Agencies face Royal Mail cutbacks

Royal Mail takes £24m DM hitRoyal Mail’s marketing agencies could be facing a 20 per cent cut in the fees they charge the postal operator, following reports that its top 150 suppliers have been told to make drastic reductions in their charges.
The group, which last week reported a 72 per cent fall in half-year profits, called its suppliers into a meeting where Kath Harmeston, group procurement director at Royal Mail, is understood to have made a presentation for cost cutting. She also set a 30 day deadline to negotiate new contracts.
Proximity London handles Royal Mail’s direct and digital accounts; Abbott Mead Vickers BBDO runs its advertising business.
A spokeswoman for Royal Mail said: “Royal Mail is striving to get the best value for money throughout the business and we are asking our suppliers for their ideas and proposals on how we might achieve this – but we are absolutely not imposing a blanket cut on suppliers’ bills.”
Last week Royal Mail chief executive Moya Greene demanded a rethink on how much it can charge rivals to deliver their mail after it emerged it losing 2.5p on each of the 22 million letters it delivers for rival firms equating to a loss of nearly £6m a year. Greene said the postal operator was lobbying regulator Postcomm to demand a change in the current pricing system.

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