Tuesday, November 22, 2005

Financial Services Direct Mail Takes a Dive

Despite pouring records amounts of money into direct mail campaigns over the last three years, the financial services industry has been experiencing steadily declining response rates from that effort, according to a report by the Direct Marketing Association. Lead Generation Response rates dropped to 1.43%, down from 2.48% in 2003.

That clearly points out that financial services marketers are doing something wrong. Usually it's the list ... get that wrong and results will plunge. Next, look at the offers ... are they relevant, compelling and unique? Lastly, look at the creative delivery ... is the direct mail saying anything that meshes with the prospect's needs?

Direct mail as a medium has had surprising resilliance over the years. Marketers rely on it consistently ... but if the context is wrong and the mail doesn't work, it could be that some marketers begin mistrusting the medium (instead of themselves).

FACT 1 — Direct mail has NEVER declined in the past 50 years. The Universal McCann Study confirms that by contrast, in the last half-century, radio has declined in just seven of those years. Daily newspapers experienced 8 years of decline or slow growth. Consumer magazines, 8 years. Business Magazines, 9 years. Broadcast TV (developed in the 1950’s) came closest to Direct Mail at just 3 years. So Direct Mail has never even slowed down, let along count it among the disappearing. Instead, direct mail usage has increased each year over the last 50 years!

FACT 2 – During the economic downturn of 1990-91 when the GDP grew by just 1.3%, direct mail grew by 1.5%. All other media declined: Daily newspapers -14.6%, Consumer magazines -11.6%, TV -8.5%.

FACT 3 – Not even price increases in postage and paper have slowed the growth of direct mail. In years of postal increases, DM increased an average of 4.4% and with paper increases, DM grew 4.6%.

FACT 4 – Direct mail’s share of total advertising expenditures in 1960 was 19.0%, in 1980 it was 17.5% and in 2000 it was 22.2%.

FACT 5 – The most recent decade compounded annual growth rate for direct mail when adjusted for inflation has been 1995-2000 at 6.4% and from 2001-2005 at 6.6%.


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