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Direct Mail Not Working For Financial Services

  • Ad Age, Tuesday, November 22, 2005 1:15 PM
Direct mail is apparently not working for marketers of financial services. Despite spending a record $13.2 billion on direct marketing last year, the industry's efforts are nonetheless experiencing steadily declining response rates, according to a new report from the Direct Marketing Association. The reason, according to experts, is clutter. They say a barrage of mailings is causing consumers to discard the offerings, often without even opening the envelope. "We're just starting to see the effects of saturation," said David Kelly, vice president of Sigma Analytics, a unit of database marketing agency Merkle. The response rate for some recent lead-generating direct mail campaigns monitored by the DMA was just 1.43 percent, according to the association's 2005 Response Rate Report conducted earlier this year, down from 2.09 percent last year and 2.48 percent in 2003. For direct-order mail--which solicits or closes a sale--the response rate was even lower, 0.69 percent in 2005. That compares to 3.5 percent in 2004 and 1.15 percent in 2003. To solve the problem, mailings need to become more targeted and differentiated. "You have to make sure you're talking to the right kind of person," said Michael Sugzda, senior vice president-client services director for Citibank at WPP Group's Wunderman.

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