Sour Economy Stems Tide Of Direct Mail Solicitations

stack of mailFinancial services companies are backing off their seemingly relentless direct mail efforts to acquire new customers, according to two companies tracking the volume of direct mail.

Overall, direct mailings from financial services companies (including banking, credit card, investment and mortgage and loan companies) are down about 10% over the first quarter of 2008, compared with the fourth quarter of 2007, according to Mintel Comperemedia. The firm estimated the total volume of financial services direct mail to be 4.2 billion for the quarter, down 13% from the same period as last year.

Chris Zagorski, a senior marketing analyst at Mintel, says the economy was the main factor for the drop-off, but other factors such as increased postage and higher oil prices also played a role. "With credit lines tapped and people struggling to make ends meet, both consumer spending and savings are down," he says.

advertisement

advertisement

According to Mintel, credit card issuers cut back on their direct mail the most, down 14% from Q4 2007 to Q1 2008. Offers from mortgage companies declined 6% between quarters. Together, those two sectors represent about 90% of the financial services direct mail sent out to consumers, according to Mintel. The third quarter--which is typically heavy for credit card companies--may bring an increase in direct mail solicitations, Zagorski says.

The credit card company research is backed by findings from Synovate's Mail Monitor, which found that the volume of credit card offers sent out in the first quarter of 2008 was down 18% from the same period in 2007, and had reached its lowest level since the fourth quarter of 2003. While financial services companies began cutting back on their mailings in the fourth quarter of 2007, the first quarter of this year saw a much larger drop-off, says Andrew Davidson, VP/competitive tracking services for Synovate's financial services group.

"What's happened is the cutback has deepened to a certain extent," Davidson tells Marketing Daily. "Now we're seeing a bigger drop."

Most of the financial services companies have cut back on targeted lower-income households and those most affected by the subprime mortgage collapse, Davidson says. Card issuers that cut back the most were HSBC (down 54% from last year), Washington Mutual (down 39%) and Citigroup (down 36%). HSBC and Washington Mutual had been actively targeting subprime consumers, while Citibank has had financial difficulties as a result of the mortgage collapse, according to Davidson.

There is some indication, however, that the market has bottomed out and direct mail solicitations may be on the increase, according to Davidson. While most issuer solicitations were down from the fourth quarter of 2007, three--Discover Financial, Citibank and WaMu--increased their mailings in the first quarter of 2008 (by 15%, 24% and 149%, respectively).

"There's some indication that the worst is behind us, and that could have a ripple effect," Davidson says. "A number of issuers that hit rock bottom in the fourth quarter of 2007 started to rebound a bit."

Next story loading loading..