Advertising Growth Incentive

In this presentation… The incentive defined How it works Requirements Real Examples Calculating the baseline & targets Postage credit rates Forecasting for change The application process Receiving postage credits Frequently asked questions 3 4 5 6 8 9 10 11 12 13

Campaigns with mail achieve Advertising Growth and Commitment Incentives Grow your business by using Advertising mail… Send more advertising mail than the previous year and see the benefits it can provide to your company Campaigns with mail achieve market share growth* 2X … and enjoy the added reward of postage credits Receive postage credits of 15% per item on incremental advertising mail posted during a 12 month period 15% * When compared to campaigns without mail. Source: A meta-analysis by Peter Field on the IPA Databank, 2014

Enjoy rewards for growth for up to 3 years… Growth Incentive You will be rewarded with postage credits if you send incremental advertising volume over a 12-month period Year 1 After enjoying a year of growth and being rewarded with postage credits, you will now be eligible to use the Advertising Volume Commitment Year 1 Incentive – simply post the same or higher volume of advertising mail that you sent during the year of your use of the growth incentive Year 2 After completing the year of using the Advertising Volume Commitment Year 1 Incentive you will have the opportunity to apply for another year – totalling 3 years of not only seeing the benefits that mail can provide to your company, but also being rewarded for it!

Real Examples A clothing based ecommerce company selling branded, high value fashion through their website tested direct mail for the first time to acquire new customers. They have now tested different approaches and are forecasting growth of 86%. A women’s fashion e-tailer used mail to acquire new prospects. They tested a concertina leaflet to showcase more products and used the growth incentive to grow volumes by 3.1m items. The customer is now using the volume commitment incentive to grow again this year

Growth Incentive Requirements Earn 15% postage credits on incremental volume that you send in addition to your volume “baseline”, which we calculate based on your historic volume and growth trend Available for letter and large letter items sent using Advertising Mail or Responsible / sustainable Mail Send a minimum of 150,000 incremental letter items, or 75,000 incremental large letter items *We define the Mail Originator as the participant on whose behalf the items are being produced.

Calculating your baseline for the growth incentive Growing customer example Declining customer example 4m 3m 3m 2m 2m 2m Volume Volume Baseline Baseline Year -2 Year -1 Year -2 Year -1 Date of application Date of application Your baseline is the volume of advertising mail you posted in the year before the application plus your annual growth rate. The annual growth rate is the total volume from the year before the application date (Year -1) minus the total volume for the preceding year (Year -2). To calculate your baseline, if you have declined in volume, we will use the same volume you posted in the 12 months leading up to your application

Commitment Incentive Requirements After completing your Advertising Growth Incentive apply for the Advertising Volume Commitment Year 1 Incentive Match the total volume of advertising mail you sent under the Growth Incentive to earn 7.5% postage credits on the volume that was incremental volume during the year of your Advertising Growth Incentive Continue to grow and earn 15% postage credits on new incremental volume After completing your Advertising Commitment Year 1 Incentive apply for your Advertising Volume Commitment Year 2 Incentive *We define the Mail Originator as the participant on whose behalf the items are being produced.

Calculating your targets for the volume commitment incentives Advertising Volume Commitment Year 2 Incentive Advertising Volume Commitment Year 1 Incentive Incremental Volume 0.2m items Incremental Volume Matched Volume Matched volume target 2.8m items Advertising Growth Incentive 0.3m items 0.3m items Incremental Volume Cumulative total 2.5m items Matched Volume Matched volume target 2.5m items Agreed Base Volume Commitment 0.5m items 0.5m items 2.5m items Agreed Base Volume Commitment Agreed Base Volume Commitment 2m items 2m items Earn credits on Incremental Volume Earn credits on Incremental Volume & matched volume Earn credits on Incremental Volume & matched volume

Postage Credits 2019 We will calculate the amount of Postage Credits to be awarded to you by applying the relevant Postage Credit Rate to the volume of incremental items and committed volume items posted during your 12 month incentive period Incentive Committed Volume Credit Rate Incremental Volume Credit Rate Growth Incentive NA 15% Volume Commitment Year 1 Incentive 7.5% Volume Commitment Year 2 Incentive Test type Committed Volume Credit Rate Incremental Volume Credit Rate Growth Incentive NA 15% Volume Commitment Year 1 Incentive 7.5% Volume Commitment Year 2 Incentive

Forecasting changes As part of the application, we ask for your a forecast of your intended number of items for the next year including format and weight. We understand that things can change, so… You can increase the level of incremental volume, formats and weights that you declare on your original accepted application We will however award postage credits on eligible items that exceed your forecast by up to 10%

Application process Decide Apply Post Speak to your account manager or mail provider to discuss the best incentive for you Ensure you meet the necessary requirements to apply Apply On the incentive page on royalmailwholesale.com click on the link ‘apply online’ Complete the application form online and submit Post You will be contacted by the group incentive team to discuss your application Your application will be confirmed and you can then start posting under the incentive Please complete an application form using the link at royalmail.com/advertising-growth-application

Receiving postage credits Notification At the end of your incentive we will inform you of the amount of postage credits you have earned Receive You can choose to receive your credit as a voucher or have it paid into any Royal Mail postage account you hold. Credit vouchers are valid for 12 months Redeem Redeem credits against any future posting. Simply complete the redemption form and send this to your mail provider

FAQs How do I apply for the growth incentive? Please complete an application form using the link at royalmail.com/advertising-growth-application How do I apply for the volume commitment incentive? You may apply for an Volume Commitment Incentive anytime during the period of your Growth Incentive or no later than 3 months’ after your Growth Incentive has ended. Please complete an application form using the link at royalmailwholesale.com/avc/ and submit this to groupincentive@royalmail.com. What happens when an agent applies on my behalf? You and the agent will receive an acknowledgement email once the application form is submitted. Royal Mail will check the form and contact the agent if there are any questions. Once checks are complete Royal Mal sends the application form to you to confirm you have read and understood the terms and conditions.

FAQs What happens if I do not send enough incremental items during the growth incentive? You only receive postage credits if you send a at least 150,000 incremental Letter items or 75,000 Large Letter format items. What happens if I do not send enough advertising items to match the volume I sent during my commitment incentive? You only receive postage credits if you match the volume of advertising mail you sent during the Growth Incentive period. Can I send manual mail items and qualify for postage credits under the scheme? You do not need to use Mailmark for Advertising Mail mailings that are Large Letter format or non-machine readable Letter format (e.g. Poly-wrapped C5 letters).

FAQs I am looking to change mail provider in the next 12 months, will I be able to continue earning credits with my new provider? Yes, eligible items can be sent using any participating mail provider. I’m looking to change mail provider next year, will I be able to use credits earned with my current provider with my new provider? Yes, the postage credit vouchers can be redeemed with any participating mail provider. How long will my postage credit vouchers be valid for? Postage credit vouchers are valid for 12 months from date of issue. How long is this incentive available for? The incentive is currently open for new applications until 31st December 2019

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