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Sez today's Ad Age daily e-letter:

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.
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The response rate for some recent lead-generating direct mail campaigns monitored by the DMA was just 1.43%, according to the association’s 2005 Response Rate Report conducted earlier this year, down from 2.09% last year and 2.48% in 2003. For direct-order mail --which solicits or closes a sale -- the response rate was even lower, 0.69% in 2005. That compares to 3.5% in 2004 and 1.15% in 2003.

Direct mail represents nearly 20% of financial services companies’ direct marketing spending, according to the DMA.

The yearly comparisons aren’t exact -- for example, the DMA only this year started lumping insurance companies with other financial services marketers, and sampling groups change -- but the downward decline is directionally accurate, said Ann Zeller, VP-information and special projects for the DMA. The trade group surveyed 23 lead-generating campaigns and 18 direct-order campaigns.

Consider, for example, credit cards. Marketers shipped out 5.23 billion credit-card offers in 2004, up nearly 1 billion from 2003, according to researcher Synovate -- and saw the response rate drop to 0.4% from 0.6% in 2003. As recently as 1998, the response rate was as high as 1.2%.

Yet credit-card marketers sent out a record 1.4 billion offers in the first quarter -- only to get a record low response rate of 0.4%, according to Synovate.

I don't think this is much of a surprise. The explanation given is "clutter"--we get so many credit card solicitations (I get about three or four a week, on average and they go right into the shredder) that we're just sick of them. And since most people have a credit card already, there is little point to switch to another one, unless there is a decent offer, such as, say, accruing airline mileage or those hotel points.

The industry thinks that better targeting is the solution (hear that, variable-data printing buffs) and that may be part of it. But one has to remember that all the targeted marketing in the world won't help unless there is a compelling offer. Plus, identity theft fears may be making people a leery of these things. I'd be curious to see data that track the sales of paper shredders with credit card direct mail volumes.