost 14 percent. In part, the decline in correspondence is a continuation of long-term trends, but it is also related to changing demographics. Younger households both send and receive fewer pieces of correspondence mail, a result of younger households’ comfort with and use of the Internet, and their lower average income level.

Table E.2: Household Mail Volume Received and Sent by Market Served (Billions of Pieces)

Market	2006	2007	2008
Correspondence	16.6	16.9	16.5
Transactions	42.7	43.3	41.7
Advertising*	104.9	100.3	99.4
Periodicals	6.7	6.6	6.4
Packages	3.2	3.1	3.4
Unclassified	3.8	3.8	4.7
Total	170.2	166.2	164.0

Source: HDS Diary Sample, FY 2006, 2007, and 2008.
Notes:
Correspondence and Transactions include 8.2 billion pieces of First-Class advertising-enclosed mail (excluded from totals).
Advertising excludes unsolicited samples of periodicals and packages (0.1 billion pieces).
Package volumes include ground packages and expedited.
Packages include 1.2 billion pieces of CD/DVD rentals. *Prior to 2007, Standard mail volumes were inflated by about 3 billion pieces due to a double count of Detached Address Labels by the carrier cost system. Also, volumes through 2007 were understated by about 2 to 3 billion pieces due to a change in the methodology used by the carrier cost system for estimating deliveries to residential addresses. These volumes are used as a control for survey results.

The increase in e-mail correspondence and the movement towards electronic bill payment have affected mail volumes.

Electronic alternatives also affect transactions mail volume. Automatic deduction and Internet bill payment account for a growing share of household bill payments over time. In fact, over the past seven years, the percentage of bills paid by electronic methods increased from 17 percent in 2002 to 38 percent in 2008. In contrast, bills paid by mail decreased from 75 percent to 56 percent of total payments during the same time. In-person payments decreased slightly, from 8 percent in 2002 to 6 percent in 2008. The number of bills and statements households received through the mail decreased slightly, while the number of bills received over the Internet continues to grow rapidly.

Advertising mail represented more than half of all mail received by households in 2008. As shown in Table E.3, 84 percent of all advertising mail received by households is Standard Mail (83 billion pieces). The remainder consists of First-Class Mail; either stand-alone advertising (8.3 billion pieces), or secondary advertising that is sent along with other matter (8.2 billion pieces).

Over time, the data show a decline in the percentage of First-Class advertising mail.

Table E.3: Advertising by Mail Class

Mail Classification	Volume (Billions)	Percent of Total Advertising
First-Class Advertising	16.4	17%
Standard Regular Mail	69.4	70%
Standard Nonprofit Mail	13.6	14%
Total Advertising Mail	99.6	100%

Source: HDS Diary Sample, FY 2008.
Note: Total includes unsolicited samples of packages and periodicals.

As shown in Table E.4, households received 6.4 billion pieces of Periodicals mail in 2008, slightly less than in 2007 and 2006. Nearly three-quarters of these were magazines. Newspapers are only 23 percent of total Periodicals, down from 35 percent in 1987. Contributors to the decline in newspaper volumes are lower circulation and readership levels as well as the growth of the Internet as an alternative delivery method.

Table E.4: Periodical Type Received

Mail Classification	Volume (Billions)	Percent of Total Periodicals
Newspapers	1.4	23%
Magazines	4.6	72%
Unclassified	0.4	6%
Total Periodicals	6.4	100%

Source: Household Diary Study, FY 2008.

In 2008, households received 2.7 billion and sent 1 billion packages. Compared to 2007, total packages sent and received increased 13.7 percent. Most of the growth was in First-Class, where CD/DVD rentals contributed to most of the increase in volume. In general, delivery from mail order and Internet retailers is an important driver of package volume, and while the HDS data is not designed to quantify it, there are indications that online auction sites (like eBay) are responsible for some of the recent increase in packages sent by households.

Table E.5: Packages Received and Sent via the U.S. Postal Service (Millions of Pieces)

Mail Classification	2008
	Received		Sent
	Number	Percent	Number	Percent
First-Class Mail	1,154	43%	672	66%
Standard Mail	594	22%	—	—
Package & Shipping Services	897	33%	330	33%
Unclassified	58	2%	13	1%
Total Packages	2,704	100%	1,015	100%

Source: HDS Diary Sample, FY 2008.
Notes: Totals may not sum due to rounding.
First-Class Packages include 1.2 billion pieces of CD/DVD rentals ( reported in First-Class Mail letters in Tables E.1, 1.5, and 1.6).

Chapter 1: Introduction – Volumes & Trends

The U.S. Postal Service Household Diary Study (HDS) Report documents the findings of the Fiscal Year (FY) 2008 study. The HDS measures the mail sent and received by U.S. households, tracks household mail trends, and compares mail use between different types of households.

The Household Diary Study provides a means to track household mail trends over time.

The Survey

· Demographics,

· Lifestyle,

· Attitudes toward mail and advertising,

· Bill payment behavior, and

· Use of the Internet and other information technologies.

These data are used for market research, forecasting, and strategic planning within the Postal Service.

The Survey Consists of Two Parts:

1) An entry, or recruitment, interview, conducted by phone or via Web, collects demographic, lifestyle, and attitudinal information from about 8,500 households.

2) These households then receive a mail diary, which collects information on the mail the household sends and receives in a one-week period. Annually, about 5,200 households successfully complete the diary.

The data generated by these two instruments are the basis of the analysis in this report.

The HDS FY 2008 report covers the period from October 1, 2007, through September 28, 2008, equivalent to the Government Fiscal Year (GFY) used by the Postal Service. Data from FY 2006 and FY 2007 are also reported on a GFY basis.

U.S. Postal Service Volumes

Serving a nation containing five percent of the world’s population according to the Universal Postal Union, the Postal Service delivers over 45 percent of the world’s mail. The Postal Service delivered 203 billion pieces of mail in FY 2008—a decrease of almost 10 billion pieces from 2007, the largest decline since the Great Depression.

In 2008 the economy was driven by a severe recession, the collapse of the housing market and an extended credit crunch. These events were the leading cause for the extraordinary decline in mail volumes. Standard Mail was impacted more significantly than any other class of mail, driving volumes down 4.5 percent. Since the vast majority of Standard Mail consists of advertising pieces, its volume is particularly sensitive to the health of the economy. As poor economic conditions forced most businesses to cut their advertising spending drastically, Standard Mail fell to historical lows.

Standard Mail, however, exceeded First-Class Mail again in 2008, a trend which started in 2005 and has continued since then. A 3.4 billion decrease in First-Class Single-Piece letters was a major contributor to the change in mix, as it has been for the past several years. In fact, since 1998, First-Class Single-Piece letters have decreased by 17.6 billion, or 32 percent, fueled, in part, by the adoption of the Internet and the subsequent increase in electronic diversion of the mail. The economy was also a major contributor to lower First-Class volumes, as 12 percent of this volume consisted of advertising mail. Additionally, because of the mortgage meltdown and tight credit conditions, the decline in First-Class advertising was driven mostly by the financial industry. In 2008, First-Class financial advertising fell more than 10 percent, a drop considerably greater than reductions in any other industry. Similarly, the crisis surrounding financial institutions also forced them to cut Standard Mail advertising more significantly (-2 percent) than other industries, but still to a lesser extent than the cuts made in First-Class advertising.

The Postal Service estimates the revenues, volumes, and weight of mail pieces going through the postal network by using a combination of statistical sampling systems, mailing statements, and accounting data. These data are published in the Revenue, Pieces, and Weight (RPW) Reports.

Table 1.1 presents the RPW volumes for FY 2008, along with data for FY 1987, 2006, and 2007. This report makes frequent comparisons to those years.

Table 1.2 reports revenue, pieces, and weight data by class and shape for FY 2008.

· The letters column heading includes postcards and refers to pieces that are less than 11.5 inches wide by 6.125 inches tall, and less than .25 inches thick.

· Flats consist of pieces that are greater than 11.5 inches wide, 6.125 inches tall, or .25 inches thick, but less than 12 by 15 by .75 inches.

· Parcels are pieces that are larger than 12 by 15 inches, or thicker than .75 inches.

Because of the difficulty involved in recording mail-piece characteristics in the Household Diary, these categories do not correspond precisely to the shape categories used by HDS respondents.

Table 1.3 is derived from Table 1.2. It shows the revenue per piece and weight per piece for each subclass of mail by shape.

Table 1.1: Total Mail Volume: FY 1987, 2006, 2007, and 2008 (Billions of Pieces)

Mail Classification	1987	2006	2007	2008
First-Class Mail:	78.6	97.4	95.9	91.3
First-Class Letters:	75.3	91.8	90.1	85.9
Single-Piece	53.9	41.9	40.1	36.7
Workshare	21.4	49.9	50.0	49.2
First-Class Cards:	3.2	5.7	5.8	5.4
Single-Piece	2.5	2.3	2.2	1.9
Workshare	.8	3.4	3.6	3.6
Periodicals	10.3	9.0	8.8	8.6
Standard Mail:	59.4	102.5	103.5	99.1
Regular and ECR:	48.3	87.9	88.7	84.3
Regular	21.7	54.9	56.5	55.3
Enhanced Carrier Route	26.6	33.0	32.2	28.9
Nonprofit and NP ECR:	10.9	14.6	14.8	14.8
Nonprofit	8.6	12.0	12.1	12.5
NP Enhanced Carrier Route	2.3	2.6	2.7	2.3
Package & Shipping Services:	1.0	2.2	2.2	2.1
Other Domestic Mail	.5	1.1	1.1	.9
International Mail	.8	.8	.8	.8
Total	153.2	213.0	212.2	202.7

Source: RPW Reports.
Note: Totals may not sum due to rounding.

Table 1.2: Total Mail: Revenue, Pieces, and Weight by Shape, FY 2008

Mail Classification	Revenue (Millions of Dollars)				Pieces (Millions of Pieces)				Weight (Millions of Pounds)
Mail Classification	Letters	Flats	Parcels	Total	Letters	Flats	Parcels	Total	Letters	Flats	Parcels	Total
First-Class Mail:	31,953	4,197	942	37,091	87,327	3,463	490	91,280	3,226	714	165	4,105
First-Class Letters:	30,720	4,197	942	35,858	81,925	3,463	490	85,879	3,185	714	165	4,064
Single-Piece	14,392	3,578	926	18,896	33,545	2,690	480	36,716	1,010	597	162	1,769
Workshare	16,328	619	16	16,962	48,380	773	11	49,163	2,175	117	3	2,295
First-Class Cards:	1,233	—	—	1,233	5,402	—	—	5,402	41	0	0	41
Single-Piece	500	—	—	500	1,846	—	—	1,846	12	0	0	12
Workshare	732	—	—	732	3,556	—	—	3,556	29	0	0	29
Periodicals	24	2,248	5	2,277	132	8,466	7	8,605	9	3,655	12	3,677
Standard Mail:	11,564	8,276	650	20,490	64,237	34,107	740	99,084	3,187	7,498	332	11,017
Regular and ECR:	10,178	7,717	618	18,513	52,360	31,200	696	84,256	2,585	7,029	315	9,928
Regular	9,247	3,273	617	13,136	46,198	8,438	693	55,330	2,296	2,243	314	4,853
Enhanced Carrier Route	931	4,444	1	5,376	6,162	22,762	3	28,927	289	4,785	0	5,075
Nonprofit and NP ECR:	1,386	560	32	1,977	11,877	2,907	43	14,828	602	469	18	1,089
Nonprofit	1,308	390	32	1,730	10,889	1,570	43	12,501	564	298	18	880
NP Enhanced Carrier Route	77	170	0	247	989	1,338	0	2,326	38	171	0	209
Package & Shipping Services:	108	1583	6,169	8,762	23	573	1362	2,007	2	660	4,269	4,978
Total	43,649	16,304	7,765	67,719	151,719	46,610	2,599	200,929	6,424	12,527	4,779	23,730
Other:	—	—	—	—	—	—	—	—	—	—	—	—
Other Domestic Mail	—	—	—	0	—	—	—	892	—	—	—	182
International Mail	—	—	—	2,348	—	—	—	835	—	—	—	282
Total	—	—	—	70,967	—	—	—	202,704	—	—	—	24,241

Source: RPW Reports.
Note: Revenue data do not include fees. Totals may not sum due to rounding.

Table 1.3: Total Mail: Revenue and Weight per Piece by Shape, FY 2008

Mail Classification	Revenue per Piece (Dollars)				Weight per Piece (Ounces)
Mail Classification	Letters	Flats	Parcels	Total	Letters	Flats	Parcels	Total
First-Class Mail:	0.366	1.212	1.920	0.406	0.591	3.299	5.367	0.719
First-Class Letters:	0.375	1.212	1.920	0.418	0.622	3.299	5.367	0.757
Single-Piece	0.429	1.330	1.929	0.515	0.482	3.550	5.387	0.771
Workshare	0.337	0.801	1.511	0.345	0.719	2.427	4.479	0.747
First-Class Cards:	0.228	—	—	0.228	0.121	—	—	0.121
Single-Piece	0.271	—	—	0.271	0.103	—	—	0.103
Workshare	0.206	—	—	0.206	0.130	—	—	0.130
Periodicals	0.181	0.266	0.709	0.265	1.134	6.908	28.584	6.837
Standard Mail:	0.180	0.243	0.878	0.207	0.794	3.517	7.189	1.779
Regular and ECR:	0.194	0.247	0.887	0.220	0.790	3.604	7.227	1.885
Regular	0.200	0.388	0.889	0.237	0.795	4.254	7.249	1.403
Enhanced Carrier Route	0.151	0.195	0.407	0.186	0.750	3.364	2.071	2.807
Nonprofit and NP ECR:	0.117	0.193	0.735	0.133	0.811	2.583	6.583	1.175
Nonprofit	0.120	0.248	0.737	0.138	0.829	3.036	6.595	1.126
NP Enhanced Carrier Route	0.078	0.127	0.354	0.106	0.610	2.051	4.778	1.439
Package & Shipping Services:	4.696	2.763	4.529	4.366	1.391	18.429	50.150	39.685
Total	0.288	0.350	2.987	0.337	0.677	4.300	29.414	1.890
Other:	—	—	—	—	—	—	—	—
Other Domestic Mail	—	—	—	0.000	—	—	—	3.266
International Mail	—	—	—	2.813	—	—	—	5.403
Total	—	—	—	0.350	—	—	—	1.913

Source: RPW Reports.

Mail Flows

Mail volume can be broken into four basic flows, based on origin and destination. These flows are:

1) Household to household,

2) Household to non-household,

3) Non-household to household, and

4) Non-household to non-household.

Table 1.4a shows the total mail in each flow, and Table 1.4b shows pieces per household per week.

Table 1.4a: Total Domestic Mail Flows (Billions of Pieces)

Originating In:	Destinating In:
Originating In:	Household	Non-household	Total Originating
Household	5.9	15.3	21.3
Non-household	142.7	37.9	180.6
Total Destinating	148.6	53.2	201.9

Source: HDS Diary Sample, FY 2008.
Note: Totals may not sum due to rounding.

Table 1.4b: Domestic Mail Flows per Household per Week

Originating In:	Destinating In:
Originating In:	Household	Non-household
Household	1.0	2.5
Non-household	23.5	N/A

Source: Household Diary Study, FY 2008.

Household Mail

As shown in Table 1.4a, domestic mail to and from households constituted more than 80 percent of total mail volume in 2008. This equates to 27.0 pieces per week sent and received by U.S. households. Table 1.5 presents the volumes of mail sent and received by households as estimated from the Household Diary Study. The table shows the categories in which the households record their mail. Households received 148.6 billion pieces of mail and sent 21.3 billion. Both of these totals include the 5.9 billion pieces of mail that households sent to each other. The total mail received or sent by households in FY 2008 was 164.0 billion pieces.

In FY 2008, households received 39 billion pieces of unaddressed mail. These pieces were predominately the flyers and inserts associated with Standard Mail pieces.

Table 1.5: Mail Received and Sent by Households (Billions of Pieces)

Mail Classification	Received	Sent
First-Class Mail	57.2	20.8
Standard Regular Mail	69.4	—
Standard Nonprofit Mail	13.6	—
Periodicals	6.4	—
Package & Shipping Services	2.0	0.5
Total	148.6	21.3
Household to Household	5.9
Total Mail Received and Sent by Households	164.0
FY 2008 RPW Total*	201.9
Non-household to Non-household (Residual)	37.9
Unaddressed	3.9	—

Source: HDS Diary Sample, FY 2008.
*Does not include international mail.

Table 1.6 presents these data in two other forms, annual volumes per household and pieces per household per week. Many of the subsequent results in this report are presented in terms of pieces per household per week.

Table 1.6: Pieces Received and Sent per Household

Classification	Annual Pieces per HH	Pieces per HH per Week
Mail Received
First-Class Mail	490	9.4
Standard Regular Mail	594	11.4
Standard Nonprofit Mail	117	2.2
Periodicals	55	1.1
Package & Shipping Services*	17	0.4
Total Mail Received	1,273	24.5
Mail Sent
First-Class Mail:	178	3.4
Package & Shipping Services*	5	0.1
Total Mail Sent	182	3.5
Unaddressed	33	0.6

Source: HDS Diary Sample, FY 2008.
* Includes First-Class and Standard Mail packages.

Classes and Markets

· First-Class Mail is used to send transactional mail, correspondence, and advertising. Because it is limited to pieces weighing thirteen ounces or less, it is primarily composed of letters and cards.

· Standard Mail is advertising mail. For the most part, Standard Mail is composed of letters and flats, although it contains a few postcards and packages as well.

· Periodicals are magazines and newspapers, and are predominantly flat-shaped.

· Package & Shipping Services are Priority Mail, Express Mail and Package Services. Priority Mail and Express Mail are expedited services for delivering correspondence, transactional mail, and merchandise. Priority and Express pieces can be of any shape except postcards. Package Services are used to deliver merchandise, books, catalogs, and media such as CDs and DVDs. Most of this mail is parcel-shaped.

Table 1.7 crosswalks between classes of mail and the markets they serve.

Table 1.7: Mail Received and Sent by Households

Class	Market (Billions of Pieces)
Class	Correspondence	Transactions	Advertising	Periodicals	Packages	Total
First-Class Mail	16.5	41.7	16.4	—	1.7	68.1
Standard Mail	—	—	83.0	—	0.6	83.6
Periodicals	—	—	—	6.4	—	6.4
Package & Shipping Services	—	—	—	—	1.0	1.0
Total	16.5	41.7	99.4	6.4	3.4	159.1

Source: HDS Diary Sample FY 2008.
Notes:
Correspondence and Transactions include 8.2 billion pieces of secondary advertising mail also reported in Advertising Mail.
The “Total” column does not include pieces that could not be identified according to markets (Unclassified—see Table E.2).
First-Class Packages include 1.2 billion pieces of CD/DVD rentals sent and received, reported in First-Class Mail letters
in Tables E.1, 1.5, and 1.6.

Report Organization

The rest of the Household Diary Study report is organized around the markets the mail serves. Each chapter contains an analysis of the trends in the Household Diary Study data, as well as a discussion of how those trends impact and are impacted by changes in the broader market. The following provides an overview of each chapter.

Chapter 2: Profile of Mail Usage gives an analysis of household demographics. This chapter examines demographic trends over time and their impact on the mail, and discusses attributing factors, such as access to technology and changing attitudes.

Chapter 3: Correspondence examines mail that is used solely or primarily to deliver (non-sales-related) communications, such as letters and greeting cards. This chapter includes analysis of both personal and business correspondence.

Chapter 4: Transactions reviews financial transactions in the mail and the impact of new technologies on that market. It analyzes household bill payment trends with a focus on technological and demographic change.

Chapter 5: Advertising Mail presents the trends in mail used to deliver sales-related messages.
It contains information on household attitudes towards advertising by various media, treatment of advertising mail, and demographic determinants of advertising mail receipt.

Chapter 6: Periodicals examines magazines and newspapers delivered in the mail. It looks at how changing demographics are affecting the market for periodicals, and what the implications are for future volume.

Chapter 7: Packages analyzes household use of various types of and it discusses the household market for merchandise delivery

In addition, there are three appendices to the report:

Appendix A contains a set of comparative tables for FY 1987, 2007, and 2008, organized by class of mail. A concordance is presented for comparison with pre-2000 reports.

Appendix B documents the study methodology and discusses how the data were collected, weighted, and adjusted, and compares demographic data in the sample to that of the population as a whole.

Appendix C contains the instruments used to administer the survey.

Chapter 2: Profile of Mail Usage

Introduction

This chapter provides information on demographic trends and other factors affecting mail volume, providing a basis for assessing mail volume growth. The breakouts introduced provide the basis for much of the analyses in subsequent chapters.

The first section looks at growth in mail volume, population, households, and delivery points over recent decades. The next section examines the demographic characteristics of mail users, contrasting higher-mail-volume households with lower-volume households. The third section details the emerging demographic trends that will affect the future of mail. The last section examines some of the technological, behavioral, and attitudinal factors affecting mail.

Mail Volume and Demographics

Total U.S. mail volume grew from 110 billion pieces in 1981 to almost 203 billion in 2008, an increase of 84 percent. This growth outpaced the rate of population growth and household formation. Over the same period, according to the U.S. Census Bureau, the adult population grew 36 percent, and households grew by 41 percent. The number of places to which the Postal Service delivers increased still faster, growing by 52 percent (see the USPS annual report). As Table 2.1 shows, however, volume growth slowed dramatically over the last six years, while growth in population and households was much steadier.

Total U.S. mail volume increased 84 percent between1981 and 2007, outpacing population growth and household formation.

The 1980s was a time of extraordinary mail volume growth that started in 1978 and continued through 1988. In 1984, mail volume grew more than ten percent. During this period, technology facilitated this growth. Construction of computerized databases and techniques for sorting large amounts of data created a fertile climate for direct mail marketing. Computerization of financial systems encouraged billing by mail and payments through the mail. These innovations in business processes were further encouraged by postal rates.

The Postal Service introduced work-sharing discounts, encouraging mailers to prepare the mail in ways that reduce the total system cost of creating and delivering the mail. Mailers could take advantage of these discounts by sorting the mail in advance. The Postal Service would receive the mail presorted to the individual ZIP codes and/or to the carrier routes associated with those ZIP codes.

In the late 1980s and early 1990s, mail volume growth barely kept pace with household growth. The demand for mail was hurt by a recession and two very large rate increases. This was also a period in which the Postal Service absorbed substantial costs that were reapportioned from the Federal government’s retirement programs.

Table 2.1: Mail Volume and Demographics Average Annual Growth 1981-2008

	1981-1990	1991-2000	2001-2008
Total Mail Volume	4.6%	2.3%	.3%
Delivery Points	1.7%	1.5%	1.2%
Adult Population	1.5%	1.3%	1.0%
Households	1.4%	.9%	1.1%

Source: U.S. Postal Service, U.S. Census Bureau.

The last half of the 1990s saw rapid growth in mail volume, spurred by a strong economy and rates that increased by less than inflation. The Postal Service also realigned the incentives built into its price structure. It reduced the incentives mailers had for presorting mail and encouraged them to prebarcode it. By 2002, the majority of letters the Postal Service received had qualifying barcodes on them. This restructuring of the rates took advantage of the extensive automation of mail preparation and sorting that occurred over the previous decade.

The 1990s ended in a speculative bubble as the U.S. economy rapidly embraced information technology and integrated the Internet into its business processes. An economic recession followed that, according to the National Bureau of Economic Research, began in March 2001. The 2001 Government Fiscal Year ended with the terrorist attacks on the World Trade Center and the Pentagon. This led to large-scale disruptions of those mail services dependent on air transport, such as First-Class, Priority, and Express Mail.

When air service was restored, Priority Mail was no longer allowed on commercial passenger flights. GFY 2002 began with bio-terrorism. Lethal anthrax sent through the mail resulted in five deaths and a number of serious injuries. The 2.2 percent mail volume decline in 2002 was the worst since World War II. In 2003, Standard Mail volume recovered to a new high, but total First-Class volume continued to decline. Work-shared First-Class Mail fell for the first time ever. Since 2003, Standard Mail volume grew along with the economy, reaching new highs and exceeding First-Class Mail for the first time in 2005. Total First-Class volume, on the other hand, has continued to decline in part due to the diversion of bills and statements to electronic alternatives and to lower-cost Standard Mail options. In 2008, a severe economic recession (which, according to the National Bureau of Economic Research, began in December 2007), accompanied by the collapse of the housing market and a persistent credit crunch, contributed to a 4.5 percent decrease in total mail volumes, the largest volume decline since the Great Depression. The economic crisis led to much slower cash flows and forced most businesses—especially financial institutions—to curtail their direct-mail advertising expenses. Standard Mail volume, consisting almost entirely of advertising mail, was severely impacted by the limited advertising budgets and fell 4.3 percent. First-Class Mail advertising (approximately 12 percent of the total First-Class Mail) was also curtailed because of the financial crisis. This further aggravated a long-running negative trend in total First-Class Mail volumes that was driven by electronic diversion. More specifically, in 2008, lower advertising volumes, combined with the ongoing electronic diversion of the mail, contributed to a 5 percent decline in total First-Class Mail.

Between 2001-2008, total mail volume fell 2.3 percent, and First-Class volume fell 11.7 percent. Nevertheless, the U.S. population grew about 7 percent, and households grew 8 percent during the same period. The Postal Service added 8.5 percent more delivery points to its network.

Continued growth in delivery points will be an ongoing source of pressure on postal costs.

The Postal Service depends on mail volume growth to fund universal service. The number of addresses the delivery network serves increases as the number of American businesses and households grow. When mail volume grows faster than the number of delivery points, the system benefits from significant economies of scale. When mail volume grows slower or falls, as was the case between 2001-2008, the Postal Service’s ability to fund delivery service is hampered because the Postal Service charges its customers for piece volume but does not assess connect charges, access fees, or system fees, like many other network enterprises.

By 2010, according to the U.S. Census Bureau, the total U.S. population and the adult population are projected to grow by approximately one percent and two percent a year respectively. This is in line with the recent past. Households are expected to grow by about 1.1 percent a year. This should result in continued growth in the number of addresses the Postal Service serves, and in the resulting costs. Given recent mail volume trends, this presents a challenge. Continued growth in delivery points that exceeds volume growth has become an ongoing source of pressure on Postal costs.

Characteristics of Higher- and Lower-Volume Households

Tables 2.2 and 2.3 show the demographic characteristics of households by the amount of mail received. It is apparent from these tables that household mail use is strongly correlated with both income and education. Note, however, the similar correlation between mail receipt and Internet access, which is also related to income and education. Therefore, households that make the most use of the mail are the households with the greatest opportunity to use alternatives to the mail.

These high-volume households are beginning to take advantage of the opportunity to move away from the mail. Households that receive 30 or more pieces of mail each week pay 27.3 percent of their bills by Internet, up from 16.5 percent in 2006 and 21.1 percent in 2007. In comparison, households that receive less than 30 pieces of mail each week paid 22.7 percent of their bills online, up from 13.9 percent in 2006 and 15.6 percent in 2007.

Table 2.2: Characteristics of Higher- and Lower-Mail-Volume Households

Mail Received (Pieces per HH per week)	Households (Millions)	Median Annual HH Income	HHs w/ Internet Access (Percent)	Annual Bills Paid (Millions)	Annual Bills Paid by Internet (Millions)	Mail Sent (Pieces per HH per week)
45 or more	14.2	$95,868	94%	2,751	761	6.5
36-44	13.0	$77,928	89%	2,260	637	5.1
30-35	13.9	$69,542	89%	2,246	583	4.1
24-29	17.9	$66,751	88%	2,840	815	3.4
18-23	20.0	$54,966	76%	2,887	672	3.0
12-17	19.5	$44,730	69%	2,439	490	2.3
Less than 12	18.3	$30,343	54%	1,912	307	1.6
Total	116.8	$59,467	78%	17,336	4,265	3.5

Source: HDS Diary Sample, FY 2008.
Note: Mail received includes USPS and Non-USPS mail.

Table 2.3: Education of Higher- and Lower-Mail-Volume Households

Mail Received (Pieces per HH per week)	Households (Millions)	Educational Attainment of Head of Household
Mail Received (Pieces per HH per week)	Households (Millions)	Less than High School	High School Graduate	Some College or Technical School	College Graduate
45 or more	14.2	3%	20%	18%	60%
36-44	13.0	8%	24%	23%	45%
30-35	13.9	8%	24%	28%	40%
24-29	17.9	9%	32%	22%	36%
18-23	20.0	12%	33%	25%	30%
12-17	19.5	17%	32%	26%	24%
Less than 12	18.3	29%	34%	19%	16%
Total	116.8	13%	29%	23%	34%

Source: HDS Diary Sample, FY 2008.
Note: Percentages may not total 100% due to heads of households who did not answer the educational attainment question.
Mail received includes USPS and Non-USPS mail. Percentages in this table are row percentages.
Excludes households not receiving any mail delivery at their home address (using mailbox only).

Demographic Characteristics of U.S. Households

This section develops breakouts of households by demographic categories that influence the volume of mail sent and received. It looks at both traditional and newly emerging factors. The following chapters will show how mail volume varies with these household characteristics.

Income, Education, and Age

Traditionally, mail use was largely determined by household income, education, and age. As Table 2.4 shows, income and education are strongly correlated with each other, as expected.

The relationship between income and age, shown in Table 2.5, is somewhat more complicated. Up to retirement, household income and age are fairly closely related. After retirement, households earn substantially less; although by that point, mail behavior is pretty well set, and older households continue to receive similar amounts of advertising and periodicals, and pay similar amounts of bills, even though their income declines.

Table 2.4: Households by Income and Education (Millions of Households)

Household Income (Thousands)	Educational Attainment of Head of Household				Total
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Total
Under $35	9.1	8.9	6.1	3.1	27.2
$35 to $65	3.1	10.6	8.2	9.4	31.2
$65 to $100	1.2	8.4	6.9	12.2	28.8
Over $100	0.5	3.0	3.2	11.3	18.1
Don’t know / Refused	1.4	3.3	2.6	3.8	11.5
Total	15.1	34.2	26.9	39.9	116.8

Source: HDS Diary Sample, FY 2008.
Note: Totals may not sum due to rounding.

Table 2.5: Households by Income and Age (Millions of Households)

Household Income (Thousands)	Age of Head of Household				Total
Household Income (Thousands)	Under 35	35 to 54	Over 55	Don’t Know/ Refused	Total
Under $35	6.5	7.6	13.1	0.0	27.2
$35 to $65	7.9	11.8	11.5	0.0	31.2
$65 to $100	7.0	14.0	7.8	0.1	28.8
Over $100	2.3	10.3	5.5	0.0	18.1
Don’t know / Refused	2.0	3.3	5.8	0.3	11.5
Total	25.6	47.0	43.7	0.4	116.8

Source: HDS Diary Sample, FY 2008.
Note: Totals may not sum due to rounding.

Household Size

The majority of U.S. households include either one or two adults, but households with three or more adults make up 16 percent of the total. Once considered the norm, nuclear families—two adults and at least one child—now account for only 31 percent of households (per the U.S. Census Bureau). The changing composition of households impacted the amount and kinds of mail sent and received by households over the past 20 years, generating more and different kinds of advertising mail, as well as affecting transaction mail trends (bills tend to be tied to households as much as to individuals).

Table 2.6: Households by Size (Millions of Households)

Household Size
One person	20.8
Two	43.3
Three	20.9
Four	19.4
Five or more	12.4
Total	116.8

Source: HDS Diary Sample, FY 2008.
Note: Total may not sum due to rounding.

Table 2.7: Households by Number of Adults (Millions of Households)

Number of Adults
One	24.6
Two	73.1
Three or more	19.1
Total	116.8

Source: HDS Diary Sample, FY 2008.
Note: Totals may not sum due to rounding.

Internet Access

Access to and use of new technologies, such as personal computers and the Internet, have a large and growing impact on mail use. Although a significant number of pieces both sent and received by households are still related to bills and statements, electronic activity in this area is diverting mail once used for these purposes. On the other hand, online shopping potentially adds packages and catalog delivery to the Postal Service mailstream.

Table 2.8 shows that 78 percent of households have Internet access. The highest levels of access are within households with incomes over $100,000; 95 percent of such households have Internet access, as seen in Figure 2.1. In comparison, 42 percent of households with incomes under $35,000 have Internet access. For households without Internet access, 69 percent indicated they planned to purchase the service within the next year.

Table 2.8: Households by Type of Internet Access (Millions of Households)

Type of Internet Access
Broadband	74.1
Dial-up	17.3
None	25.3
Total	116.8

Source: HDS Diary Sample, FY 2008.
Note: Totals may not sum due to rounding.

Eighty-one percent of wired households, or 63 percent of the total, have Broadband access (DSL, cable, or T1). Figure 2.2 shows the trend in Broadband connections. The rapid growth of Broadband expands the potential scope of electronic diversion of the mail. A fast, always-on connection to the Internet becomes a stronger alternative channel for the delivery of entertainment, information, and communication. As more households begin using Broadband, we expect to see effects not only on bill payments, but also bill and statement presentment, periodicals, and perhaps even advertising mail.

Figure 2.1: PC Ownership and Internet Access

Household Income (Thousands)	Own PC	Internet Access
under $35K	52%	42%
$35K-$65K	82%	77%
$65K-$100K	93%	91%
$100K+	96%	95%
Don’t know/Refused	72%	67%

Source: HDS Recruitment Data, FY 2008.

Figure 2.2: Broadband Subscribers

Calendar Year	Broadband Subscribers
1998	0.5
1999	1.4
2000	5.8
2001	11
2002	17.4
2003	24.6
2004	31
2005	40
2006	50.9
2007	61.1
2008	66.7

Source: Leichtman Research Group.

Use of the Post Office

A rented mailbox is one alternative that households use to manage their mail. In 2008, 4.5 percent of all households in the U.S. rented mailboxes from the Postal Service, and 4.1 percent rented a box from a private company. As seen in Figure 2.3, in most cases, higher-income households are slightly more likely to use a post office box than lower-income households, a pattern similar to prior years. Post office box use, however, declined over the past seven years, after 2001, largely as a result of price increases, with 4.5 percent of U.S. households renting a box from the Postal Service in 2008, compared to ten percent in 2001.

The Postal Service currently owns and operates almost 37,000 post office locations throughout the United States. As shown in Figure 2.4, the use of post offices for mailing services continues to dominate the mail service industry. Over 82 percent of all U.S. households patronize a post office at least once a month, while just 11 percent visit a private mailing company. Over 48 percent of all households in the U.S. visit the post office three or more times in a month. Even with the continued availability of mail-related products and services through alternative modes (such as Internet orders), in-person visits to postal facilities remain stable. Only a little more than 11 percent of households visited private mailing companies in both 2007 and 2008.

Figure 2.3: Household Use of Rented Mailboxes

Household Income (Thousands)	USPS	Private Service
under $35K	3.4%	5.3%
$35K-$65K	4.1%	4.4%
$65K-$100K	3.9%	3.7%
$100K+	4.8%	3.2%

Source: HDS Recruitment Data, FY 2008.

Figure 2.4: Household Visits to Post Office in Past Month

Number of Visits	USPS		Private Service
Number of Visits	2007	2008	2007	2008
1 - 2	48%	34%	9%	9%
3 - 6	26%	30%	2%	2%
7 or more	9%	18%	0%	0%

Source: HDS Recruitment Data, FY 2007 and 2008.

Chapter 3: Correspondence

Introduction

This chapter examines correspondence mail among households and between households and businesses including letters, greeting cards, invitations, and announcements. In several cases, this chapter and several following it examine comparisons in data between 2006 and 2008, providing a better illustration of mail trends over time.

Correspondence Mail Volume

Total correspondence sent and received represents about 10 percent of all household mail volumes, as shown in Table E.2. Table 3.1 below provides a recent history of total correspondence volumes, showing a 0.4 percent decline from 2006 to 2008. However, longer-term trends indicate that, over the past several years, the decline was much steeper. For example, since 2002, total correspondence fell almost 14 percent. Personal correspondence, which is essentially household to household mail, was flat compared to 2007 but fell 7.1 percent from 2006, continuing a declining trend that has lasted for more than 16 years. In 1987, households reported receiving 1.6 pieces of personal correspondence each week. By 2008, personal correspondence received declined to 0.9 pieces per household per week.

To a large extent, this decline stemmed from changes in communication technology, such as affordable long distance telephone service and more recently, e-mail, the Internet, and cellular communications—all of which provide an alternative to personal letters and business inquiries. Such advances completely transformed the marketplace and continue to have an impact on personal correspondence.

Correspondence Mail and Household Characteristics

The following tables break down correspondence mail sent and received by households using the demographic categories developed in Chapter 2.

Income, Education, and Age

Table 3.2 on the following page shows that both household income and educational attainment have a strong effect on correspondence received. However, as Table 3.3 shows, within a given educational category, income has much less of an effect on the amount of correspondence mail a household sends.

Table 3.1: First-Class Correspondence Mail Sent and Received by Sector

Sector	Volume (Millions of Pieces)			Change, 2006-2008
Sector	2006	2007	2008	Change, 2006-2008
HH to HH	6,079	5,610	5,646	-7.1%
NHH to HH	8,461	9,175	8,780	3.8%
HH to NHH	2,034	2,132	2,083	2.4%
Total	16,574	16,917	16,509	-0.4%
Sector	Pieces per Household per Week			Share of 2008 Total
Sector	2006	2007	2008	Share of 2008 Total
HH to HH	1.0	0.9	0.9	34.2%
NHH to HH	1.4	1.5	1.4	53.2%
HH to NHH	0.3	0.4	0.3	12.6%
Total	2.8	2.8	2.7

Source: HDS Diary Sample, FY 2006, 2007, and 2008.
Note: Totals may not sum due to rounding.
Definition of correspondence recalculated for FY 2006 and 2007; numbers do not compare to previously published reports.

Table 3.2: Correspondence Mail Received by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Educational Attainment of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	1.1	1.6	1.7	2.0	1.5
$35 to $65	2.0	2.1	2.3	2.3	2.2
$65 to $100	2.0	2.6	2.5	2.9	2.7
Over $100	2.8	2.7	2.9	3.7	3.4
Average	1.5	2.2	2.3	3.0	2.4

Source: HDS Diary Sample, FY 2008.
Note: Excludes Don’t Know/Refused.

Table 3.3: Correspondence Mail Sent by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Educational Attainment of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	.5	.9	1.0	1.1	.8
$35 to $65	.8	1.2	1.3	1.4	1.2
$65 to $100	.4	1.2	1.3	1.7	1.4
Over $100	.6	1.8	1.3	2.0	1.8
Average	.6	1.2	1.2	1.7	1.3

Source: HDS Diary Sample, FY 2008.
Note: Excludes Don’t Know/Refused.

Tables 3.4 and 3.5 show that age also has a considerable effect on correspondence mail sent and received by households. Regardless of their income, younger households both send and receive fewer pieces of correspondence mail. Young adults traditionally send and receive less mail than older adults, but the advent of the Internet age widened the gap between these two age groups.

Table 3.4: Correspondence Mail Received by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 34	35 to 54	Over 55	Average
Under $35	1.1	1.2	1.9	1.5
$35 to $65	1.7	2.0	2.7	2.2
$65 to $100	2.3	2.6	3.2	2.7
Over $100	2.3	3.6	3.4	3.4
Average	1.7	2.4	2.7	2.4

Source: HDS Diary Sample, FY 2008.

Table 3.5: Correspondence Mail Sent by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 34	35 to 54	Over 55	Average
Under $35	.4	.6	1.1	.8
$35 to $65	.8	1.0	1.8	1.2
$65 to $100	1.3	1.3	1.8	1.4
Over $100	1.7	1.8	1.7	1.8
Average	.9	1.2	1.6	1.3

Source: HDS Diary Sample, FY 2008.

Household Size

As expected, household size has a positive impact on correspondence mail. Tables 3.6 and 3.7 show that the jump from one person to two is associated with considerable increases in correspondence mail, although further increases in size do not have nearly the same effect. As shown in Table 3.7, these increases are generally due to the presence of an additional adult in the household.

Table 3.6: Correspondence Mail Received and Sent by Household Size (Pieces per Household per Week)

Household Size	Received	Sent
One person	1.7	1.0
Two	2.5	1.5
Three	2.2	1.0
Four	2.5	1.2
Five or more	3.0	1.4
Total	2.4	1.3

Source: HDS Diary Sample, FY 2008.

Table 3.7: Correspondence Mail Received and Sent by Number of Adults in Household (Pieces per Household per Week)

Number of Adults	Received	Sent
One	1.7	1.0
Two	2.5	1.4
Three or more	2.7	1.2
Average	2.4	1.3

Source: HDS Diary Sample, FY 2008.

Internet Access

Table 3.8 shows that households with Internet access (Broadband and Dial-up) tend to send and receive more correspondence mail than households without such service. The explanation for this somewhat counterintuitive result is the high correlation among income, educational attainment, and the presence of an Internet connection in the home. As Table 3.9 shows, households with Internet access have a greater average income than households without. Similarly, households with Internet access have a higher level of education than households without. In fact, these correlations could be a warning sign for mail, since more volume goes to households that are vulnerable to diversion.

Table 3.8: Correspondence Mail Received and Sent by Type of Internet Access (Pieces per Household per Week)

Type of Internet Access	Received	Sent
Broadband	2.6	1.4
Dial-up	2.3	1.3
None	1.7	.9
Average	2.4	1.3

Source: HDS Diary Sample, FY 2008.

Table 3.9: Income and Education by Type of Internet Access (Pieces per Household per Week)

Type of Internet Access	Median Income	% w/ College Degree
Broadband	71,446	43%
Dial-up	52,208	30%
None	28,925	13%

Source: HDS Diary Sample, FY 2008.

Personal Correspondence

In FY 2008, personal correspondence accounted for an average 0.9 pieces per week, which was constant from 2007 and was .01 pieces less than in 2006. Table 3.10 shows the total volumes and average number of pieces by personal correspondence type.

In 2008, we see a continuing decline in personal letters—a trend mainly driven by the adoption of the Internet as a preferred method of communication. Non-holiday greeting cards, invitations, and announcements also fell as more electronic alternatives (such as evites and e-cards) become available. The number of Internet greeting cards decreased 2.7 percent from 2006 but increased 3.5 percent between 2007 and 2008.

Table 3.10: Personal Correspondence Sent and Received

Correspondence Type	Volume (Millions of Pieces)			Change, 2006-2008
Correspondence Type	2006	2007	2008	Change, 2006-2008
Personal Letters	1,138	1,116	1,046	-8.1%
Holiday Greeting Cards	2,612	2,117	2,278	-12.8%
Non-Holiday Greeting Cards	1,323	1,454	1,374	3.9%
Invitations	566	597	555	-1.9%
Announcements	141	130	122	-13.4%
Other Personal	299	196	271	-9.4%
Total	6,079	5,610	5,646	-7.1%
Internet Cards	1,001	942	975	-2.7%
Correspondence Type	Pieces per Household per Week			Share of 2008 Total
Correspondence Type	2006	2007	2008	Share of 2008 Total
Personal Letters	.2	.2	.2	18.5%
Holiday Greeting Cards	.4	.4	.4	40.3%
Non-Holiday Greeting Cards	.2	.2	.2	24.3%
Invitations	.1	.1	.1	9.8%
Announcements	.0	.0	.0	2.2%
Other Personal	.1	.0	.0	4.8%
Total	1.0	.9	.9	100.0%
Internet Cards	.2	.2	.2

Source: HDS Diary Sample, FY 2006, 2007 and 2008.
Note: Totals may not sum due to rounding.

Figure 3.1: Personal Correspondence Sent by Income Group (Pieces per Household per Year)

Household Income (Thousands)	Letters	Holiday Greeting Cards	Greeting Cards	Internet Cards
Under $35	7.4	12.6	6.3	5.4
$35 to $65	9.8	17.3	11.1	10.4
$65 to $100	9	21.7	13.6	8.8
Over $100	10.4	27.9	15.8	9.4

Source: HDS Diary Sample, FY 2008.

Figure 3.2: Personal Correspondence Sent by Age Cohort (Pieces per Household per Year)

Age	Letters	Holiday Greeting Cards	Greeting Cards	Internet Cards
Under 35	7.2	10.6	8	9.4
35 to 54	8.5	17.8	11.6	9.6
Over 55	10.4	26.8	14.1	6.4

Source: HDS Diary Sample, FY 2008.

Figure 3.1 above shows the major personal correspondence types by income. Personal correspondence sent by households seems to follow a pattern of higher-income households being more likely to send letters, holiday cards, and non-holiday greeting cards than lower-income households.

The largest disparity between high- and low-income households is in the volume of holiday greeting cards sent. Households with incomes over $100,000 sent an average of 14 holiday greeting cards in FY 2008, compared to the six sent by households with incomes under $35,000.

There seems to be a direct relationship between household income and use of Internet greeting cards, which makes sense in light of the number of higher-income households with Internet service compared to lower-income households.

The number of letters and greeting cards sent also seems to follow a pattern where older households send more than younger household send—an average of 10 letters and 27 holiday greeting cards in 2008. Figure 3.2 illustrates this point. They also sent an average of 14 non-holiday greeting cards.

In comparison, households under age 35 sent an average of seven letters and 11 holiday greeting cards in FY 2008, along with eight non-holiday cards. Younger households sent more Internet cards (9) than they did traditional, mailed non-holiday greeting cards (8), while households whose heads are 55 or over sent less than half as many Internet cards (6) as they sent traditional cards (14) through the mail.

The relationship between holiday greeting cards received and income is shown in Figure 3.3. Households with incomes above $100,000 received the greatest number of holiday greeting cards during FY 2008 (27.9) compared to 18.2 holiday cards in 2007 for the same income group, yet down from 33.1 in 2006. Households with incomes less than $35,000 received fewer holiday cards in 2008 than in 2006 or 2007, while the $65,000 to $100,000 category received more holiday cards in 2008 than they did in 2007, and the same as in 2006. In the middle income group ($35,000 to $65,000), holiday cards received increased slightly from 2007 but show a substantial decrease from 2006.

When examined by age, the number of holiday greeting cards received decreased since 2006 for all age categories, but went up between 2007 and 2008 for the top and bottom age categories.

Households where the head of household is aged 55 or older received the largest average number of holiday greeting cards—an average of 26.8 pieces in 2008—yet that number decreased 12 percent from 2006 (29.9 pieces).

Figure 3.3: Holiday Greetings Received by Age and Income, FY 2006, 2007 and 2008

Household Income (Thousands)	2006	2007	2008
Under $35	14.2	17.1	12.6
$35 to $65	26.1	17.1	17.3
$65 to $100	21.8	20.4	21.8
Over $100	33.1	18.2	27.9
Age	2006	2007	2008
Under 35	10.9	9.8	10.6
35 to 54	19.5	19.3	17.8
Over 55	29.9	22.4	26.8

Source: HDS Diary data, Diary Sample only, FY 2006, 2007 and 2008.

As shown in Table 3.11, households with Internet access (including both Broadband and Dial-up) receive more letters, holiday cards, and non-holiday greeting cards, compared to households without Internet access. As discussed earlier, households with Internet access, on average, have higher income and education levels (see Table 3.9), attributes which, typically, lead to a greater use of written correspondence.

In examining household Internet use, Figure 3.4 shows that 60 percent of all persons who have Internet access send at least one personal e-mail during a typical day, and 66 percent receive at least one e-mail.

Table 3.11: Personal Correspondence by Type of Internet Access (Pieces per Household per Week)

Correspondence Type	No Internet Access	Dial-up	Broadband
Personal Letters	.12	.17	.19
Holiday Greeting Cards	.34	.40	.38
Non-Holiday Greeting Cards	.14	.21	.26
Total	.61	.78	.83

Source: HDS Diary Sample FY 2008.

Figure 3.4: Daily Personal E-mails Sent and Received

Number of Daily Personal Emails	Sent	Received
0	40%	34%
1 to 3	33%	21%
4 to 6	15%	17%
7 to 10	6%	12%
11 or more	5%	16%

Source: HDS Recruitment Sample, FY 2008.

Business Correspondence

Households and businesses exchange many types of mail, including bill payment, statements, and advertising (discussed in Chapters 4 and 5). This section of the report provides data on correspondence types between households and businesses. Table 3.12 outlines volumes by correspondence type for 2006 through 2008. Correspondence received from the non-household sector accounts for 52 percent of total correspondence volumes. Business/government invitations and announcements and social announcements accounted for most of the correspondence received by households, and all were down compared to 2007. Other business/government consists mostly of insurance-related correspondence.

Table 3.12: Business Correspondence Type (Sent and Received) by Sector (Millions of Pieces)

Business Correspondence Type	2006	2007	2008	Change, 2006-2008
Business/Government/Social Received by Households
Invitation/Announcement	3,264	3,121	2,886	-11.6%
Holiday Greeting from Business	421	382	399	-5.3%
Other Business/Government	2,577	3,131	3,161	22.7%
Total Business/Government Received	6,262	6,634	6,446	2.9%
Announcement	1,761	2,208	1,657	-5.9%
Other Social	437	333	677	54.8%
Total Social Received	2,198	2,541	2,334	6.2%
Total Received	8,461	9,175	8,780	3.8%
Business/Government/Social Sent by Households
Inquiry	583	560	566	-2.9%
Other Business/Government	1,078	1,118	1,034	-4.2%
Total Business Sent	1,662	1,678	1,600	-3.7%
Letter	124	138	133	7.1%
Inquiry	44	81	63	45.4%
Other Social	205	235	287	40.2%
Total Social Sent (Social includes social, political & nonprofit.)	372	454	483	29.8%
Total Sent	2,034	2,132	2,083	2.4%

Source: HDS Diary Sample, FY 2006, 2007 and 2008.
Note: Totals may not sum due to rounding.
Definition of correspondence recalculated.

Chapter 4: Transactions

Introduction

This chapter examines the volumes and trends in transactions mail: the bills, statements, payments, donations, rebates, and orders sent and received by households. Information is presented on household bill payment trends, which is of particular interest due to the availability of electronic alternatives to traditional mail payments.

Transactions Mail Volume

Transactions sent and received comprise about 25 percent of all household mail volumes (as seen in Table E.2) and 53 percent of household First-Class Mail; as such, they are an important part of the mailstream. Although many businesses now use electronic funds transfer (EFT) or other electronic technologies to settle transactions, households still pay a majority of their recurring bills through the Postal Service. As the Internet becomes more ubiquitous, however, the movement towards consumer electronic bill presentment and payment (EBPP) continues to gain momentum.

Transactions comprise 53 percent of Household First-Class Mail.

As Table 4.1 shows, the total transactions volume sent and received by households decreased 2.4 percent between 2006 and 2008. All transaction categories, except for business confirmations and social/charitable transactions, were contributors to the decline. Electronic diversion continues to erode the volume of mail payments in favor of online payments, automatic deductions from bank accounts, and other electronic methods of bill payment. As a result, bills paid by mail fell 2.5 percent from 2006 to 2008. The growth in non-mail methods of payments is also evident from Table 4.1, which shows that bills paid by mail are much lower than total bills received.

Table 4.1: Transactions Mail Sent and Received

Transaction Type	Volume (Millions of Pieces)			Change, 2006-2008
Transaction Type	2006	2007	2008	Change, 2006-2008
Business
Bills	19,080	18,788	18,655	-2.2%
Bill Payments	9,949	10,202	9,704	-2.5%
Statements	6,920	7,133	6,560	-5.2%
Confirmations	2,738	3,242	2,824	3.2%
Payments (to HH)	1,439	1,418	1,324	-8.0%
Orders	612	560	537	-12.2%
Rebates	173	169	162	-6.2%
Total Business	40,911	41,512	39,766	-2.8%
Social/Charitable
Requests for Donation	708	733	754	6.5%
Donations	524	550	657	25.4%
Bill	212	194	180	-14.9%
Confirmations	355	273	331	-6.8%
Total Social/Charitable	1,798	1,749	1,921	6.9%
Total Transactions	42,709	43,261	41,687	-2.4%

Table 4.1: Transactions Mail Sent and Received (cont.)

Transaction Type	Pieces per Household per Week			Share of 2008 Total
Transaction Type	2006	2007	2008	Share of 2008 Total
Business
Bills	3.2	3.1	3.1	44.8%
Bill Payments	1.7	1.7	1.6	23.3%
Statements	1.2	1.2	1.1	15.7%
Confirmations	.5	.5	.5	6.8%
Payments (to HH)	.2	.2	.2	3.2%
Orders	.1	.1	.1	1.3%
Rebates	.0	.0	.0	0.4%
Total Business	6.9	6.9	6.5	95.4%
Social/Charitable
Requests for Donation	.1	.1	.1	1.8%
Donations	.1	.1	.1	1.6%
Bill	.0	.0	.0	0.4%
Confirmations	.1	.0	.1	0.8%
Total Social/Charitable	.3	.3	.3	4.6%
Total Transactions	7.2	7.2	6.9	100.0%

Source: HDS Diary Sample, FY 2006, 2007, and 2008.

Transactions Mail and Household Characteristics

The following tables break down transactions mail sent and received by households based on the demographic categories introduced in Chapter 2.

Income, Education, and Age

As seen in Tables 4.2 and 4.3, household income and educational attainment influence the amount of transaction mail sent and received—to some extent, income has an even greater impact on transaction mail sent and received than education. The basis for this relationship is fairly clear; higher-income and better-educated households, on average, have more financial accounts, insurance policies, and credit cards—all generators of transactions mail volume.

Table 4.2: Transactions Mail Received by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Educational Attainment of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	3.1	3.4	3.6	3.7	3.4
$35 to $65	4.5	5.0	5.2	4.8	4.9
$65 to $100	5.4	5.7	5.8	5.7	5.7
Over $100	6.7	7.1	6.9	7.0	7.0
Average	3.7	4.8	5.2	5.8	5.1

Source: HDS Diary Sample, FY 2008.

Table 4.3: Transactions Mail Sent by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Educational Attainment of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	1.3	1.4	.9	1.5	1.3
$35 to $65	2.3	2.1	1.6	1.8	1.9
$65 to $100	2.0	2.0	1.9	1.9	1.9
Over $100	3.3	2.1	2.1	2.2	2.2
Average	1.6	1.9	1.6	1.9	1.8

Source: HDS Diary Sample, FY 2008.

Tables 4.4 and 4.5 also show that age has a strong effect on transactions mail, independent of income. Across all income categories, younger households send and receive less transactions mail. In part, this is due to the fact that such households are less likely to own their home and have fewer insurance policies, investments, and the like. However, it is also the case that these households are more active users of electronic alternatives to traditionally mail-based transactions. This is especially evident for transactions mail sent (primarily bill payments) where households under 35 years old sent only 43 percent as much mail as older households.

Across all income categories, younger households send and receive less transactions mail.

Table 4.4: Transactions Mail Received by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 35	35 to 54	Over 55	Average
Under $35	2.7	3.6	3.6	3.4
$35 to $65	4.3	5.0	5.3	4.9
$65 to $100	4.6	5.9	6.4	5.7
Over $100	5.4	6.7	8.0	7.0
Average	4.0	5.4	5.3	5.1

Source: HDS Diary Sample, FY 2008.

Table 4.5: Transactions Mail Sent by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 35	35 to 54	Over 55	Average
Under $35	.5	1.3	1.6	1.3
$35 to $65	1.1	1.9	2.5	1.9
$65 to $100	1.2	1.9	2.7	1.9
Over $100	1.1	1.9	3.2	2.2
Average	1.0	1.8	2.3	1.8

Source: HDS Diary Sample, FY 2008.

Household Size

In terms of household size, Table 4.6 shows that going from a one-person household to a two-person household adds 1.8 pieces of transaction mail per week received and .6 pieces per week sent, but larger household size has little effect on volume.

Table 4.6: Transactions Mail Received and Sent by Household Size (Pieces per Household per Week)

Household Size	Received	Sent
One person	3.4	1.5
Two	5.2	2.1
Three	5.2	1.7
Four	5.7	1.6
Five or more	6.1	1.8
Average	5.1	1.8

Source: HDS Diary Sample, FY 2008.

For transactions mail received, Table 4.7 shows that each additional adult adds about 1.4 pieces (on average) of mail received per week. However, one additional adult generates only .3 pieces of extra mail sent, and further changes have little effect on volume.

Table 4.7: Transactions Mail Received and Sent by Number of Adults in Household (Pieces per Household per Week)

Number of Adults in HH	Received	Sent
One	3.6	1.4
Two	5.2	1.8
Three or more	6.3	2.1
Average	5.1	1.8

Source: HDS Diary Sample, FY 2008.

Internet Access

Table 4.8 shows that households with Internet access (Broadband or Dial-up) receive more transactions mail than households without Internet service, even though having an Internet connection at home should make transactions more susceptible to electronic diversion. As shown in Table 4.9, this apparent contradiction is explained in large measure by the fact that household Internet access is strongly correlated with income and education.

In Table 4.8, we also see that while the number of transactions sent by households with Broadband is higher than for households without access (mainly due to the higher income of households with Internet access), it is also lower than the number for Dial-up users. This is an indication that diversion of bill payments and other transactions is likely to increase as more households upgrade to Broadband, as a higher connection speed may lead to easier and faster online transactions.

Table 4.8: Transactions Mail Received and Sent by Internet Access (Pieces per Household per Week)

Type of Internet Access	Received	Sent
Broadband	5.6	1.8
Dial-up	4.8	2.1
None	3.5	1.6
Average	5.1	1.8

Source: HDS Diary Sample, FY 2008.

Table 4.9: Income and Education by Type of Internet Access

Type of Internet Access	Median Income	% w/ College Degree
Broadband	71,446	43%
Dial-up	52,208	30%
None	28,925	13%

Source: HDS Diary Sample, FY 2008.

Bill Payment

The average number of bills paid per month per household in 2008 was 12.4—slightly higher than in 2006 and 2007 (11.8 and 12.1, respectively). Households use a variety of methods to pay bills. Historically, they have been paid in person, via phone, or by mail. In the past decade, emerging technologies provided additional bill receipt and payment options. The most important of these are automatic deduction and online bill payment.

The Household Diary Study measures bill payment by all of these methods.

Table 4.10 shows the percentage of households who pay bills by each method and the average number of bills paid per month by each method. About 90 percent of households paid at least one bill by mail. Alternatively, this implies that 10 percent of households did not pay any of their bills by mail. Historically this is the highest level recorded to-date. The average number of bills paid by mail per household was 7.0 per month, down 5 percent from 2006 when the average number of bills paid per month by mail was 7.4. Other popular bill payment methods are automatic deduction from bank account (48 percent of households), in-person (30 percent) and, more recently, using the Internet (36 percent).

Notably, households reported paying 31 percent more monthly bills by electronic methods in 2008 than in 2006. In particular, online payments increased rather quickly, growing 63 percent since 2006 and 37 percent since 2007. As a result, in 2008, almost as many payments are made using the Internet as by all other electronic methods combined (2.6 compared to 2.1).

Since 2006, the average number of bills paid by Internet increased by 63 percent.

Table 4.10: Bill Payment by Method, FY 2006, 2007, and 2008

Bill Payment Method	2006	2007	2008
Bill Payment Method	Average Number of Bills Paid per Month	Average Number of Bills Paid per Month	Average Number of Bills Paid per Month	Share of Bills Paid	Percent of Households Using Method
Mail	7.4	7.5	7.0	56.3%	90.1%
Automatic Deduction	1.3	1.4	1.4	11.5%	48.4%
Internet	1.6	1.9	2.6	21.2%	36.3%
In-person	.8	.7	.7	5.7%	29.7%
Credit Card	.4	.4	.4	2.9%	17.6%
Telephone	.3	.3	.3	2.3%	12.0%
Total	11.8	12.1	12.4	100.0%	—

Source: HDS Recruitment Sample, FY 2006 through 2008.

As Figure 4.1 shows, electronic methods account for a growing share of household bill payments over time. In fact, since 2006, the average number of bills paid by electronic methods increased by 23 percent, largely at the expense of the mail, which dropped a little more than 6 percent during that time period.

Figure 4.1: Monthly Average Household Bill Payment by Method

Postal Fiscal Year	Mail	In-Person	Internet	Automatic Deduction	Other Electronic
1998	8.20	0.90	0.10	0.40	0.10
1999	8.10	0.90	0.10	0.50	0.10
2000	8.70	1.00	0.20	0.80	0.10
2001	8.80	0.80	0.40	0.80	0.20
2002	8.70	0.90	0.50	1.00	0.50
2003	8.30	0.80	0.70	1.00	0.50
2004	8.40	0.80	1.10	1.20	0.60
2005	8.00	0.80	1.30	1.20	0.60
2006	7.40	0.80	1.60	1.30	0.70
2007	7.50	0.70	1.90	1.40	0.60
2008	7.00	0.70	2.60	1.40	0.70

Source: HDS Recruitment Sample, FY 1998-2008.
Note: Other Electronic includes telephone.

Figure 4.2 shows that automatic deductions more than tripled since 1998. Given the continuing penetration of the Internet into everyday life, and the increasing affordability and popularity of Broadband connections, we expect the trend away from traditional mail to continue in the future.

Figure 4.2: Average Monthly Automatic Deductions per Household

Postal Fiscal Year
1998	.44
1999	.45
2000	.79
2001	.78
2002	.95
2003	.98
2004	1.15
2005	1.24
2006	1.27
2007	1.38
2008	1.42

Source: HDS Recruitment Sample, FY 1998-2008.

The types of bills paid by mail are shown in Table 4.11. There has been a decrease in almost all types of bills and the percentages paid by mail since 2006. Sixty percent of households paid their telephone bills by mail, equaled by electric bills (60 percent), followed by credit card bills (57 percent), insurance (55 percent), cable/satellite TV (48 percent), natural gas/propane (47 percent), and water/sewer and medical (at 47 and 48 percent respectively).

The Household Diary Study finds that the number of total bills paid per month varies by age and income, as does the choice of methods used for bill payment. Figure 4.3 shows the total average number of bills paid per month for each income and age group.

Table 4.11: Types of Bills Paid by Mail

Bill Type	Percent of Household
	2006	2007	2008
Telephone	69%	66%	60%
Electric	66%	66%	60%
Credit Cards	62%	62%	57%
Insurance	60%	60%	55%
Cable/Satellite TV	53%	55%	48%
Natural Gas/ Propane, etc	54%	54%	47%
Water/Sewer	50%	50%	47%
Medical	44%	50%	48%
Cell Phone	41%	40%	37%
Rent/Mortgage	36%	35%	32%
Internet Service	26%	29%	29%
Taxes	N/A	43%	41%
Car Payment	25%	25%	21%
Other Loans	23%	22%	20%
Alimony/ Child Support	N/A	1%	1%

Source: HDS Recruitment Sample, FY 2006 through 2008.
Notes: N/A: not asked in survey year.

Figure 4.3: Average Bills Paid per Month by Income and Age

Household Income (Thousands)
Under $35	9.4
$35 to $65	12.2
$65 to $100	13.7
Over $100	16.4
Age
Under 35	11.8
35 to 54	13.3
Over 55	11.8

Source: HDS Recruitment Sample, FY 2008.

Unsurprisingly, the number of bills paid per month is positively related to household income. Households with incomes over $100,000 paid an average of over sixteen bills per month in FY 2008, compared to about nine bills paid by households with incomes under $35,000.

Age has a slightly different relationship with bill payment levels in that younger households (under age 35) and older households (age 55+) pay fewer bills than households where the head of household is between 35 and 54.

More of the bills that younger households pay are paid electronically, which for purposes of this chapter combines payments made via Internet, automatic deduction from bank, and other (e.g., automatic charge to credit card and payment by ATM). Figure 4.4 shows that the younger the head of a household is, the more likely it is that the household will pay bills electronically. In fact, 2008 was the first time that younger households paid more bills electronically than by mail. Younger households paid only 41 percent of their bills by mail, and 52 percent electronically. Compare that to older households, who paid more than 60 percent of bills by mail and only about 35 percent electronically. The divergence in Internet bill-paying is similarly significant, where younger households paid 36 percent of bills using the Internet, while older households paid 15 percent using this method.

Figure 4.4: Bill Payment Method by Age

Age	Mail	In-Person	Internet	Automatic Deduction	Other Electronic
Under 35	41%	7%	36%	10%	6%
35 to 54	51%	6%	27%	10%	5%
Over 55	62%	5%	15%	13%	5%

Source: HDS Recruitment Sample, FY 2008.
Note: Other Electronic includes telephone

Bills and Statements Received

Table 4.12 shows the overall volume of bills and statements received. The largest volumes of bills originated from credit card companies (3.6 billion), utility companies (2.6 billion), insurance companies (2.3 billion), and telephone companies (2.1 billion). Statements received were predominantly sent by the financial sector, including banks, insurance companies, and other financial institutions.
Overall, the volume of statements received by households from the financial sector decreased by more than 6 percent since 2006. In 2008, U.S. households received 6.0 billion statements from financial institutions. In 2006, that figure was 6.4 billion.

About 44 percent of First-Class Mail received by households was bills and statements. In FY 2008, households received 18.7 billion bills, down from 19.1 billion in 2006. The number of statements received through the mail in FY 2008 (6.6 billion) decreased 9 percent since 2006.

Table 4.12: Bill and Statement Volumes by Industry

Industry	Volumes
Industry	Bills (Millions)	Statements (Millions)
Financial
Bank, S&L, Credit Union	1,207	3,726
Credit Card	3,619	0
Insurance Company	2,339	485
Real Estate/Mortgage	349	84
Other Financial	145	1,698
Total Financial	7,659	5,992
Merchants
Department Store	973	7
Publisher	403	6
Mail Order Company	154	3
Other Merchants	550	69
Total Merchants	2,081	85
Service
Telephone Company	2,076	10
Utility Company	2,704	26
Medical and Other Professional	1,979	129
Cable TV	878	3
Other Service	497	15
Total Service	8,134	183
Manufacturers	162	21
Government	527	265
Social/Nonprofit	11	2
Other/Don’t Know/Refused	80	11
Total – All Industries	18,655	6,560

Source: HDS Diary Sample, FY 2008.

As shown in Figure 4.5, between 2006 and 2008, the number of statements received by mail decreased for all household income categories, except for households with incomes between $65,000 and $100,000, which remained relatively unchanged.

Although the number of bills households receive through the mail has decreased by approximately 5 percent compared to 2006 on a per household basis, the number of bills and statements received over the Internet increased rapidly (34 percent), albeit from a small base. Table 4.13 shows the average volume of bills received by mail and over the Internet. Importantly, in 2008 ninety percent of online bills and statements were received by households who also paid bills online. This indicates that the rapid growth in the share of households paying bill online (36 percent in 2008) has been and will continue to be a key driver of the growth in bills and statements that are received online.

Figure 4.5: Statements Received by Mail by Income

Household Income (Thousands)	2006	2007	2008
Under $35	.8	.7	.6
$35 to $65	1.2	1.1	1.0
$65 to $100	1.3	1.3	1.3
Over $100	1.5	1.8	1.6

Source: HDS Diary Sample, FY 2006 through 2008.

Table 4.13: Average Monthly Bills and Statements Received by Method

Method	2006	2007	2008
Mail	18.98	18.62	17.99
Internet	1.17	1.31	1.50
Total	20.14	19.93	19.50

Source: HDS Diary Sample, FY 2006 through 2008.
Notes: Internet averages use HDS Recruitment Sample.
Mail includes Bills and Statements.

Chapter 5: Advertising Mail

Introduction

This chapter examines advertising mail, which is any advertising, promotional, or sales material sent through the Postal Service. Advertising mail can be sent as First-Class or Standard Mail.

The Advertising Market

According to McCann-Erickson, American businesses spent about $271 billion in 2008 advertising their products and services, a decrease of 3.2 percent from 2007. Of this total advertising spending, 22 percent was spent on direct mail.

In 2008, more than one-fifth of total advertising dollars was spent on direct mail advertising.

Direct mail was the second leading media choice of advertisers in 2008, after television. However, due to a steep economic downturn, direct mail advertising spending fell 1.0 percent compared to 2007. As shown in Table 5.1, except for the Internet and Other, all other spending media categories declined as well.

Table 5.1: U.S. Advertising Spending by Medium, 2006-2008 (Billions of Dollars)

Medium	2006	2007	2008	Percent Change 2007-2008
Direct Mail	$58.6	$60.2	$59.6	-1.0%
Newspapers	$46.6	$42.1	$35.8	-15.1%
Television	$71.9	$70.8	$65.2	-7.9%
Radio	$19.6	$19.2	$17.5	-8.4%
Magazines*	$13.2	$13.8	$12.9	-6.0%
Internet	$16.9	$21.2	$23.7	12.0%
All Other	$54.9	$52.3	$55.9	7.0%
Total	$281.7	$279.6	$270.8	-3.2%

Source: McCann-Erickson – estimates.
Note: Totals may not sum due to rounding.
* Consumer magazines advertising only (business is in All Other)

Despite many changes to the U.S. economy over the past few years, and particularly in 2008, direct mail continues to be one of the most popular advertising choices. It is a highly efficient and versatile method for communicating with consumers. Direct mail can be targeted to the interests of individual customers. It can be used both to locate new customers and maintain relationships with existing customers. Direct mail allows for a variety of different types of advertising: letters, postcards, catalogs, and free samples. It can be sent as First-Class or Standard Mail, allowing advertisers to trade off their interest in more timely, personalized First-Class mailings against cost-savings from Standard Mail.

Importantly, the effectiveness of direct mail is readily measurable, more so than for any other media shown in Table 5.1. Businesses can track the response rate to a mailing far more precisely than for a television commercial or magazine advertisement. This feature alone gives advertising mail a key advantage over its competitors.

Figure 5.1 shows that direct mail’s share of total advertising spending has been on a strong upward trend for most of the past 17 years. Since 1999, the direct mail share has risen steadily reaching 22 percent in 2008. Direct mail has maintained its large ad share even with the introduction of new, fast-growing ad markets such as the Internet.

Figure 5.1: Direct Mail as a Share of Total Advertising, 1990-2008

Calendar Year
1990	18.0%
1991	19.1%
1992	19.0%
1993	19.3%
1994	19.4%
1995	19.9%
1996	19.3%
1997	19.3%
1998	19.1%
1999	18.6%
2000	19.0%
2001	19.2%
2002	19.4%
2003	19.7%
2004	19.8%
2005	20.5%
2006	21.0%
2007	21.5%
2008	22.0%

Source: U.S. Postal Service calculations based on McCann-Erickson World Group data.

Advertising Mail Volumes

Households received 100 billion pieces of advertising mail in 2008. Tables 5.2 and 5.3 show a 1 percent decrease in Standard Mail in 2008, compared to 2007. However, the economic recession reduced advertising spending by a greater percentage than shown in the tables. In 2008, the methodology used by the Postal Service’s carrier cost system for estimating city and rural deliveries (used as a control for survey results) was changed. This resulted in understated volumes for 2007 and, consequently, reduced the magnitude of the decline between 2007 and 2008. Furthermore, as discussed in last year’s report, prior to 2007, Standard volumes were overstated by approximately 3 billion pieces due to a double count of Detached Address Labels by the carrier cost system. This was corrected in 2007, resulting in an artificial large drop in volume between 2006 and 2007.

Since Revenue Pieces and Weight (RPW) reports do not include the volume distortions described above, they can be used to provide an estimate of year-over-year changes in total Standard Mail received by households (RPW reports include both household and business volumes). As Table 1.1 shows, RPW reports indicate that total Standard Mail increased by 1 percent in 2007 and then fell 4.3 percent in 2008.

Advertising mail represented about 63 percent of all mail received by households in 2008.

Table 5.2 shows that First-Class advertising mail accounts for 16.4 billion pieces (16.5 percent) of all advertising mail received by households. Of this, 8.3 billion pieces are advertising only, while the other 8.2 billion pieces are secondary advertising, such as an advertisement enclosed with a bill. In 2008, First-Class advertising volumes were adversely affected by the depressed economy. Financial institutions, the largest users of First-Class advertising, were particularly impacted by the collapse of the housing market and the sustained credit crunch that accompanied the recession.
As a result, financial advertising volumes fell 10 percent from 2007.

Advertising mail represented 63 percent of all mail received by households in 2008.

About 83 percent of all advertising mail received by households in 2008 were sent by Standard Mail, which equates to a total of 83.0 billion pieces.
As noted above, the trends in Tables 5.2 and 5.3 are distorted in both 2006 and 2007. However, data from RPW reports (which do not include the distortions) indicate that Standard advertising mail grew steadily up through 2007. In 2008, poor economic conditions forced businesses cut back on advertising spending, pushing Standard Mail volumes down sharply. As discussed in the case of First-Class advertising, the recession, combined with the collapse of the housing market and tight credit conditions, had a particularly serious impact on financial institutions. As a result, credit card and other financial types of advertising sent via Standard Mail decreased dramatically compared to other industries.

Most of the decrease in Standard Mail advertising volumes is found in Regular and ECR mail. In 2008, households received an average of 11.4 Presorted Standard or Bulk Rate mail pieces per week. Prior to 2007, this type of advertising experienced continuous growth as a result of implementing only one postal rate increase in over five years, some diversion from First-Class Mail advertising, strong growth in Direct Mail advertising spending, and a strong overall economy.

Standard Mail accounts for 83 percent of total advertising mail.

Table 5.2: Advertising Mail by Mail Classification (Volume in Billions of Pieces)

Mail Classification	Volume (Billions of Pieces)			Growth, 2006-2008
Mail Classification	2006	2007	2008	Growth, 2006-2008
First-Class Advertising	18.0	16.9	16.4	-8.6%
Advertising Only	10.3	9.0	8.3	-20.2%
Secondary Advertising	7.7	7.9	8.2	7.0%
Standard Mail	86.9	83.4	83.0	-4.5%
Regular and ECR*	73.1	69.9	69.4	-5.1%
Nonprofit	13.8	13.5	13.6	-1.1%
Unsolicited Packages	0.2	0.2	0.1	-42.0%
Total Advertising	105.1	100.5	99.6	-5.3%
Unaddressed Mail	17.8	12.6	3.9	-78.3%

Source: HDS Diary Sample, FY 2006, 2007 and 2008.
Notes:
Totals may not sum due to rounding. Unaddressed Mail is not included in totals.

*Prior to 2007 Standard mail volumes were inflated by about 3 billion pieces due to a double count of Detached Address Labels by the carrier cost system. Also, volumes through 2007 were understated by about 2 to 3 billion pieces due to a change in the methodology used by the carrier cost system for estimating deliveries to residential addresses. These volumes are used as a control for survey results.

Table 5.3: Advertising Mail by Mail Classification (Pieces per Household per Week)

Mail Classification	Pieces per HH per Week			Share of Total
Mail Classification	2006	2007	2008	Share of Total
First-Class Advertising	3.0	2.8	2.7	16.5%
Advertising Only	1.7	1.5	1.4	8.3%
Secondary Advertising	1.3	1.3	1.3	8.2%
Standard Mail	14.6	13.8	13.7	83.3%
Regular and ECR*	12.3	11.6	11.4	69.7%
Nonprofit	2.3	2.2	2.2	13.7%
Unsolicited Periodicals/Packages	0.0	0.0	0.0	0.1%
Total Advertising	17.7	16.7	16.4	100.0%
Unaddressed Mail	3.0	2.1	0.6	N/A

Source: HDS Diary Sample, FY 2006, 2007, and 2008.
Notes:
Totals may not sum due to rounding. Unaddressed Mail is not included in totals.

*Prior to 2007, Standard mail volumes were inflated by about 3 billion pieces due to a double count of Detached Address Labels by the carrier cost system. Also, volumes through 2007 were understated by about 2 to 3 billion pieces due to a change in the methodology used by the carrier cost system for estimating deliveries to residential addresses. These volumes are used as a control for survey results.

Advertising Mail and Household Characteristics

Income, Education, and Age

As advertising mail is used to sell goods and services, it is not surprising that the amount of ad mail received by a household is closely tied to income and education.

The relationship between advertising mail and household income is quite strong, as seen in Table 5.4. Households with less than $35,000 income receive less than half as much advertising mail as households with $100,000 or more income (10.4 pieces per week compared to 24.9). Table 5.4 also shows that education plays a key role in the amount of advertising mail households receive, even after accounting for the impact education has on income.

For example, among households earning under $35,000, ad mail received per week increases as the educational status of the household head increases, rising from 9.5 pieces per week for households headed by someone without a high school degree to 12.0 pieces per week for households headed by a college graduate. The pattern is repeated across all income groups, with more ad mail received as education increases.

The role that education plays in advertising mail is two-fold. First, direct mail is a written type of communication, and education may play some role in its relative effectiveness compared to television or radio advertising. Second, education is not only tied to current household income, but also future household income. A college graduate who currently has a relatively low income may, in a few years, earn a much higher income.

Table 5.4: Advertising Mail Received by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Education of Head of Household				Average
Household Income (Thousands)	Less than High School	High School graduate	Some College or Technical School	College graduate	Average
Under $35	9.5	10.2	11.1	12.0	10.4
$35 to $65	13.4	13.3	14.7	16.5	14.6
$65 to $100	14.6	17.3	17.7	19.9	18.4
Over $100	21.0	22.7	22.6	26.3	24.9
Average	11.1	14.5	15.9	20.6	16.4

Source: HDS Diary Sample, FY 2008.

Table 5.5 shows that households headed by older people receive more advertising mail than those headed by younger people. For every income group, advertising mail received increases as the age of the head of the household increases. In part, this is because age is correlated with other characteristics such as marriage, home ownership, and the presence of children in the household.

Moreover, the older a person is, the longer his or her buying history and the more businesses with which the person has a relationship that advertising mail can help maintain. Households with incomes over $100,000 and with a head of household age 55 and older received the greatest number of advertising mail pieces at 27.8 pieces per week.

The amount of advertising mail received increases as income, education, and household size increases.

Table 5.5: Advertising Mail Received by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 34	35 to 54	Over 55	Average
Under $35	7.6	9.5	12.2	10.4
$35 to $65	10.7	14.3	17.7	14.6
$65 to $100	14.8	18.4	21.5	18.4
Over $100	19.2	24.5	27.8	24.9
Average	11.9	17.1	18.2	16.4

Source: HDS Diary Sample, FY 2008.

Household Size

Tables 5.6 and 5.7 show advertising mail received increases as the household size (Table 5.6) and number of adults in the household (Table 5.7) increase. While this is evident in looking at changes in household size, the greatest change in the number of pieces of advertising mail received is seen in the number of adults in the households.

Table 5.6: Advertising Mail Received by Size of Household (Pieces per Household per Week)

Household Size
One person	12.7
Two	17.4
Three	16.7
Four	17.6
Five or more	16.6
Average	16.4

Source: HDS Diary Sample, FY 2008.

As shown in Table 5.7, households with three or more adults receive 48 percent more advertising mail than a household with only one adult. This represents an increase from an average of 12.6 pieces per week to 18.7 pieces per week. Note, however, that most of this increase occurs when the number of adults increases from one to two, indicating a strong impact stemming from the likelihood of it being a two-income household.

Table 5.7: Advertising Mail Received by Number of Adults (Pieces per Household per Week)

Number of Adults
One	12.6
Two	17.1
Three or more	18.7
Average	16.4

Source: HDS Diary Sample, FY 2008.

Internet Access

Finally, Table 5.8 shows the relationship between advertising mail received and Internet access. Despite all the attention paid to online and e-mail advertising, households with Internet access receive more advertising mail than those without access.

To a large degree, this reflects other household characteristics; as shown in Table 5.9, Internet access is closely tied to income and education. However, advertising mail is sent even when new advertising media are available. In addition, Table 5.8 may demonstrate the use of Internet information to target potential customers through direct mail advertising.

Table 5.8: Advertising Mail Received by Internet Access (Pieces per Household per Week)

Type of Internet Access
Broadband	18.4
Dial-up	15.8
None	11.1
Average	16.4

Source: HDS Diary Sample, FY 2008.

Table 5.9: Income and Education by Type of Internet Access (Pieces per Household per Week)

Type of Internet Access	Median Income	% w/ College Degree
Broadband	71,446	43%
Dial-up	52,208	30%
None	28,925	13%

Source: HDS Diary Sample, FY 2008.

Senders of Advertising Mail

Figure 5.2 provides data on the senders of advertising mail to households. Merchants continue to be the largest senders; in 2008, they sent 35 percent of Standard advertising mail and 22 percent of First-Class advertising mail. Financial firms are the second largest sender of Standard Mail advertising (21 percent) and the largest sender of First-Class advertising (37 percent). Many bills and statements, especially for credit cards, include advertising. In 2008, the financial crisis forced most financial firms to significantly curtail their advertising campaigns. This, in turn, resulted in s considerable reduction in the volume of both First-Class and Standard Mail advertising received by households from the financial industry.

Attitudes Toward Advertising

With $271 billion spent in the United States on advertising, it is not surprising that few households wish they received more.

Figure 5.2: Advertising Volumes for First-Class and Standard Mail Advertising by Sender Type

Sender Type	First-Class Mail	Standard Mail
Financial	6.0	17.5
Merchants	3.6	28.7
Services	5.1	11.6
Manufacturers	0.5	1.5
Social	0.7	13.9
Government	0.3	1.6

Source: HDS Diary Sample, FY 2008.
Base: First-Class and Standard Advertising Mail Pieces excluding Unsolicited Samples, Multiple Organizations, and
Don’t Know/No Industry given.

Whether they wish to receive more or not, most households either read or at least scan their advertising mail. Figure 5.3 shows 49 percent of households usually read their advertising mail, while an additional 30 percent scan the mail. Only 21 percent of households report they do not usually read their advertising mail. This represents an increase from the nine percent who did not usually read advertising mail in 1987, but given the large increase in advertising mail volumes since then, it is clear that U.S. households read more advertising mail now than in the past.

Seventy-nine percent of households either read or scan advertising mail sent to their household.

Figure 5.3: Advertising Mail Behavioral Trends – 1987, 2006, 2007 and 2008

Sender Type	1987	2006	2007	2008
Read	49%	46%	48%	49%
Scan	40%	35%	33%	30%
Don’t Read	9%	17%	19%	21%

Source: HDS Recruitment Sample, FY 1987, 2006, 2007, and 2008.
Note: Percentages do not include those who did not provide a response.

Interestingly, the survey shows that not all advertising is treated equally. Figure 5.4 shows that catalogs attract much more attention than credit card advertising, as they are usually more interesting to read. Forty-eight percent of households read catalogs and only 19 percent discard them without reading them. On the other hand, only 28 percent of households read credit card advertising, and 46 percent discard them without reading them.

Figure 5.4: Treatment of Standard Mail by Type

Treatment of Standard Advertising Mail	Catalogs	Credit Cards	All Other
Read	48%	28%	44%
Looked at, Not Read	13%	19%	17%
Discarded	19%	46%	26%
Set Aside for Later	13%	2%	5%

Source: HDS Diary Sample, FY 2008.
Note: Percentages do not include those who did not provide a response.

Another interesting result is found in Figure 5.5. Household behavior toward advertising mail is largely independent of how much advertising mail the household receives. For example, among households that receive zero to seven pieces of advertising mail per week, 44 percent usually read all or some of the mail, and 17 percent usually do not read any. Among households that receive eighteen or more pieces per week, 47 percent usually read all or some, and 15 percent usually do not read any.

Thus, households that receive a lot of advertising mail do not appear to be particularly “turned off” by the high volume. However, Figure 5.5 also shows that, when looked at separately, the percent of households that usually read all advertising does decrease as the number of pieces increases. When only seven or less pieces are received, 17 percent of households usually read all the advertising mail they receive. When 18 or more pieces are received, only 9 percent of households usually read all the advertising mail.

Figure 5.5: Treatment of Standard Advertising Mail by Number of Standard Mail Pieces Received per Week

Treatment of Standard Advertising Mail	0 to 7	8 to 10	11 to 12	13 to 15	16 to 17	More than 18
Usually Read	17%	13%	12%	11%	10%	9%
Read Some	27%	32%	33%	35%	35%	38%
Usually Scan	36%	38%	37%	38%	37%	37%
Usually Don’t Read	17%	16%	18%	16%	18%	15%

Source: HDS Diary Sample, FY 2008.

Effectiveness of Advertising Mail

Ultimately, advertisers send direct mail because it works—household members read and respond to it. Table 5.10 presents the intended response of households to advertising mail. Households report they intend to respond to about one in ten pieces of advertising mail, with the intended response to Standard mail being greater than for First-Class advertising (11 percent and 10 percent of pieces, respectively). The table also shows that households say they may respond to another 16 percent of Standard advertising and 10 percent of First-Class advertising. This is not to say that a similar mail piece would receive a higher response rate if mailed via Standard Mail; it is more likely the result of a different mix of advertising in Standard Mail. For example, catalogs, which typically enjoy a high response rate, are routinely mailed Standard Mail, but infrequently mailed First-Class. Credit card advertising pieces, on the other hand, have the lowest response rate and are most often mailed First-Class.

Figure 5.6 presents the total number of responses to advertising mail by income. As illustrated in Tables 5.4 and 5.5, higher-income households received more advertising mail. Figure 5.6 combines the data on the amount of advertising mail received by household income with the household’s intended response to the mail. The result is the average number of responses per week for each income level. For example, households with incomes above $150,000 report they intend to respond to 2.7 pieces of advertising mail per week, and they may respond to another 3.6 pieces per week. Other high-income households also indicate they will respond to more than one piece of advertising mail per week, as do some of the lower income households.

While intended responses do not always lead to actual responses, the data presented in Table 5.10 and Figure 5.6 help explain why direct mail is the number one choice of advertisers in America.

Table 5.10: Intended Response to Advertising Mail by Class (Percentage of Pieces)

Response	First-Class	Standard
Yes	10%	11%
Maybe	10%	16%
No	63%	63%
No Answer	17%	10%

Source: HDS Diary Sample, FY 2008.

Figure 5.6: Weekly Number of Responses by Income

Household Income (Thousands)	Will Respond	Might Respond
Under $7	0.7	0.7
$7 to $9.9	0.6	0.7
$10 to $14.9	1.4	1.0
$15 to $19.9	1.0	1.0
$20 to $24.9	0.8	1.8
$25 to $34.9	1.3	1.6
$35 to $49.9	1.4	1.9
$50 to $64.9	1.5	2.2
$65 to $79.9	1.7	2.5
$80 to $99.9	1.9	2.7
$100 to $119.9	1.8	2.9
$120 to $149.9	2.2	3.2
Over $150	2.7	3.6

Source: HDS Diary Sample, FY 2008.

Chapter 6: Periodicals

Introduction

This chapter examines periodicals sent to households. Periodicals Mail consists of newspapers or magazines regularly sent to households, usually as part of a subscription. This chapter analyzes only periodicals delivered by the Postal Service to households. Newspapers or magazines delivered by a local carrier or purchased at a newsstand or store are not included in Household Diary data. The volumes examined here are only a portion of the total periodicals volume since more than one quarter of periodicals are received by non-households, such as doctors’ offices or other businesses.

Historically, changes in total Periodicals Mail volumes have not kept pace with population growth.

The Periodical Market

Total Periodicals Mail volumes have not kept pace with population growth over time, as seen in Figure 6.1. In general, this is the result of a demographic shift due to people reading less today than they did a few decades ago. Periodicals volumes reached a peak in 1990 at 10.7 billion pieces, but declined each year since 1997, with the exception of FY 2000. In that year, periodicals volumes were temporarily buoyed by an influx of advertising revenue during the dot.com boom. Since FY 2000, the volume dropped dramatically.

Historically, troughs in periodicals volumes have lagged economic slumps more so than with other types of mail, largely because it takes time for some subscription contracts to cycle out. After the recession that started in 2001, periodicals volumes slipped not only because of reduced subscriptions, but also due to the number of publications that ceased operation as sources of advertising revenue dried up. Since then, in addition to the ongoing demographic shift away from reading, volumes continued to fall as the Internet became an increasingly accepted substitute for hard-copy publications.

Figure 6.1: Periodicals Mail Volume per Person – 1971 to 2008 (Annual Pieces per Person)

Postal Fiscal Year
1971	48.8
1972	47.9
1973	45.4
1974	44.2
1975	45.0
1976	43.6
1977	42.5
1978	42.5
1979	41.1
1980	44.9
1981	43.3
1982	41.0
1983	39.4
1984	40.3
1985	43.5
1986	44.0
1987	42.5
1988	42.6
1989	42.5
1990	42.7
1991	41.0
1992	40.2
1993	39.6
1994	38.8
1995	38.2
1996	37.6
1997	38.1
1998	37.4
1999	36.8
2000	36.7
2001	35.3
2002	33.7
2003	32.1
2004	31.1
2005	30.6
2006	30.1
2007	29.2
2008	28.3

Source: U.S. Postal Service, U.S. Census Bureau.

Advertising’s Impact on Periodicals

Advertising spending translates into advertising revenue, and the key determinant of magazine profitability is advertising revenue. The trend in advertising spending on magazines shifted to a lower level after its peak in 2000. In 2008, the severe economic recession forced businesses to cut advertising spending considerably. This suggests that changes in available advertising revenues have altered the profitability of the magazine industry.

Advertising is a form of business investment. As with other investments, when the economy takes a turn for the worse, advertising tends to slow. By 2000, advertising as a percent of Gross Domestic Product (GDP) rose to a historically high level; when the high-tech bubble burst, advertising crashed. In 2001, advertising spending suffered its largest year-over-year decline in history. After six years of economic expansion, overall spending increased; magazine advertising spending also resumed its growth but at a slower pace than the years prior to 2001. In 2008, however, the recession reduced the spending by 10 percent from 2007, on a per capita basis.

McCann-Erickson projects that advertising spending will continue to fall in 2009 (-4.5 percent), reflecting the uncertainty in the economy and the fact that advertising historically lags behind an economic recovery. In the future, as the economy recovers, it should, as it has in prior times, encourage advertising spending, which, in turn, should bode well for new magazine launches as opportunities surface to capture new segments. More magazines in circulation generally translates into higher volume for the Postal Service, since, for most titles, the mail remains the primary distribution channel. More recently, however, the Internet has become a strong competitor of hard-copy publications. The Internet provides an alternative channel for news, information and entertainment. As a consequence, Periodicals volumes may be headed toward long-term decline.

Figure 6.2 shows the sharp decline in real per capita advertising spending for consumer magazines in 2001 and 2002 and the subsequent resumption in annual growth up to 2008, at which point it fell by more than 10 percent.

Figure 6.2: Real Per-Capita Consumer Magazine Advertising Spending

Calendar Year
1960	$23.86
1961	$22.85
1962	$23.37
1963	$24.25
1964	$25.25
1965	$26.47
1966	$27.49
1967	$26.19
1968	$25.62
1969	$25.32
1970	$22.84
1971	$22.79
1972	$22.71
1973	$21.43
1974	$20.23
1975	$17.83
1976	$20.38
1977	$22.93
1978	$25.46
1979	$26.25
1980	$25.55
1981	$25.95
1982	$25.44
1983	$27.67
1984	$30.80
1985	$30.97
1986	$30.97
1987	$31.51
1988	$32.69
1989	$34.51
1990	$33.26
1991	$30.42
1992	$31.48
1993	$31.93
1994	$33.24
1995	$34.89
1996	$35.54
1997	$37.65
1998	$39.42
1999	$41.76
2000	$43.84
2001	$38.13
2002	$36.91
2003	$33.31
2004	$38.58
2005	$38.96
2006	$38.49
2007	$38.89
2008	$35.07

Source: McCann-Erickson, U.S. Census Bureau.

Household Periodicals Volume

As shown in Table E.2 of the Executive Summary, periodicals represent about 4 percent of all household mail volumes. It also shows that the volume of periodicals is declining. In FY 2008, households received 6.4 billion periodicals, compared to 6.6 billion in FY 2007 and 6.7 in 2006.

Table 6.1 shows the breakdown of periodicals received by households. Seventy-three percent of all periodicals received by households were magazines, a strong increase since 1987, when the share was 59 percent.

In 2008, households received an average of 0.8 magazines per week. The most common type of magazine is monthly, accounting for two-thirds of the total magazines.

Newspapers make up 18 percent of total Periodicals volumes, down from the 35 percent share in 1987. The number of newspapers received per household each week declined from 0.6 to 0.2 during that same time period, while magazines only declined from 1.0 to 0.8 pieces per week.

The decline in newspapers captured in the Household Diary study mirrors the behavior seen in overall newspaper circulation.

As shown in Figure 6.3, newspaper circulation in general has declined since 1990. Of course, on a per capita basis, the decline is even more pronounced.

Table 6.1: Periodical Type by Year (Pieces per Household per Week)

Periodical Type	1987	2007	2008
Newspapers	.6	.2	.2
Daily	.2	.1	.1
Weekly	.3	.1	.1
Other	.1	.0	.0
Magazines	1.0	.8	.8
Weekly	.3	.2	.1
Monthly	.6	.5	.5
Other	.1	.1	.1
Unclassified	.1	.1	.1
Total Periodicals	1.7	1.1	1.1

Source: HDS Diary Sample, FY 1987, 2007, and 2008.
Note: Totals may not sum due to rounding.

Figure 6.3: Newspaper Circulation – 1970 to 2008

Calendar Year
1970	62.1
1971	62.2
1972	62.5
1973	63.1
1974	61.9
1975	60.7
1976	60.9
1977	61.5
1978	62.0
1979	62.2
1980	62.2
1981	61.4
1982	62.5
1983	62.6
1984	63.1
1985	62.8
1986	62.5
1987	62.8
1988	62.7
1989	62.6
1990	62.3
1991	60.7
1992	60.1
1993	59.8
1994	59.3
1995	58.2
1996	57.0
1997	56.7
1998	56.2
1999	56.0
2000	55.8
2001	55.6
2002	55.2
2003	55.2
2004	54.6
2005	53.4
2006	52.3
2007	50.7

Source: Newspaper Association of America.

Figure 6.4: Daily Newspaper Readership – 1987 to 2008

Calendar Year
1987	64.8%
1988	64.2%
1989	63.6%
1990	62.4%
1991	62.1%
1992	62.6%
1993	61.7%
1994	61.5%
1995	59.4%
1996	58.4%
1997	58.3%
1998	59.0%
1999	56.9%
2000	55.5%
2001	54.3%
2002	55.4%
2003	54.1%
2004	52.8%
2005	51.6%
2006	49.9%
2007	48.4%
2008	45.6%

Source: Newspaper Association of America.
Note: There was a change in methodology in 1998.

Directly contributing to newspaper volume declines are changes in daily readership levels. As shown above in Figure 6.4, the percentage of the U.S. population reading newspapers on any given day decreased from 65 percent in 1987 to only 45 percent in 2008.

Daily newspaper readership overall has declined since 1987.

Declining newspaper readership and circulation are not the only contributors to the falling volume of newspapers received by households. With current technology and alternate delivery systems, national newspapers such as the Wall Street Journal, The New York Times, and USA Today deliver their papers to prime urban and suburban household customers before breakfast. Local printing/ distribution and morning delivery mean these copies no longer move through the mail.

Periodicals Mail and Household Characteristics

Income, Education, and Age

Table 6.2 shows that as income and education increase, periodicals volume tends to increase. Households where the head householder has a college education receive the most periodicals, averaging 1.4 per week. Similarly, households with incomes over $100,000 get an average of almost two periodicals per week, more than double what households earning less than $35,000 receive.

Households with incomes over $100,000 receive more than twice as many periodicals as households earning less than $35,000.

Table 6.3 shows periodicals volume by age and income. The higher the income and age of the household, the higher the volume of periodicals received. For households whose heads are under 34 and with incomes less than $35,000, the average is only 0.3 pieces per week. Households with income over $100,000 and whose heads are over 55 receive the most periodicals.

Table 6.2: Periodicals by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Educational Attainment of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	.5	.6	.6	.9	.6
$35 to $65	.8	.9	1.1	1.2	1.0
$65 to $100	.9	1.1	1.0	1.3	1.1
Over $100	1.9	1.3	1.3	1.6	1.5
Average	.7	.9	1.0	1.4	1.1

Source: HDS Diary Sample, FY 2008.

Table 6.3: Periodicals by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 34	35 to 54	Over 55	Average
Under $35	.3	.5	.9	.6
$35 to $65	.8	.8	1.4	1.0
$65 to $100	.8	1.1	1.5	1.1
Over $100	1.3	1.4	1.9	1.5
Average	.7	1.0	1.3	1.1

Source: HDS Diary Sample, FY 2008.

Household Size

Table 6.4 and Table 6.5 show that as households increase in size, periodicals volume increases. In households with two adults, periodicals volume is higher than in one-person households, but the presence of additional adults beyond two has no significant effect on receiving periodicals.

Table 6.4: Periodicals by Size of Household (Pieces per Household per Week)

Household Size
One person	.8
Two	1.3
Three	1.0
Four	1.0
Five or more	.8
Average	1.1

Source: HDS Diary Sample, FY 2008.

Table 6.5: Periodicals by Number of Adults in Household (Pieces per Household per Week)

Number of Adults
One	.8
Two	1.1
Three or more	1.1
Average	1.1

Source: HDS Diary Sample, FY 2008.

Internet Access

As with many other types of mail, wired households receive more periodicals through the mail, as shown in Table 6.6. And, as with those other types of mail, this is largely the result of the correlation between income, education, and Internet access. As household Broadband access to the Internet becomes more common, it is likely that more periodical content will be delivered over the Internet, rather than by mail.

Table 6.6: Periodicals by Type of Internet Access (Pieces per Household per Week)

Type of Internet Access
Broadband	1.1
Dial-up	1.1
None	.8
Average	1.1

Source: HDS Diary Sample, FY 2008.

Subscription Type

Figure 6.5 provides an overview of subscription type for FY 1987, 2007, and 2008. As shown, the distribution of subscription type has remained relatively stable over the last two years and similar to the distribution in the 1987 period. In 2008, a household member ordered and paid for 44 percent of total periodicals sent to households. An additional 36 percent were free—either ordered by a household member or delivered to the household without a freestanding order, for example, as a prerogative of membership in a professional, fraternal, or religious organization.

Figure 6.5: Subscription Type by Year

Subscription Type	1987	2007	2008
Paid	49%	45%	44%
Free (ordered)	4%	7%	7%
Gift	4%	4%	4%
Free (not ordered)	10%	32%	29%
Other	3%	1%	1%

Source: HDS Diary Sample, FY 1987, 2007, and 2008.
Base: Total Periodicals Mail volume – RPW.
Note: Percentages do not add to 100 due to the exclusion of periodicals sent to non-households and those to
which no response was given as to subscription type.

Examining these volumes by sender type shows that commercial organizations sent more than any individual member organizations. Member organizations are professional affiliations, charitable, religious, and veterans’ organizations, educational groups, and unions.

As shown in Table 6.7, professional organizations combined account for 10 percent of total periodicals received by households. Charitable organizations account for only one percent of periodicals received by households.

Table 6.7: Periodicals by Sender Type

Sender Type	Pieces per Household per Week	Percent of Periodicals Received by HH
Commercial Organization	.82	78%
Professional Organization	.10	9%
Religious Organization	.05	4%
Educational Organization	.05	5%
Union	.01	1%
Charitable Organization	.01	1%
Veterans’ Organization	.01	1%
Unclassified	.01	1%
Total	1.05	100%

Source: HDS Diary Sample, FY 2008.

Volume Drivers

A number of factors influence a household’s receipt of periodicals. Several of these variables are demographic, while others are more behavioral in nature. In the past, income seemed to influence volume strongly, since periodicals are usually received through a paid subscription.

Typically, higher income households subscribe to more magazines and newspapers. In 2008, the number of periodicals per household declined for the lower and middle third income groups, as shown in Figure 6.6.

However, over the long run, the number of periodicals per household has declined for all income groups, including higher income households.

Figure 6.6: Number of Periodicals Received per Week by Households by Income Group

Income Group	1978	1987	1995	2008
Lower Third	1.4	1.0	0.9	0.6
Middle Third	2.0	1.6	1.4	1.0
Highest Third	3.5	2.4	1.6	2.1

Source: HDS Diary Sample, FY 1978, 1987, 1995, and 2008.

Chapter 7: Packages

Introduction

This chapter discusses packages sent and received by households. Packages can be mailed via the U.S. Postal Service at a variety of rates; for example, documents are usually sent as First-Class Mail, Priority Mail, or Express Mail, while product samples are generally Standard Mail. Merchandise and goods can be any of these classes, or any of the Package Services subclasses, including Parcel Post, Bound Printed Matter, and Media Mail.

The Package Market

The package delivery market is an important and growing segment of the economy. From 1999 to 2008, package volume grew from 7.6 billion pieces to 8.4 billion pieces, averaging 1.1 percent growth per year. Package revenues increased from $45.6 billion to $64.7 billion over the same period, an average of four percent per year. Over that time, however, segments of the market performed differently.

There are three major segments of the package market:

· Overnight air,

· Two- and three-day air, and

· Ground.

The U.S. Postal Service is a major player in the two- and three-day air segment but provides services in all: Express Mail in the overnight segment, Priority and First-Class Mail in the two- and three-day segment, and Standard Mail and Package Services in the ground segment.

Table 7.1 shows the volume and growth rates of the three segments of the package delivery market. Between the early 1980s and 2000, the overall market grew, driven by growth in the overnight and two-day and three-day air segments. This growth was largely due to expansion of the services offered by United Parcel Service (UPS) and Federal Express (FedEx). UPS began to push strongly into the overnight market, and both UPS and FedEx developed new two- and three-day offerings to compete with Priority Mail.

The 2001 recession led to declines in all segments of the package market, with the largest effect in the two-day and three-day air segment as customers shifted to time-guaranteed ground service in the face of hard economic times. The slow recovery in 2002 continued to adversely affect all segments of the package market, except for ground. Ground began to pick up in 2002 at the expense of the other segments. This pattern continued through 2004. As a result, the ground segment accounts for more of the package market by volume than it has at any point over the last ten years (see Figure 7.1). In 2005 and 2006, the recovering economy boosted all segments of the package market. In 2007 and 2008, however, the instability of fuel prices and the recession contributed to decreases in both overnight and two- and three-day service volumes, while improved service resulted in continued growth for ground volumes.

From 1999 to 2008, package volume grew from 7.6 billion to 8.4 billion pieces.

While many carriers serve the package delivery market, FedEx, UPS, the U.S. Postal Service, and DHL are the larger players

Table 7.1: Total Package Market Volume Growth (Units in Millions)

Fiscal Year	Overnight Air		Two- & Three- Day Air		Ground		Total
Fiscal Year	Volume	Percent Growth	Volume	Percent Growth	Volume	Percent Growth	Volume	Percent Growth
1999	1,115	5.4%	2,161	1.8%	4,335	1.6%	7,611	2.2%
2000	1,160	4.0%	2,225	3.0%	4,571	5.4%	7,956	4.5%
2001	1,126	-2.9%	2,135	-4.1%	4,555	-.4%	7,815	-1.8%
2002	1,063	-5.6%	1,980	-7.3%	4,578	.5%	7,621	-2.5%
2003	1,062	-.1%	1,842	-7.0%	4,737	3.5%	7,642	.3%
2004	1,044	-1.7%	1,873	1.7%	4,931	4.1%	7,848	2.7%
2005	1,057	1.2%	1,931	3.1%	5,105	3.5%	8,093	3.1%
2006	1,075	1.7%	2,009	4.0%	5,254	2.9%	8,338	3.0%
2007	1,051	-1.8%	1,966	-2.2%	5,438	3.5%	8,455	1.5%
2008	997	-5.2%	1,869	-4.9%	5,527	1.6%	8,393	-0.7%

Source: UPS, FedEx, and U.S. Postal Service data, Colography Group.

Figure 7.1: Package Delivery Market Segment Share

Postal Fiscal Year	Overnight Air	Two- & Three- Day Air	Ground
1999	15%	28%	57%
2000	15%	28%	58%
2001	14%	27%	58%
2002	14%	26%	60%
2003	14%	24%	62%
2004	13%	24%	63%
2005	13%	24%	63%
2006	13%	24%	63%
2007	12%	23%	64%
2008	12%	22%	66%

Source: UPS, FedEx, and U.S. Postal Service data, Colography Group.

Tables 7.2-7.5 have been redacted.

Postal Service Package Volume

Compared to other mail, like letters and flats, the number of packages captured in the Household Diary Study is small, as most people do not receive packages on a regular basis. The interpretation of the results should be conducted with this in mind.

Postal Service package volume sent and received by households increased 16 percent in FY 2008 after remaining unchanged in FY 2007. When sent volumes are isolated, households sent 37 percent more packages in 2008 than in 2007, increasing their use of First-Class Mail Packages.

Households received 2.7 billion packages in FY 2008 and sent 1.0 billion, as seen in Table 7.6. When the combined volumes (excluding Standard) are compared to FY 2006, First-Class and Package & Shipping Services sent by households increased by 54 percent in FY 2008. First-Class and Package & Shipping Services received by households, when combined, increased by 10 percent compared to FY 2006. First-Class packages sent and received increased by 50 percent, driven by a strong growth in CD/DVD rentals. Standard Mail packages, on the other hand, fell 12 percent compared to 2006.

Table 7.6: Postal Service Sent and Received Packages, FY 2006, 2007, and FY 2008 (Units in Millions)

Mail Classification	Volume (Millions of Pieces)
	2006		2007		2008
	Sent	Received	Sent	Received	Sent	Received
First-Class	352	869	445	974	672	1,154
Standard Mail	—	674	—	653	—	594
Package and Shipping Services	299	1,002	258	829	330	897
Unclassified	23	115	39	71	13	58
Total Packages	674	2,660	742	2,527	1,015	2,704
Mail Classification	Percent of Pieces
	2006		2007		2008
	Sent	Received	Sent	Received	Sent	Received
First-Class	52%	33%	60%	39%	66%	43%
Standard Mail	—	25%	—	26%	—	22%
Package and Shipping Services	44%	37%	35%	33%	33%	33%
Unclassified	3%	4%	5%	3%	1%	2%
Total Packages	100%	100%	100%	100%	100%	100%

Source: HDS Diary Sample, FY 2006, 2007, and 2008.
Notes: First-Class Packages include 1.2 billion pieces of CD/DVD rentals sent and received, reported in First-Class Mail letters in Tables E.1, 1.5, and 1.6.
Percentages may not sum to 100 due to rounding..
Totals include 278 million pieces of household-to-household packages that are counted in both sent and received.

Packages and Household Characteristics

Income, Education, and Age

According to the HDS, high-income households sent and received more packages than their less affluent counterparts in FY 2008, as shown in Figure 7.2.

In fact, households in the highest income bracket received almost double the volume of packages than households with incomes under $35,000. Households headed by younger people on average received about the same number of packages as those with older heads of household, as shown in Table 7.7. Younger households with income between $65,000 and $100,000, however, seemed to receive many more packages. This may be the case because young heads of households make more purchases online than older ones. When it comes to sending packages, younger households with income between $65,000 and $100,000 again sent more packages than older households, as shown in Table 7.8.

Figure 7.2: Postal Service Sent and Received Packages by Household Income (Pieces per Household per Week)

Household Income (Thousands)	Received	Sent
Under $35	0.31	0.08
$35 to $65	0.41	0.15
$65 to $100	0.53	0.22
Over $100	0.60	0.22

Source: HDS Diary Sample, FY 2008.
Base: Packages Sent and Received by Households and Delivered by
U.S. Postal Service.

Table 7.7: Postal Service Received Packages by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of Head of Household			Average
Household Income (Thousands)	Under 35	35 to 54	Over 55	Average
Under $35	.23	.31	.35	.31
$35 to $65	.39	.43	.41	.41
$65 to $100	.69	.47	.51	.53
Over $100	.47	.58	.68	.60
Average	.45	.45	.44	.45

Source: HDS Diary Sample, FY 2008.

Table 7.8: Postal Service Sent Packages by Income and Age (Pieces per Household per Week)

Household Income (Thousands)	Age of head of Household			Average
Household Income (Thousands)	Under 35	35 to 54	Over 55	Average
Under $35	.09	.09	.07	.08
$35 to $65	.15	.15	.14	.15
$65 to $100	.32	.20	.18	.22
Over $100	.10	.25	.20	.22
Average	.18	.20	.13	.17

Source: HDS Diary Sample, FY 2008.

The Household Diary Study indicates that households whose heads have college degrees tend to receive and send more packages on average than households with lower educational attainment. These results are shown in Tables 7.9 and 7.10.

Table 7.9: Postal Service Received Packages by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Education of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	.25	.26	.42	.41	.31
$35 to $65	.31	.41	.40	.47	.41
$65 to $100	.39	.47	.55	.56	.53
Over $100	.58	.72	.52	.59	.60
Average	.27	.41	.46	.53	.45

Source: HDS Diary Sample, FY 2008.

Table 7.10: Postal Service Sent Packages by Income and Education (Pieces per Household per Week)

Household Income (Thousands)	Education of Head of Household				Average
Household Income (Thousands)	Less than High School	High School Graduate	Some College or Technical School	College Graduate	Average
Under $35	.03	.06	.13	.18	.08
$35 to $65	.04	.11	.16	.22	.15
$65 to $100	.06	.17	.18	.26	.22
Over $100	.00	.15	.25	.22	.22
Average	.03	.12	.16	.25	.17

Source: HDS Diary Sample, FY 2008.

Household Size

The Household Diary Study shows that larger households tend to receive and send more packages than smaller households, as shown in Table 7.11. This, however, does not hold true for households with three or more members and is probably due to the likelihood that more children are present in larger households.

Table 7.11: Postal Service Received and Sent Packages by Size of Household (Pieces per Household per Week)

Household Size	Received	Sent
One person	.31	.12
Two	.52	.19
Three	.44	.19
Four	.45	.14
Five or more	.43	.16
Average	.45	.17

Source: HDS Diary Sample, FY 2008.

Table 7.12: Postal Service Received and Sent Packages by Number of Adults in Household (Pieces per Household per Week)

Number of Adults	Received	Sent
One	.31	.16
Two	.48	.18
Three or more	.47	.12
Average	.45	.17

Source: HDS Diary Sample, FY 2008.

Internet Access

Access to the Internet seems to play an important part in determining the number of packages sent and received by households. Table 7.13 shows the packages sent and received by households with Internet access and households without. In FY 2008, households with Broadband Internet access sent almost three times as many and received more than double the number of packages sent and received by households without Internet access. These relationships probably reflect the correlation between income, education, and Internet access.

In FY 2008, households with Internet access sent and received more packages than households without Internet access.

Table 7.13: Received and Sent Packages by Household Internet Access (Pieces per Household per Week)

Type of Internet Access	Received	Sent
Broadband	.53	.20
Dial-up	.38	.17
None	.25	.07
Average	.45	.17

Source: HDS Diary Sample, FY 2008.

Household Package Contents

As shown in Table 7.14, packages received by households most often contain music and videos, books, clothes, and pharmaceuticals—a sign that online purchases and mail order retail are primary drivers of household package volume. In fact, online purchases have contributed to a significant growth in music/video contents received.

This type of content increased by more than any other type, growing from 25 percent of all content types in 2006 to 38 percent in 2008, mostly due to volumes generated by video rental outfits like Netflix and Blockbuster.

Households most often send music and videos, clothes, books, and toys. Primarily, this is due to the fact that so many household packages are sent in the holiday season, but it may also be evidence of the growing use of online sales and auction portals, such as eBay.

Table 7.14: Contents of Postal Service Sent and Received Packages

Contents	Volume (Millions of Pieces)
	2006		2007		2008
	Sent	Received	Sent	Received	Sent	Received
Music/Video	237	586	359	595	543	835
Books	38	290	49	343	121	302
Clothing	71	173	119	203	124	171
Pharmaceuticals/Contacts	1	245	7	293	10	267
Toys	28	53	62	57	85	78
Food Products	16	51	30	68	31	64
Checkbooks	2	90	2	80	1	74
Computer Hard- and Software	12	129	16	30	26	36
Electronic Equipment	15	42	17	53	24	37
Travel Products and Information	8	42	12	50	8	30
Sporting Goods	7	16	4	28	8	30
Footwear/Shoes	4	21	6	21	3	24
Telecommunications	4	5	6	11	4	10
Other Contents	271	533	131	564	132	602
Total Packages	674	2,660	742	2,527	1,015	2,704

Table 7.14: Contents of Postal Service Sent and Received Packages (cont.)

Contents	Percent of Pieces
	2006		2007		2008
	Sent	Received	Sent	Received	Sent	Received
Music/Video	35%	22%	48%	24%	53%	31%
Books	6%	11%	7%	14%	12%	11%
Clothing	11%	7%	16%	8%	12%	6%
Pharmaceuticals/Contacts	0%	9%	1%	12%	1%	10%
Toys	4%	2%	8%	2%	8%	3%
Food Products	2%	2%	4%	3%	3%	2%
Checkbooks	0%	3%	0%	3%	0%	3%
Computer Hard- and Software	2%	5%	2%	1%	3%	1%
Electronic Equipment	2%	2%	2%	2%	2%	1%
Travel Products and Information	1%	2%	2%	2%	1%	1%
Sporting Goods	1%	1%	1%	1%	1%	1%
Footwear/Shoes	1%	1%	1%	1%	0%	1%
Telecommunications	1%	0%	1%	0%	0%	0%
Other Contents	40%	20%	18%	22%	13%	22%
Total Packages	100%	100%	100%	100%	100%	100%

Source: HDS Diary Sample, FY 2006, 2007, and 2008.
Notes:
FY 2006 did not include “Contents” for Expedited Sent; Total Expedited Sent was added to “Other Contents” in Sent totals.
Contents questions are multiple response; total packages does not include multiple contents and, as such, does not equal the sum for each column.
Does not include contents for which no answer was given (DK/RF).
Music/Video packages include 1.2 billion pieces of CD/DVD rentals sent and received,, reported in
First-Class Mail letters in Tables E.1, 1.5, and 1.6.

Appendix B: Methodology

Study Design and Methodology

The U.S. Postal Service Household Diary Study (HDS), conducted by NuStats on behalf of the Demand Forecasting & Economic Analysis division of the Postal Service’s Finance Department, is a continuously fielded study that measures household mail volumes, mail uses, and attitudes about the mail and advertising.

The HDS uses a two-stage survey design: Stage 1 is an interviewer-mediated household recruitment interview. Stage 2 is a self-completion mail diary [Appendix C contains the survey instruments]. The HDS uses a multi-mode approach to minimize response bias, to improve data accuracy through efficient data checking and householder re-contacts, and to provide immediate telephone assistance to participants during their diary week.

Household Recruitment Interview

The household recruitment interview collects information on household and personal demographics, recall of mail sent and received, adoption and use of communications technologies, bill payment behavior, and attitudes towards advertising.

Mail Diary

The mail diary covers a seven-day period (Monday to Sunday) and collects information on the number of mail pieces received and sent, industry source, mail characteristics, and attitudes regarding mail received.

Sample Design

This section describes the household selection process for participation in the HDS. A sample is the representative subset of the survey population used to gain information about the entire population. The population of inference for the HDS is all U.S. households. The probability design ensures each household has an equal chance of selection.

The sample design allows projections of results to all U.S. households. The Postal Service provided an address sample that NuStats matched for known telephone listings. Generally, the study was conducted using telephone sampling for household selection and screening, followed by diaries mailed to eligible households and completed by each household unit. Households without telephones were contacted via the U.S. Mail. The sample design involves a systematic sample stratified by strata (or urban/rural location) and Census regions, ensuring even coverage across the United States.

A master national sample was specified and drawn by in-house sampling statisticians. The Postal Service drew the household probability sample from the national address database following NuStats specifications. The master list, sorted by zip code, was used to draw a systematic stratified sample. This sample was then tagged with variables indicating each housing unit’s geographic location in terms of Census region and stratum.

Sample was drawn for each of the four quarters based on known proportions of households within a Census region and urban or rural location. Census regions are defined by state. Urban and rural location is defined by county and metropolitan status as defined by the U.S. Census Bureau. The strata are defined by county as follows:

· Stratum 1: Counties that are part of the thirty largest metropolitan areas in the United States, defined by population, according to Census 2000 100 percent counts.

· Stratum 2: Counties that are part of metropolitan areas but are not in Stratum 1.

· Stratum 3: Counties that are not part of a metropolitan area.

Quarterly sample frames were then derived based on the amount of sample needed for each quarter, and sample was allocated to region and strata cells based on known proportions as indicated by Census 2000 counts of households.

The sample was continuously “fielded” throughout all 52 weeks of the year. Sample was released in a manner designed to recruit equal sample sizes for each diary week, resulting in a sample file of at least 5,200 households. Table B.1 below shows the distribution of recruited and completed households.

Table B.1: Sample by Postal Quarter

Quarter	Required Sample	Recruited Households	Completed Households
Quarter 1	1,300	2,028	1,328
Quarter 2	1,300	2,022	1,378
Quarter 3	1,300	2,020	1,355
Quarter 4	1,300	1,922	1,251
Total	5,200	7,992	5,312

Data Collection Method

The study uses a two-stage design in which households are recruited to participate in the diary study in a household interview (Stage 1) and recruited households complete a seven-day diary of mail received and sent (Stage 2).

Stage 1: Household Recruitment Interview

The main function of the household recruitment interview is to recruit households to participate in the diary study. In addition, the interview collects information on household and person demographics, recall of mail sent and received, adoption and use of communication technologies, bill payment behavior, and attitudes towards advertising.

Households completed the recruitment interview via computer-assisted telephone interviewing (CATI) technology. The FY 2008 household interview consisted of 7,992 completed interviews with an adult member (age 18 or older) in the household. These respondents represented a cross-section of U.S. households by geography. The household interview contained 125 data items and took an average of 24 minutes to administer. The flow of the interview included the following elements:

· Introduction. Each interview began with an introduction and purpose of the interview. The interviewer also verified the respondent’s address.

· Technology adoption and use. Questions were asked about ownership and use of personal computers, fax machines, Internet, and other electronic communication. One battery of questions came from the Technology Augment survey, which was discontinued following the FY 2005 study.

· Mail volume recall. The respondent was asked to summarize how many personal letters, greeting cards, electronic greeting cards, and packages all members of the household have sent in a particular time period.

· Use of postal services. The use of post offices, post office boxes, and private mailing services was explored.

· Communication with non-U.S. friends and relatives. If members of the households had any friends or relatives living overseas, they were asked about cards, letters, e-mails, telephone calls, and wire transfers sent.

· Bill payments. Bill payment volumes, methods, and timing were explored in depth.

· Periodicals. Summary volumes of magazines and newspapers received by the household were collected.

· Advertising. Descriptions of advertising received by the household as well as attitudes about the advertising, and orders placed because of it, were elicited.

· Online shopping. Respondents were asked about their online shopping habits, including questions about shipping methods.

· Financial accounts and credit cards. Respondents were asked to summarize the total accounts and credit cards held by the household.

· Household and person demographics. Demographic items included gender, age, marital status, employment status, educational attainment, race/ethnicity, household income, household wage earners, home ownership, residence tenure, and dwelling type.

The completion rate for the FY 2008 study (defined as the proportion of respondents who completed the diary portion relative to all recruited respondents) was 66.5 percent. This represents no change from 66.5 percent in 2007. Most recruitment refusals took place prior to hearing who NuStats was and why the firm was calling. Refusal households that were later re-contacted cited time constraints and privacy concerns as reasons for not participating.

Stage 2: Mail Diary Package

Recruited households were sent mail diaries, instructions, and a toll-free “help” telephone number. The night before an assigned diary week began, NuStats made reminder calls to households to confirm receipt of the packet and to answer any questions. If the packet was not received by this time, NuStats re-confirmed the address, assigned a new diary week, and re-sent the packet.

The diary package contained a Certificate of Appreciation, Instruction Booklet, and a photo-based “Quick Start” sheet. The Instruction Booklet provided information about the study, answers to frequently asked questions, instructions for filling out the diary, guidelines for sorting mail, and examples of mail markings.

The diary instrument was composed of two parts:

· The Question sheets. The Question sheets were color-coded by mail classification (e.g. First-Class Mail received, First-Class Mail sent, Standard, Bulk Rate, Nonprofit, etc.). Information collected about each mail classification included: type of mail piece (i.e. envelope, postcard, catalog), receiver zip code, sender zip code, mail classification, mail type, sender type, information about advertising enclosed and receiver reaction or responses to it, and timeliness of the mail piece arrival.

· Seven answer booklets, each specific to a day of the week. Each booklet was arranged by mail classification and color-coded to correspond to the question sheets.

Households were instructed to enclose pertinent information from each mail piece received to enable NuStats editors to verify or clarify quantity and classes of mail recorded in the diaries. NuStats uses a three-stage editing process to check the accuracy of the diary information recorded by each household. First, returned diary packets are culled for those that represented a reasonable attempt to complete the diary. Second, the diary information recorded for each day is checked to assure sufficient and logical answers as well as to verify recorded information against the mail markings returned in the package. In stage three, a second editor re-checks the diary information recorded for each day. This second edit functions as a quality control check to assure data accuracy. Completed diaries then receive a rating of 1 (little follow-up needed), 2 (follow-up call needed), or 3 (unusable).

During the editing process, correction callbacks were made to households to clarify information or to fill-in missing information. About three percent of returned diaries did not pass the edit checking process, and over half required some form of respondent re-contact to clarify or correct diary information.

Of the 7,992 households recruited to receive a diary package, 5,312 actually returned acceptable completed diaries (defined as containing data suitable for analysis) to NuStats for a completion rate of 66.5 percent.

Data Processing

Data Management

Data management entails processing the information resulting from the Household Interview and Mail Diaries, making it available for analysis, storing it, and documenting it. Household interviews were conducted using CATI technology, where the questionnaire and relevant data checks were programmed into a master questionnaire that was used by all interviewers to administer the survey. Recorded data was extracted from the CATI software into a database management file.

Returned diary information was recorded (entered) in one of two methods, either traditional manual data entry or through optical scanning technology. A data entry program, pre-programmed with data check routines, captured approximately 50 percent of the diary data in a database management file. The remaining 50 percent were scanned using Teleform software. Once scanned, the data were translated into a database file that was easily appended to include the manually entered data.

After completion of data collection, editing and entry tasks, the survey data were contained in eleven data files. One data file contained the Household Interview data. The Mail Diary data were in ten files—one for each mail classification (First-Class Mail received, First-Class Mail sent, etc.). These files were all developed in SAS-PC.

The file variables are identified by variable name. For each file variable, the File Information contains:

· Label, which is a brief description of the variable;

· Measurement level, which specifies the level of measurement as scale (numeric data on an interval or ratio scale), ordinal, or nominal. Nominal and ordinal data can be either string (alphanumeric) or numeric;

· Value formats, which identify the response codes; and

· Column width and alignment.

Several SAS programming operations were necessary to put the Mail Diary data in the desired form for analysis. The structure for these programs was contained in a separate File Information document that accompanied the data delivery.

Various edit routines were used to check the consistency of the reported data and to identify reporting or entry errors. Routine edit checks were conducted to examine questionnaire responses for reasonableness and consistency across items. Routine checks included such items as:

· Response code range checks;

· Checks for proper data skips and patterns of answering questions consistent with prior answers;

· Checks for realistic responses (e.g., number of online purchases possible in one month); and

· Checks for high frequency of item non-response (missing data from question refusals).

When conducting these checks, data were compared against the actual survey forms or respondents were re-contacted. NuStats identified extreme values that were impossible or unlikely, and corrected inconsistent data when possible. For example, extremely high numbers of computers owned by a household were examined to determine whether they were legitimate or probable entry errors.

Some extreme/inconsistent data values unable to be corrected or verified were edited to missing values.

In addition, NuStats performed in-depth customized data checks to ensure data within each record of the Household Interview were logically consistent. For example, a respondent should report paying bills by Internet only if he/she also reports having Internet access. Customized checks were also used to ensure consistency between the Household Interview and Mail Diary data. For example, an addressee was identified as a child (under 18) in the diary only if the household also reported having a child in the Household Interview.

Raw variables, derived variables, and analytical programs were documented in a data documentation binder that accompanied the data delivery. Any information that could be directly or indirectly used to identify individual respondents, such as respondent names, addresses, or telephone numbers, were removed to protect respondent confidentiality and privacy. Such information is stored in a locked archival file.

Sample Demographic Profile (all counts unweighted), Government Fiscal Year 2008

Table B.2: Annual Household Income by Recruitment/Retrieval Status

Annual Household Income	Recruited Households		Total	Sample Percent	Population Percent
Annual Household Income	Retrieved	Not Retrieved	Total	Sample Percent	Population Percent
Under $10,000	119	141	260	2.5%	7.2%
$10,000 - $14,999	156	148	304	3.3%	6.0%
$15,000 - $19,999	163	109	272	3.4%	5.8%
$20,000 - $24,999	205	136	341	4.3%	5.8%
$25,000 - $34,999	420	213	633	8.9%	10.7%
$35,000 - $49,999	671	297	968	14.2%	14.1%
$50,000 - $64,999	727	334	1,061	15.4%	11.9%
$65,000 - $79,999	727	252	979	15.4%	9.0%
$80,000 - $99,999	583	240	823	12.3%	9.1%
$100,000 or more	955	415	1,370	20.2%	20.3%
Don't Know	114	138	252	N/A	N/A
Refused	472	257	729	N/A	N/A
Total	5,312	2,680	7,992	100.0%	100.0%

Notes:
Sample Percent based only on retrieved households that provided a response to the Household Income question.
Population percent based on U.S. Census Bureau, Current Population Survey Annual Demographic File (March 2008).

Table B.3: Number of Adults in Household by Recruitment/Retrieval Status

Number of Adults in Household	Recruited Households		Total	Sample Percent	Population Percent
Number of Adults in Household	Retrieved	Not Retrieved	Total	Sample Percent	Population Percent
One	1,145	614	1,759	21.6%	33.4%
Two	2,322	941	3,263	43.7%	51.9%
Three	775	431	1,206	14.6%	10.4%
Four	693	396	1,089	13.0%	3.3%
Five or More	377	298	675	7.1%	1.0%
Total	5,312	2,680	7,992	100.0%	100.0%

Notes: Sample Percent based only on retrieved households.
Population percent based on U.S. Census Bureau, Current Population Survey Annual Demographic File (March 2008).

Table B.4: Geographic Region by Recruitment/Retrieval Status

Geographic Region	Recruited Households		Total	Sample Percent	Population Percent
Geographic Region	Retrieved	Not Retrieved	Total	Sample Percent	Population Percent
Northeast	1,120	510	1,630	21.1%	19.2%
Midwest	1,345	556	1,901	25.3%	23.4%
South	1,783	1,076	2,859	33.6%	36.0%
West	1,064	538	1,602	20.0%	21.3%
Total	5,312	2,680	7,992	100.0%	100.0%

Notes:
Sample Percent based only on retrieved households.
Population percent based on U.S. Census Bureau, Census 2000, Summary File 3, Table H6 (Occupied Housing Units).

Table B.5: Urban/Rural Location by Recruitment/Retrieval Status

Urban / Rural Location	Recruited Households		Total	Sample Percent	Population Percent
Urban / Rural Location	Retrieved	Not Retrieved	Total	Sample Percent	Population Percent
30 Largest Metro Areas	2,564	1,365	3,929	48.3%	48.7%
Other Metro Areas	1,625	778	2,403	30.6%	29.9%
Non-Metropolitan Areas	1,123	537	1,660	21.1%	21.4%
Total	5,312	2,680	7,992	100.0%	100.0%

Notes: Sample Percent based only on retrieved households.
Population percent based on U.S. Census Bureau, Census 2000; Strata based on Metro Area Classification by County.

Table B.6: Age of Head of Household by Recruitment/Retrieval Status

Age of Head of Household	Recruited Households		Total	Sample Percent	Population Percent
Age of Head of Household	Retrieved	Not Retrieved	Total	Sample Percent	Population Percent
18 - 24	40	54	94	0.8%	5.4%
25 - 44	1,092	688	1,780	20.6%	35.8%
45 - 64	2,401	1,087	3,488	45.4%	38.1%
65+	1,756	829	2,585	33.2%	20.7%
Refused	23	22	45	N/A	N/A
Total	5,312	2,680	7,992	100.0%	100.0%

Notes:
Sample Percent based only on retrieved households that provided a valid response.
Population percent based on U.S. Census Bureau, Current Population Survey Annual Demographic File (March 2008).

Table B.7: Educational Attainment of Head of Household by Recruitment/Retrieval Status

Educational Attainment of Head of Household	Recruited Households		Total	Sample Percent	Population Percent
Educational Attainment of Head of Household	Retrieved	Not Retrieved	Total	Sample Percent	Population Percent
8th grade or less	80	105	185	1.5%	4.9%
Some high school	192	173	365	3.6%	8.1%
High school graduate	1,409	866	2,275	26.6%	29.5%
Some college	1,010	517	1,527	19.1%	19.1%
Technical school graduate	218	99	317	4.1%	4.4%
College graduate	1,408	551	1,959	26.6%	23.7%
Postgraduate work	971	351	1,322	18.4%	10.4%
Refused	24	18	42	N/A	N/A
Total	5,312	2,680	7,992	100.0%	100.0%

Notes: Sample Percent based only on retrieved households that provided a valid response.
Population percent based on U.S. Census Bureau, Current Population Survey Annual Demographic File (March 2008).

Data Weighting and Expansion

This section explains the methodology used for creating sampling and expansion weights for the FY 2008 Household Diary Study.

The FY 2008 HDS uses both weighting and expansion factors to 1) adjust the sample data to match population parameters and 2) expand mail volumes exhibited in the diary sample to all U.S. households.

Weighting Procedures – FY 2008 Recruitment

Sampling weights were produced separately for the households that participated in the recruitment phase of the FY 2008 HDS, and those that completed and returned a diary. There were two main weighting variables: Geography and Education. FY 2008 recruitment geographic weights were derived from sample households’ strata and region:

Strata: As mentioned previously, there are three strata. A household was classified within strata as residing in the top 30 metropolitan areas nationwide, any other metropolitan area, or a non-metropolitan area.[1] Table B.8 provides unweighted sample counts from FY 2008 recruitment data for strata:

Table B.8: HDS 2008 Recruitment Data: Urban/Rural Location

Urban/ Rural Location	Household	Percent	Cumulative Percent
30 Largest Metro Areas	3,929	49.2%	49.2%
Other Metro Areas	2,403	30.1%	79.2%
Non-Metro Counties	1,660	20.8%	100.0%
Total	7,992	100.0%

Regions: Households were classified by state. There are four mutually exclusive regions as defined by the U.S. Census Bureau (along with respective states):

Four Census Regions:

Northeast: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

Midwest: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

South: Alabama, Arkansas, Delaware, District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

West: Arizona, Alaska, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

Table B.9: HDS 2008 Recruitment Data: Geographic Region

Geographic Region	Households	Percent	Cumulative Percent
Northeast	1,630	20.4%	20.4%
Midwest	1,901	23.8%	44.2%
South	2,859	35.8%	80.0%
West	1,602	20.0%	100.0%
Total	7,992	100.0%

Strata/Regions: Table B.10 indicates the distribution of households from the FY 2008 recruitment sample within strata and regions.

Population parameters for the intersection of the three strata and four regions were based on 2000 Census counts of households by county. As Table B.10 shows, each county was grouped according to its location within these 12 mutually exclusive and collectively exhaustive geographic categories.

To calculate the weight for each strata/region interval, the population percentage was divided by the sample percentage. Geography weights appear in the last column to the right in Table B.11.

Table B.10: Distribution of Households within Strata and Region

Geographic Region	Stratum (Urban/Rural Location)			Total
Geographic Region	30 Largest Metro Areas	Other Metro Areas	Non-Metro Areas	Total
Northeast	1,140	308	182	1,630
Midwest	876	531	494	1,901
South	905	1,194	760	2,859
West	1,008	370	224	1,602
Total	3,929	2,403	1,660	7,992

Table B.11: HDS 2008 Recruitment Data: Construction of Geographic Weight

Stratum	Geographic Region	Households (Population)	Percent	Households (Sample)	Percent	Weight
30 Largest Metro Areas	Northeast	13,512,686	12.8%	1,140	14.3%	.90
	Midwest	11,317,737	10.7%	876	11.0%	.98
	South	12,488,134	11.8%	905	11.3%	1.05
	West	14,020,576	13.3%	1,008	12.6%	1.05
Other Metro Areas	Northeast	4,134,396	3.9%	308	3.9%	1.02
	Midwest	6,617,353	6.3%	531	6.6%	.94
	South	15,769,481	15.0%	1,194	14.9%	1.00
	West	5,061,183	4.8%	370	4.6%	1.04
Non-Metro Areas	Northeast	2,638,540	2.5%	182	2.3%	1.10
	Midwest	6,799,442	6.4%	494	6.2%	1.04
	South	9,757,599	9.3%	760	9.5%	.97
	West	3,362,974	3.2%	224	2.8%	1.14
Totals		105,480,101	100.0%	7,992	100.0%	1.00

Source: Household Population Estimates based on U.S. Census Bureau, 2000 Census.

Education: In addition to weighting for differences in geography between the sample and the population, an additional weight was created based on differences in the educational attainment of the head of household. For those households in which either more than one person was identified as the head of household or no individual was identified as the head of household, one was chosen based on the following sequence of criteria: 1) oldest male, 2) oldest female (if no male exists). For cases in which two candidates for the head of the household were of the same age, the respondent on the phone was chosen.

Known population parameters were based on weighted proportions derived from the U.S. Census Bureau’s Current Population Survey annual demographic file for March 2008. In cases where the head of household refused to provide his/her education level, an educational level was imputed based on the average educational level of like cases. There were 42 such cases in 2008; mean levels of educational attainment were based on geography (strata and regions), as well as age and income level, if provided.

Table B.12: HDS 2008 Recruitment Data: Construction of Educational Attainment Weight

Educational Attainment	Households (Population)	Percent	Households (Sample)	Percent	Weight
8^th Grade or Less	5,678,671	4.9%	185	2.3%	2.10
Some high school	9,447,954	8.1%	367	4.6%	1.76
High school graduate	34,415,623	29.5%	2,283	28.6%	1.03
Some college	22,250,252	19.1%	1,546	19.3%	0.98
Technical school graduate	5,125,159	4.4%	330	4.1%	1.06
College graduate	27,672,660	23.7%	1,959	24.5%	0.97
Post graduate work	12,193,177	10.4%	1,322	16.5%	0.63
Totals	116,783,496	100.0%	7,992	100.0%	1.00

Note: Education responses include imputed “Don’t Know/Refused” answers.

Weighting Procedures – FY 2008 Diary Data

As mentioned above, 7,992 households participated in the recruitment phase of the FY 2008 HDS, and 5,312 households completed usable diaries. Balancing weights for the FY 2008 HDS diary data were developed in the same way as for the recruitment data. An additional age weight was derived based on the age of the head of household using the following categories: 18-21, 22-24, 25-34, 35-44, 45-54, 55-64, 65-69, 70-74, and over 75 years old.

Other adjustments to weights used in the diary data included a quarterly adjustment, which accounted for variances in sampling across postal quarters. All component weights were multiplied together and normalized to ensure that the number of weighted cases equals the number of unweighted cases.

A final adjustment in the form of expansion factors was made to expand the sample to the level of total households in the United States at the time of data collection, which was 116.78 million. The number of households in the United States was divided into the number of households that participated in the diary portion of the survey. The resultant factor was applied to each household in the survey. The expansion factor was multiplied by the sampling weight and then multiplied by 52 (the number of calendar weeks in one year) to derive nationwide annual volume estimates from the sample data.

Expansion Factor

116,783,496 / 5,312 = 21,984.8

Component Weight:

Where Ps = population count in cohort and
Pt = total population count;
Ss = sample count in cohort and
St = total sample count.

Adjustment Factors

In order to account for variations in the reporting of household mail volumes, three types of adjustment factors were used:

1) Destination adjustment factors;

2) Household-to-Household adjustment factors; and

3) Household-to-Non-household adjustment factors.

Destination adjustment factors were calculated from differences between weighted volumes derived from FY 2008 HDS sample data and mailing volumes calculated using the Postal Service’s City Carrier Cost System (CCCS) and Rural Carrier Cost System (RCCS). These destination adjustment factors were applied to First-Class Letters & Flats, Standard Regular and Nonprofit Letters & Flats, Postal Service Packages, and Periodicals.

Household-to-household adjustment factors were applied based on the logic that mail originating and destinating in households form a “closed loop.” In other words, mail sent by households to households should equal mail received by households from households. (This situation does not necessarily exist within the confines of a finite sample since households may receive mail from households outside the sampling frame.) Therefore, household mail sent is adjusted to equal household mail received. This factor (1.04) was applied to personal First-Class Letters & Flats.

Household-to-non-household adjustment factors were applied to account for under-reporting of mail sent by households to non-households. The use of this adjustment factor is based on a comparison between the reported bills paid by households from the recruitment phase of the survey and amounts derived from actual diary data. This factor (1.43) was applied to business First-Class Mail sent by households to non-households.

The following table indicates adjustment factors applied by postal classification:

Table B.13: HDS 2008 Adjustment Factors Utilized by Postal Classification

Postal Classification	Destination Adjustment Factor	Household-to-Household	Household-to-Non-household
First-Class Letters & Flats	.96	1.04	1.43
Standard Regular Letters & Flats	.93	N/A	N/A
Standard Nonprofit Letters & Flats	.93	N/A	N/A
Package Services	.82	N/A	N/A
Expedited	.90	N/A	N/A
Periodicals	.81	N/A	N/A

[1] Metropolitan area is defined within the sample according to the official definition used by the U.S. Census Bureau, commonly referred to as Metropolitan Statistical Areas (MSAs). Metropolitan areas are defined as single- or multi-county areas. Non-metropolitan areas are counties that do not belong to a metropolitan area. Each sample county was assigned to a stratum according to its metropolitan status.