Housing woes affect DM industry

Recent coverage in the mainstream media about two financial crises – the subprime mortgage meltdown, and burdensome student loans – has touched on the role, perceived or real, that direct marketing practices have played in both.

For the former, the Federal Trade Commission and a couple of Attorneys General have pointed the finger at fraudulent mortgage marketers. There will always be some players in any industry that practice less than ethically, and their actions can sometimes dominate perception. Regardless, there’s no question that market forces have caused many direct marketers and their agency and supplier partners to reconsider how they are marketing products in such a volatile environment.

Many financial services marketers have told me that they have significantly retooled their mortgage marketing programs, from straightforward acquisition tactics to a strategy based more on education and informed decisions. What effect this will end up having on conversion rates has yet to be seen, but it will be interesting to learn how mortgage marketers are trying to maintain ROI for their DM efforts.

The mortgage crisis is not just affecting the companies and divisions who are directly marketing those products. Harte-Hanks released its third-quarter financial results last week, and attributed its negative numbers (including a 21% drop in profit) in part to the performance of its Shoppers products, the success or failure of which is closely tied to the housing market. As president and CFO Dean Blythe said in his statement, “We continue to face a difficult revenue environment primarily attributable to the condition of the real estate and associated financing market.” He sees this trend continuing into 2008. As one of the major players in this world, we will soon see if others catch a cold from HH’s sneeze.

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