Financial services direct mail holds its own—for now

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Acquisition direct mail volumes in the financial services sector increased in 2006, according to a recent study from Mintel’s Comperemedia competitive intelligence service, which analyzes direct mail, e-mail marketing and print media. Overall acquisition mail volumes for credit card marketers grew by 6%, while those for insurance marketers increased by 13%.

According to the Direct Marketing Association, approximately 11.1% of all direct mail advertising expenditures are generated by the financial services sector.

The results were derived based on rolling panels comprised of more than 4,500 consumers a month. Panelists were selected based on income, age, geography and home ownership status to assemble a representative sample of American households. For the whole of 2006, Mintel Comperemedia evaluated the contents of panelists’ mailboxes, while tracking trends and mailing details.

While overall acquisition mail volumes increased, individual volumes for the nation’s largest financial services mailers were more of a mixed bag. JPMorgan Chase & Co., the nation’s highest-volume financial services mailer, reduced the number of mail pieces it sent out—from more than 1.80 billion in 2005 to just over 1.70 billion in 2006. Similar decreases were seen at Citibank and Bank of America. Such reductions were offset by steep increases on the part of HSBC Bank and Discover Financial Services, with the latter boosting 2006 acquisition mail volume over that of the previous year by 29%.

Jenny Roock, director of research at Mintel Comperemedia, attributes Discover’s acquisition mail boom to the 2006 introduction of a large-scale advertising campaign. “Discover recently hired a new agency and unveiled a whole new campaign focused on increasing awareness of the flexibility of its cards,” she said.

Mai Lee Ua, senior public relations associate at Discover Financial Services, added, “We’re constantly evaluating the different ways in which we acquire card members. Direct mail has been a large part of our overall marketing strategy and continues to be a successful way to engage prospective cardholders.”

The insurance sector showed even greater diversity of activity. While health insurance mail volumes experienced a 21% jump in 2006, travel insurance mail volumes plummeted by 41%. Geico and Global Life and Accident Insurance Company ranked among the highest-volume insurance mailers, sending out more than 886 million and 804 million acquisition mail pieces in 2006, respectively.

In the face of volume increases, response rates held steady. Roock cited a slight increase—from 0.41% in 2005 to 0.44% in 2006—for credit card acquisition mail response rates. Mintel Comperemedia does not track response rates for insurance acquisition mailings, but Mike Rauscher, exec VP-marketing services at Affinion Group, an affinity marketing company specializing in insurance, said his company saw strong direct mail response rates in 2006.

“Critical to that was our ability to develop and execute a strong slate of test concepts and creatives—more than 300 in all—focused on driving customer engagement and involvement, presenting a clear and concise offer, answering the consumer question ‘what’s in it for me?’ and incorporating a strong call to action,” he said.

Despite such solid performances, however, concerns about sustaining high acquisition mail volumes for the long-term remain, many driven by rising postal rates and evolving consumer habits and preferences.

“We have to be cognizant of other channels, like online, retail branches and partner distribution networks, and bring the product to consumers in more relevant and cost-effective ways,” said Matthew Kane, senior director of acquisitions marketing for Chase. “We still heavily leverage direct mail, but the majority of accounts we book don’t come in through it. Today, approximately 35% to 40% of accounts come from direct mail, while three to four years ago that number was 60% to 70%.”

Still, as Chase aggressively invests in alternative ways to reach prospective cardholders, Kane said direct mail will remain an important tool because of its targetability, at least for the foreseeable future.

“In the short term, you have to be everywhere and do everything to reach the masses,” he said. But looking further into the future, “I think we’ll see changes in the industry driven by generational biases for how people engage and interact with information.”

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