Postal Service Audit Behind Shop Shift

Inspector General Cited Need for 'Oversight and Internal Controls'

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The U.S. Postal Service is under fire for "not adequately monitoring its two largest advertising contracts," just as it's completing an agency review, according to an audit by the inspector general. Coincidence? Not according to the audit.

It stated: "We met with the Postal Service's chief marketing and sales officer, who agreed with the concerns we raised. She initiated corrective actions by not extending the contract with its major advertising contractor."

In a letter replying to the audit, the USPS stated it "believes our advertising campaigns were effective and that we received best value under the advertising contracts. However, we agree that oversight and internal controls needed improvement in some areas."

The "corrective actions" the USPS made in response to the audit also include "separating the two largest advertising contracts into multiple contracts" and changing the leadership in its advertising group. USPS hired Nagisa Manabe as chief marketing and exec VP-sales officer in May 2012.

USPS declined to comment. The audit doesn't mention the actual agency names but describes the two agency contracts that came under scrutiny. One contractor was "responsible for such activities as purchasing media, developing creative content and providing strategic direction."

USPS recently ended its contract with Interpublic Group of Cos.' Campbell-Ewald, the agency that had supported many of these activities. It began an agency-of-record review in early 2011, but then the review was paused. Almost a year later, the Postal Service split the initial RFP into separate briefs—creative and media among others -- and restarted the process. Campbell-Ewald's sibling media agency UM won the media business. The creative review is ongoing.

DraftFCB, which continues to work on retail and promotions, is acting direct marketing and creative agency. The Postal Service spent $95.8 million in U.S. measured media in 2011, according to the Ad Age DataCenter.

The office of the inspector general declined to comment. "We stand by our work," said Campbell-Ewald Chairman-CEO Bill Ludwig, adding that "USPS lauded our efforts" in an August press release highlighting the impact of marketing on areas of growth.

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