Direct Mail May Get Cut Back

Consumers May See Less-Cluttered Mailbox but More Come-ons in Inbox

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NEW YORK ( -- For consumers, the silver lining of the credit crunch could end up be a lessening of the carpet-bomb direct-mail efforts of credit-card issuers and banks.


Luc Bondar, VP-loyalty marketing at Carlson Marketing

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According to the Direct Marketing Association's Quarterly Business Review, which surveyed 447 members and nonmembers, most of the 27 financial-services marketers who took part said they will keep marketing budgets constant but reallocate expenses if a recession does occur. Peter A. Johnson, senior economist and VP-research, strategy and platforms at the DMA, said that will translate into more reliance on e-mail marketing and database segmentation and possibly less on those come-ons that clutter up mailboxes.

An easy target
"There may be some cutting back in direct mail," Mr. Johnson said. "CMOs are going to demand cutbacks, and in those circumstances, the direct-mail investment is going to be the easy target because it's more expensive than e-mail."

Data from Mail Monitor, a direct-mail-marketing service from Synovate, seems to back up Mr. Johnson's sentiment. It found that credit-card-mail volume declined in the fourth quarter of 2007 and attributed that to the strain banks and card issuers are feeling as a result of the mortgage crisis and shaky economy. According to Mail Monitor, in the fourth quarter of last year, 1.29 billion offers were received by U.S. households, down 14% from the 1.5 billion offers that were received during the fourth quarter of 2006. Consumer response rates were also flat, at 0.5%. Synovate said overall mail volume for the year was 5.2 billion, down 10% from 5.8 billion in 2006.

The report revealed that the card issuers who have cut back the most on solicitations are Washington Mutual (-73%), HSBC (-34%), Citibank (-52%) and Discover (-50%). On the flip side, Chase significantly increased its mailing volumes 62% compared with 2006.

According to the DMA's 2007-2008 Power of Direct Marketing report, banks and credit institutions spent $17.2 billion across all direct-marketing channels in 2007. And in the year ending in September 2007, there were 11.3 billion pieces of credit-card-based mail in the mail stream.

Luc Bondar, VP-loyalty marketing at Carlson Marketing, said a shift is occurring with some of the agency's clients from mass-marketing efforts to campaigns built around a more-targeted dialogue, although that doesn't necessarily mean less direct mail. The agency works with credit-card providers such as Visa and Bank of America.

Web may benefit
"Direct marketing is actually benefiting from this, but so is interactive marketing," Mr. Bondar said. "A lot of card issuers are looking to build out strong interactive capabilities, where customers have the opportunity to do more than just look at their transactions and be more engaged in the company's services and offerings."

Mr. Bondar said current economic conditions are ensuring that any discipline that allows a bank to better understand its customers and potential clients is getting much more attention from marketers. "There will be a lot more targeted activity around things like portfolio management coming into play," Mr. Bondar said. "But we shouldn't see a significant drop-off in total volumes of DM activity, just a shift in targeting."
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