O.C. Bulk Mailers Ready for Rate Hike : Postal service: Increase will mean higher costs for advertisers, but many had anticipated the move and expect only minor changes.

The rate increases proposed Tuesday by the U.S. Postal Service will mean higher business costs for companies that advertise by mail, but many had anticipated it and view it as only a minor change.

Letter shops and mailing organizations, which handle half of the nation’s advertising mail, will be directly affected, according to Mail Advertising Service Assn. International, an Alexandria, Va., trade group that represents commercial mail handlers. Magazine publishers, grocery stores that mail weekly flyers, shopping center ad collectives and mortgage brokers updating fast-changing interest rates will feel the effects as well.

Even so, the trade association is supporting the increase. It would be the first of its kind in four years, said Barry Brennan, a spokesman for the group, and “that is substantially less than the rate of inflation for that period.”

Advertising mail, also known as direct mail, is a large and rapidly growing marketing medium. Businesses sent 65.7 billion pieces of direct mail last year, up 5.2% from 1992.

Though some companies may be forced by tight budgets to cut back at first, most will adjust, many businesses said Tuesday.

Kaye Kaufman, owner of Services Etc. in Irvine, says her company--which addresses letters, maintains mailing lists and offers other related services--will see a decline in revenue at first but will recover within a year.

Postal rate increases “always have an impact,” said Kaufman, who has been in business for 15 years.

Third-class postal rates, which apply to advertising flyers and other business mailings, would rise 10.2%, according to the Postal Service’s proposal. The cost to mail a letter first class would go up 10.3%, from 29 cents to 32 cents. Any increase must be approved by the independent Postal Rate Commission, a process that could take months. But the rate increase is expected to pass.

Katherine Armstrong, who owns a Mail Boxes Etc. franchise in Costa Mesa, said her customers had been complaining all day Tuesday about the possibility of higher rates. Armstrong said she will be passing along any increase to her customers. Together with the fee she charges for service, she said, prices will be high enough to cause some customers to squawk.

“People will probably still come,” she said, “but they’ll complain.”

One local merchant, though, actually sees a possible business boom if rates rise. Brian Mullally, sales manager for Friden Neopost in Fountain Valley, predicted that companies will be more concerned about how much they spend for postage. And that could help his company, which makes high-volume scales and other mailing equipment.

“Nobody likes surprises,” Mullally said, “especially when it comes to money.”

Friden Neopost has another product that could realize a gain from higher postage: rate change protection. It is insurance against paying to have a technician recalibrate a company’s postal meters each time rates go up.

Given that United Parcel Service typically shifts its rates almost annually, Mullally said, the insurance “is a pretty good buy.”

Postal Rate May Take Hike

How the basic first-class mail charges have increased: 1956: 3 cents 1958: 4 1963: 5 1968: 6 1971: 8 1974: 10 1975: 13 1978: 15 1981: 20 1985: 22 1988: 25 1991: 29 1994: 32* * Proposed

Third Class Postal Rates

The postal rate increase proposed Tuesday would particularly affect direct mail--one of the fastest-growing advertising media--and businesses. How the bulk rate mail charges have increased: 1969: 22 cents 1971: 23 1972: 28 1974: 32 1975: 41 1976: 36 1978: 41 1981: 45 1985: 38 1988: 48 1991: 60

Note: Maximum bulk rate per pound for advertising circulars. Lower rates are charged according to level of presorting. Proposed rate hike not yet determined.

Source: U.S. Postal Service