Less for the recycling bin: Direct mail offers dwindle

What's in your mailbox? Chances are, fewer credit-card applications.

Faced with a slumping economy, the nation's financial service companies have sharply cut back their direct mail so far this year. Such unsolicited mailings from banking, credit card, investment and mortgage loan firms fell 12.7 percent in the first quarter of 2008 compared with the same period a year ago, according to research complied by Chicago-based Mintel Comperemedia.

“One of the main drivers definitely has to do with the economy,” said Mintel senior analyst Chris Zagorski. “With credit lines tapped and people struggling to make ends meet, both consumer spending and savings are down.”

Charlotte's Bank of America Corp., the nation's biggest card issuer, cut its direct mailings by 17.5 percent

The recent drop follows a year of steady decline as banks and consumer lenders reassess their marketing to credit-stretched consumers. At the same time, credit card and loan delinquencies across the industry keep rising. And competition within the U.S. credit card market has taken on more importance given industry consolidation and slower balance growth, said Credit Suisse analyst Moshe Orenbuch.

“We believe the decline in mail volume over the past several months is a result of the combination of lower response rates and profit pressures at individual issuers,” Orenbuch wrote in a recent report.

The number of credit card and other offers landing in consumers' mailboxes remains staggering: Financial service companies sent an estimated 4.2 billion pieces of direct mail in the first quarter, down nearly 10 percent from 4.6 billion in the fourth quarter of 2007.

“Even though there is a decrease, we're talking about billions of mail pieces,” Zagorski said.

Among financial services companies, credit card issuers cut back the most. Estimated mail volume for credit cards fell nearly 14 percent in the first quarter to roughly 2.6 billion mailings. Mortgage and loan companies cut their mail offers 6 percent.

Of last year's top 10 credit card mailers, JPMorgan Chase & Co. reduced its direct mail the most – 34 percent – during the first quarter. London-based HSBC Holdings PLC followed with a 23.3 percent reduction.

“My goal as a marketer is to make sure the last marketing dollar I spend is as efficient as possible,” said Matt Kane, the senior director of acquisitions marketing at JPMorgan Chase. “If I have more efficient ways to spend my money, I would much rather spend the money there than direct mail.”