updated 6/2/2008 5:15:22 PM ET 2008-06-02T21:15:22

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 companies fell 12.7 percent in the first quarter of 2008 compared to 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."

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, and Bank of America Corp. cut its direct mailings by 17.5 percent.

"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."

Kane said JPMorgan is expanding other marketing efforts, including those based online and in retail branches.

Credit card issuer Capital One Financial Corp. reduced its direct mail volume by 17.3 percent in the first quarter, as profit at the company's U.S. card business fell 8.8 percent.

A few credit card companies — including American Express Co. and Discover Financial Services — slightly increased their volume, while credit card mailings from Washington Mutual Inc. were up 55.8 percent in the quarter. Such variation is partly the result of companies employing different marketing in different parts of the country, Zagorski said.

U.S. banks and credit institutions spent $13.4 billion last year on direct marketing advertising, which includes direct mail, generating $178.8 billion in sales, according to the New York-based Direct Marketing Association. In 2012, the group predicts such sales will hit $286.2 billion.

"Direct mail will never fully go away," said Edward Manzitti, the association's vice president of research and market intelligence. "It's a very effective way to get customers to react."

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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