Credit card direct mail in Canada has not rebounded from the recession in the same way that it has in the United States. In Canada volumes plummeted in 2009 and have remained flat ever since. Any hope of a recovery in 2011 has been severely delayed by industrial action that has crippled the Canadian postal system. Industrial action began on June 3, when almost 50,000 Canada Post employees commenced a series of rotating strikes, after the union and management failed to hammer out a new contract. The National Association of Major Mail Users (NAMMU), which represents the direct mail industry in Canada, is projecting 15,000+ layoffs as a result of Canada Post’s estimated 50% reduction in mail volumes during the strike. Factor in the growth of emerging channels, such as online advertising, and it is understandable that some might predict the demise of credit card direct mail, particularly for acquisition. However, it is my view that there will still be a recovery at some point. Here’s why:
U.S. issuers
Credit card direct mail in Canada has always been fueled by the presence of the U.S. monolines. Back in 2000 Canadian banks were forced to respond to the threat from MBNA and Capital One and the result was an expanding mailbox that eventually peaked in 2008. In 2011, in the lead up to the strike, Capital One and MBNA, along with American Express have been dominating the mail. I doubt the Canadian banks will sit back and allow their customers to be tempted by these competitive offers in the long term.
Duality
The new rule allowing banks to issue both Visa and MasterCard branded credit cards has added a new competitive element to the market. Both CIBC and RBC have been promoting MasterCard branded cards and MasterCard accounts for the majority of card offers in the mail in 2011, up significantly from prior years. Visa will be looking to redress the balance by encouraging card issuers to promote Visa over MasterCard.
Cobrand cards
Cobrand cards have not traditionally been big Canada. However, recent partnerships suggest that this might change as issuers seek out new strategies to gain an advantage. In the past year we have seen card issuer’s partner with WestJet, Delta, Costco and Sears to name a few of the more notable launches. Capital One acquired the HBC portfolio and recently announced that it would be launching a card in partnership with Intercontinental Hotels. All of these cards need to be promoted and direct mail remains a key channel for bringing them to market.
The personal approach
Direct mail is now competing with emerging channels for the marketing dollar. The great strength of direct mail is its ability to offer a personal message. Comperemedia has been tracking the decline of non-personalized mail as a proportion of total mail volume. It appears that some of the Canadian issuers that still rely on mail are realizing the benefits of the personal approach. It is the ability to offer a personal message that will sustain direct mail in the coming years.
So, despite the strike, there is evidence to suggest that we are not seeing the end of credit card direct mail in Canada. Direct mail will continue to be a valuable part of the credit card marketing mix for some time to come.
