Top 100 direct mail advertisers: financial-services brands

Spend on mailings relating to personal loans is down by more than a third, and that on mortgages down by 13%, according to Nielsen Media Research.

Some find this to be poetic justice. 'Direct mail arguably fuelled the boom in financial services, leading to irresponsible lending,' says Martin Nieri, managing director at digital agency CMW. 'That, in turn, has led to the credit crunch that is now forcing lenders to cut mailing volumes.'

Even so, the shift has had little impact on the prodigious output of finance mailings. Nielsen records only a 3.5% drop in the sector's total spend on direct mail in the past year. The overall volume of mailings in the sector remains at a steady 1.1bn, nearly as much as charities and mail order combined.

Agencies claim that the focus has switched from loans and mortgages to savings and investments. This is confirmed by the survey, which shows an increase in savings-related mailings of 126%. There are signs that financial clients are shifting from acquisition to cross-selling and retention strategies.

However, in the long term, specialists expect mail volume to decline as financial brands move to email to engage with customers. 'It makes sense to communicate with an online customer via an online channel,' says Chris Dickens, head of strategy at direct agency Geronimo.

Banks, lenders and insurers are also under pressure to be responsible in recruiting customers. The Financial Services Authority (FSA)'s 'Treating Customers Fairly' initiative means that financiers must ensure that prospects make an informed choice, with clear explanations of the risks and benefits.

'The need to avoid greater risk should mean that responsibility is seen as a business imperative, rather than a set of guidelines to abide by,' says Sam Jordan, managing director at integrated marketing agency Baber Smith.

Top brands are keen to be seen responding to customer concerns about waste and irrelevance. Insurer Norwich Union has cut mail spending by 17%, which it says is a result of better use of modelling to target consumers and improve return on investment.

Lloyds TSB, too, is working to optimise the relevance and targeting of its direct mail. According to Nielsen, the bank sent out almost 56m pieces in the past year, down from 72m last year, and cut its spend by 23%. 'That's for three main reasons: economic efficiency, reducing environmental impact and serving our customers better,' says Justin Bell, head of marketing effectiveness.

Responsible behaviour means offering the right propositions to the right audiences, adds Bell. Sophisticated data analysis helps to identify the most appropriate audiences for each of the bank's products or services. 'Our studies revealed how to improve targeting, which meant we could mail lower volumes, cut print and postage costs, and reduce the overall environmental impact,' he says.

There is also a strong interest in improving pre-screening strategies. 'Banks want to avoid mailing to people who are unlikely to pass screening procedures [for credit],' says Alison Nicholson, senior sales consultant at EuroDirect. She points to the popularity of 'doublewashes', where a file is pre-screened for bad debt through two credit bureaus before mailing.

Some experts think the sector has to work on making itself easier to comprehend. 'Many financial products are dull and complicated,' says Dan Thwaites, planning director at marketing agency HS&P. 'Consumers won't bother with them if they have to work hard to figure them out.'

Financial-services providers can learn from other sectors, believes Thwaites. He cites Tesco as an example, praising its decision to move its financial services in-house from RBS. Tesco is also well-known for targeting consu-mers with its Clubcard data - a degree of expertise lacking in financial-services marketing, adds Thwaites.

As the biggest users of direct mail, financial brands carry the responsibility to use the medium well. Periods of economic growth have tended to obscure this message, but companies may now find it in their best interests to show discretion and restraint.

This article was first published on Marketing