A A P S C o n f e r e n c e 2 0 1 4 CANADIAN HOUSEHOLD DISTRIBUTION
AGENDA Canadian Market Overview Size and Scope of Canada Distribution Channels Distribution Geography Canada Post Recent changes case study data Predictions of the future
SIZE AND SCOPE - CANADA Population HHLD Counts Canada 33,476,688 13,320,615 Ontario 12,851,821 4,887,505 Quebec 7,903,001 3,395,345 British Columbia 4,400,057 1,764,635 Alberta 3,645,257 1,390,275 Manitoba 1,208,268 466,140 Saskatchewan 1,033,381 409,645 Nova Scotia 921,727 390,280 New Brunswick 751,171 314,010 Newfoundland and Labrador Prince Edward Island Northwest Territories 514,536 208,840 140,204 56,460 41,462 14,700 Yukon 33,897 14,120 Nunavut 31,906 3,470
DISTRIBUTION CHANNELS B.C. Vancouver Sun/Province Black Press Glacier Media Postmedia Dailies Quebec Publisac Transcontinental Polybag Distribution Ontario Montreal Gazette Postmedia Daily Toronto Star Journal De Montreal Quebecor Media Daily Toronto Sun Journal De Quebec Quebecor Media Daily Globe and Mail National Post Metroland Media Community Weeklies and Dailies Quebecor Media Community Weeklies and Dailies The AdMill Group Polybag Distribution Independent Truck and Crew Operations Nova Scotia Halifax Herald St John s Telegram Transcontinental Dailies and Weeklies New Brunswick Moncton Times & Transcript Irving St John Telegraph - Irving Transcontinental Dailies and Weeklies Alberta Calgary Herald Edmonton Journal Postmedia QMI dailies and weeklies Saskatchewan Regina Leader Post Saskatoon Star Phoenix Postmedia Dailies Manitoba Winnipeg Free Press Brandon Sun P.E.I. Charlottetown Guardian Transcontinental Dailies and Weeklies
DISTRIBUTION GEOGRAPHY Forward Sortation Area (FSA) 4445 Houses 2955 Apartments 7,400 Total Census Tract (CT) 620 Houses 290 Apartments 910 Total Dissemination Area (DA) 165 Houses 45 Apartments 210 Total Postal Walks 600 Average Total
DISTRIBUTION GEOGRAPHY Dissemination Area Map Retail Location 48,000 Houses selected 21,000 Apartments
DISTRIBUTION GEOGRAPHY Point Map of Sales Transactions
DISTRIBUTION GEOGRAPHY Sales used to select Dissemination areas Market: Whitby Target: 20,000 houses Distribution: $118K Avg HHLD Income 20,180 houses
CANADA POST CORPORATION (CPC) Who has access to the mailbox The homeowner owns the mailbox, not the Postal system. Anyone is allowed to place permitted materials inside a homeowners mailbox. Unaddressed advertising materials are permitted Example: flyers, product samples, door hang cards, coupons, etc Addressed materials are restricted
EXCLUSIVE PRIVILEGE Canada Post Corporation Act Canada Post Corporation has the sole and exclusive privilege in Canada of collection, transmitting and delivering letters. CPC Lettermail Personal Letters Postcard Greeting card Invoices Reports Etc
EXCLUSIVE PRIVILEGE Exceptions: Subscription and other items Newspaper Magazines Books Catalogues Parcels
CANADA POST HOME DELIVERY Home Delivery Phase Out Canada Post will phase out home delivery to the remaining 5,000,000 urban homes over the next 5 years. Door to door delivery will be replaced with community mailboxes announced December 11, 2013
WHY THEY MUST CHANGE? Mail Volumes and Financials 14 Mail Volumes (in billions of pieces) 12 10 8 6 4 2 0 2008 2012 2020* 2008 2012 2020* Driving to a $1 Billion deficit By 2020 * Projected 25% decrease
CONSOLIDATED REVENUE Canada Post Corporation Consolidated Revenue from Operations 2050 Operational Revenue (in millions of dollars) 2000 1950 1900 1850 1800 1750 1700 1650 1600 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Operational Revenue (in millions of dollars)
CONSOLIDATED PROFIT (LOSS) Canada Post Corporation Consolidated Profit (Loss) from Operations 250 Operational Profit (in millions of dollars) 200 150 100 50 0-50 -100-150 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Operational Profit (in millions of dollars)
IMPLICATIONS OF PHASE OUT To Canadian Citizens 6000-8000 Job cuts $0.63 to $1.00 Home owner MINIMAL impact
IMPLICATIONS OF PHASE OUT To Advertisers and Direct Marketers Expected Longer Pickup times Expected Pre-sorting before home Time Sensitive Advertising IMPACTED In-home consumption IMPACTED
COST COMPARISON Unaddressed Flyer Distribution Cost Comparison Rates Canada Post Unaddressed Advertising Rates Daily Newspaper Rates Weekly Newspaper Rates Polybag Delivery Systems $100/M - $140/M* $50/M-$70/M $35/M-$45/M $60/M-$80/M * Canada Post advertising mail needs to be 3-4x more effective based on cost alone.
CASE STUDY Lawrence Media - National fast food chain customer 330 Stores Nationally 2.6MM coupons cards 20.8MM coupons Printing: Glossy perforated card stock Distribution: Daily Newspapers Weekly Newspapers Canada Post Polybag * Perforated coupon reverse side
CASE STUDY 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% Canada Post Rural Preliminary Redemption % by Vehicle Canada Post Urban Dailies Weeklies Polybag Redemption
CPC FLYER EFFECTIVENESS Predictions of Canada Post Corporation (CPC) flyer effectiveness 1. Fewer CPC flyers will make it into the home as more super mail boxes are installed. 2. CPC flyers will become less and less effective to time sensitive advertising. 3. Reduced CPC flyer quantities as advertisers move to other distribution channels. 4. Daily Newspapers, community newspapers and private carriers will continue to deliver directly to the home. 5. Increased quantities for alternative distribution channels TROUBLE
SUMMARY Presentation Highlights Canada Post volumes will continue to decline as consumers and advertise gravitate to on-line solutions. More Canada Post cost cutting, service reductions and rate increases are expected to continue. Elimination of home delivery in Canada opens opportunities for newspapers and private carriers. Remember we all have access to the mailbox. Carriers that continue to deliver directly to the door have opportunities for increased volumes.
CONTACT Scott Lawrence President P (416) 423-4514 M (416) 910-0922 scott@lawrencemediasales.ca www.lawrencemediasales.com Jason Nagy Chief Information Officer (CIO) M (905) 334-1801 JNagy@lawrencemediasales.com