As credit card spending drops and with
issuers facing record credit losses, traditional customer
acquisition channels such as direct mail are drying up, with
volumes falling rapidly. Affiliate marketing is also suffering, as
Charles Davis discovered
when he looked into the changing face of the industry.


The icy grip of the US credit crunch is
far from over, and its effects are being felt downstream. Perhaps
the most obvious casualty is in card marketing, where experts
report a dramatic slowdown.

From the expected – a deep drop-off in direct
mail – to the unexpected decline in affiliate marketing traffic and
even e-mail marketing messages, the economic slowdown is greatly
reducing the amount of marketing aimed at attracting new

Analysing credit card direct mail trends, US
research consultancy Mintel Comperemedia found that the total
estimated volume for credit card acquisition offers reached only
1.34 billion during the third quarter of 2008.

Mail volumes declining

Credit card acquisition mail volume
has declined steadily since late 2006, according to Mintel, which
reported that the third quarter of 2008 represents a 13 percent
decline from the quarter before and a 28 percent drop from one year
earlier. In 2005 and 2006, Mintel tracked an average of 2.07
billion credit card acquisition offers quarterly.

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As the financial crisis worsened during the
third quarter of 2008, card issuers scaled back mailings, noted
Lisa Hronek, a senior credit card analyst at Mintel.

“Credit card companies have been cutting back
direct mail dollars for years, as they realise that blanketing
Americans with credit card offers doesn’t translate to increased
sign-up or card usage,” Hronek said. “But now, they’re facing a
two-fold problem that is much worse. Not only are consumers tapped
out financially, but issuers are also facing record losses. They’re
scaling back direct mail to cope with unprecedented financial

Hronek expects credit card companies to
continue reducing acquisition mail throughout 2009. “Card issuers
will focus on a narrower target audience, using refined marketing
and more precise mailings.”

Serverside, the UK-based firm that sells card
marketing and personalisation software to issuers, reports that
even in tough times, and perhaps especially in tough times, issuers
are keen on marketing only if it presents efficiencies.

Adam Elgar, president of Serverside, said that
the entire affinity card market is in flux.

“We’re seeing, particularly in affinity
partnerships, a lot of people are parting ways with their issuers,
and on the other side, a lot of would-be partners are going wanting
for lack of a partner,” Elgar said.

“The costs of acquisition for some of these
issuers are not what they used to be, and so they are being much
more selective in bringing on new cardholders. That, and the credit
crunch, means that everyone is rethinking the game these days.”

Web marketing becomes more

Efficiency becomes key: rather than
sending out lots of mail on a contracted basis, Elgar said that
“everyone is turning to online channels, and mail is taking a huge

Serverside’s answer to the affinity puzzle is
CardPartner, a web-based platform that allows would-be affinity
programmes to get up and running with a newly designed card in a
few hours.

Douglas Davis, director of sales and marketing
for CardPartner, said that the company can reach further down the
affinity market than the larger credit card banks because it offers
a suite of proprietary online tools that non-profits and member
groups use to design and offer their own Visa Platinum credit

“It’s getting harder and harder for the big
issuers to do much more in affinity, especially at the smaller end
of the scale,” Davis said. “The big issuers – the Bank of Americas
of the world – are playing whack-a-mole with all the problems out
there. There is a lot of talk from groups of pretty good size
groups out there that are moving, or thinking of moving, from their
affinity issuer.”

Davis said that having web channels for card
marketing is more important than ever, given the fragmentation of
the market and the lack of marketing resources in the midst of the
economic crisis.

Card issuers are also cutting spending in
online affiliate marketing, one of the last avenues of relatively
healthy acquisition rates. In November, unique visitors to, one of the largest card marketing sites, fell 25
percent from a year earlier, to 843,000, according to comScore,
which tracks online traffic.

Online affiliate

Online affiliate marketing, which
often involves lead generation websites that let consumers browse
several issuers’ offerings at once, had been considered a
relatively cheap and easy way to sign up cardholders. Issuers often
pay the sites only for approved applications, unlike direct mail

But the affiliate sites have a reputation for
attracting less creditworthy applicants, and in tough times,
issuers are more geared toward maximising existing cardholder

Several issuers have removed cards from lead
generation sites and online advertising networks in recent weeks,
including JPMorgan Chase, HSBC and Bank of America, Citigroup and
American Express.

The economics of lead generation sites, which
can require issuers to pay either on a per-click basis or for each
approved application, are harder to justify in the current
environment, when most financial companies are slashing their
marketing budgets. Combine that reality with tightening credit, and
the affiliate marketing channel is feeling the pain that so many
American companies are lamenting.


Top 10 mailing credit card

During the third quarter of 2008,
Mintel Comperemedia reports that the top 10 mailing credit card
issuers for acquisition direct mail were:

1. Chase

2. Capital One Bank

3. American Express

4. Washington Mutual*

5. Bank of America

6. Citibank

7. Barclays Bank

8. Discover


10. US Bank

*Now owned by Chase
Source: Mintel Comperemedia