Email Marketing in Financial Services - US - March 2008

• Behavioral characteristics and attitudinal data for various demographic groups
• Factors which make consumers most likely to open incoming emails
• How consumers perceive companies’ efforts to address online security challenges
• Differences in consumers’ responses to acquisition versus retention messages
• How email marketing campaigns will be influenced by changing technology

SCOPE AND THEMES

What you need to know

Scope of this report

Abbreviations and terms

EXECUTIVE SUMMARY

Key highlights

Security and trust are the most important issues for consumers

Companies are responding to consumer fears

Reputation, social networks matter

Gender affects online behavior

Older Americans are more fearful online

Hispanic consumers represent a significant opportunity

Consumers respond differently to different types of companies and brands

Emerging trends may shift the playing field

INSIGHTS AND OPPORTUNITIES

Email marketing and mobile technology

Figure 1: Usage of mobile data services, August 2007

Figure 2: Sales of mobile data services, at current and constant prices, 2002-07

Figure 3: Forecast of U.S. sales of mobile phone data services, at current and constant prices, 2007-12

Social networks and Web 2.0

Figure 4: Social networking website referrals for financial services companies, 2007

Changing U.S. economic conditions

Green marketing

Figure 5: How consumers want companies to address environmental issues, 2007

FAST FORWARD TRENDS

TREND: THE ATTENTION ECONOMY

TREND: YOUR SPAM, MY SPAM

TREND: FRIEND OF A FRIEND

OVERVIEW OF DEMOGRAPHIC TRENDS AND ONLINE REACH

Key points

The online population

Figure 6: Projected population of the U.S., by age, 2010-50

Figure 7: Estimated percentage of adults online, by location where accessed from, 1995-2007

Figure 8: Estimated number of adults who are online, 1995-2007

Most effective advertising channels for online users

Key Points:

Figure 9: Percentage of consumers who have responded to various types of advertisements in past year,

January 2008

Figure 10: U.S. adult online presence, by age, gender, race/ethnicity, educational attainment and household income, 2007

THE EMAIL GENDER GAP AND OTHER USAGE DIFFERENCES

Key points

Figure 11: Population, by gender and age, 2007

Figure 12: Percentage of men and women who go online, by age, educational attainment, race/ethnicity, household income and marital status, 2005

Different uses of email

Key points

Figure 13: Functions of the Internet: How men and women use it as a tool to communication, transact, get information and entertain themselves, December 2005

Women use email to develop relationships; men use it to find information

Figure 14: Why online men and women value their email contact with their favorite groups, December 2005

Figure 15: Importance of known sender to consumer opening email, by gender, December 2007

Gender differences in navigating the Internet

Different levels of concern about email

Figure 16: Share of online men and women who are concerned about various online security threats, December 2005

Figure 17: Concern about handling of responses to financial services email solications, by gender, January 200828

Figure 18: Non-response to financial services emails due to concerns about companies sharing information, by

gender, January 2008

Figure 19: Response to email advertisements for various financial products, by gender, January 2008

OLDER CONSUMERS—ONLINE ACTIVITY AND RESPONSE TO ONLINE FINANCIAL MARKETING

Key points

Figure 20: Internet use, by age, February-March 2007

Older Americans are more wary when they are online

Figure 21: Response to email advertisements for various financial products, by age, January 2008

Figure 22: Response to email advertisements for various financial products, by employment status, January 2008

Figure 23: Concern about handling of responses to financial services email solications, by age, January 2008

Figure 24: Non-response to financial services emails due to security concerns, by age, January 2008

Figure 25: Change in likelihood of opening financial services emails, by age, January 2008

Figure 26: Change in likelihood of opening any type of email solicitation, by age, January 2008

Figure 27: Importance of known sender to consumer opening email, by age, December 2007

HISPANICS—ONLINE ACTIVITY AND RESPONSE TO ONLINE FINANCIAL MARKETING

Key points

Demographics

Figure 28: Population, by race and Hispanic origin, 2002-12

Figure 29: Household income distribution for all households and Hispanic households, 2006

Hispanic consumers are more engaged online

Figure 30: Internet use, by Hispanic origin, February-March 2007

Hispanic consumers are more open to receiving communication from companies

Figure 31: Consumer preference for receiving relevant product offers, by Hispanic origin, December 2007

Figure 32: Likelihood of consumer opening email from a bank, by Hispanic origin, January 2008

Figure 33: Response to email advertisements for various financial products, by Hispanic origin, January 2008

Hispanic consumers are more open to sharing information with companies

Figure 34: Information consumers would be willing to disclose to unknown companies, by Hispanic origin, December 2007

Figure 35: Number of financial services accounts managed online, by Hispanic origin, December 2007

THE DEMOGRAPHICS OF EDUCATION AND WEALTH, AND RESPONSE TO ONLINE FINANCIAL MARKETING

Key points:

Demographics

Figure 36: Household income distribution, 2006

Figure 37: U.S. educational attainment, population aged 18+, 2007

Less educated, poorer people are online less

Figure 38: Internet use, by educational attainment, February-March 2007

Figure 39: Internet use, by income, February-March 2007

Less educated, poorer people are less trusting

Figure 40: Increase in concern about online security in last five years, by income, January 2008

Figure 41: Increase in concern about online security in last five years, by educational attainment, January 2008

Less educated, poorer people are more likely to respond to financial services solicitations

Figure 42: Response to email advertisements for various financial products, by income, January 2008

Figure 43: Response to email advertisements for various financial products, by educational attainment, January 2008

Less educated, poorer people are less likely to have online accounts

Figure 44: Number of financial services accounts managed online, by income, December 2007

ONLINE FINANCIAL MARKETING RESPONSES BY MARITAL STATUS AND U.S. REGIONS

Unmarried couples are much more receptive to credit card offers

Figure 45: Response to email advertisements for various financial products, by marital status, January 2008

U.S. regional differences

Figure 46: Consumer preference for receiving relevant product offers, by region, December 2007

Figure 47: Importance of known sender to consumer opening email, by region, December 2007

CONSUMER CONCERN ABOUT SECURITY IS INCREASING; TRUST IS WEAK

Key points

Consumers think security is a problem

Figure 48: Increase in concern about online security in last five years, January 2008

Figure 49: Increase in concern about online security in last five years, by gender, January 2008

Figure 50: Increase in concern about online security in last five years, by age, January 2008

Consumers don’t trust companies to safeguard their personal information

Figure 51: Consumer beliefs about sharing of personal information, January 2008

Figure 52: Consumer beliefs about sharing of personal information, by Hispanic origin, January 2008

Consumers are overwhelmed by inbox overload: Spam

Figure 53: Change in amount of spam received, January 2008

Figure 54: Change in amount of spam received, by age, January 2008

Figure 55: Unwanted solicitations from unfamiliar companies, January 2008

Figure 56: Unwanted solicitations from unfamiliar companies, by age, January 2008

CONSUMERS’ FEARS INHIBIT THEIR ENGAGEMENT WITH COMPANIES

Key points

Consumers are reluctant to even open emails

Figure 57: Percent of business emails opened by consumers, December 2007

Figure 58: Percent of business emails opened by consumers, by age, December 2007

Figure 59: Change in likelihood of opening any type of email solicitation, January 2008

Figure 60: Change in likelihood of opening any type of email solicitation, by race/ethnicity, January 2008

Figure 61: Change in likelihood of opening financial services email solicitation, January 2008

Figure 62: Change in likelihood of opening financial services email solicitation, by gender, January 2008

Consumers are unwilling to share important information with companies

Key points:

Figure 63: Information consumers would disclose to unknown companies, December 2007

Figure 64: Information consumers would disclose to unknown companies, by gender, December 2007

Figure 65: Information consumers would disclose to unknown companies, by age, December 2007

COMPANIES ARE RESPONDING TO TRUST AND SECURITY CONCERNS

WORKING ON THE CONSUMER EXPERIENCE

Key points

Technical solutions

Credible format

Opting in or out

Separate URLs

Personalized data in emails

Email newsletters

Affinity partnerships

CRITICAL ELEMENTS: REPUTATION AND SOCIAL NETWORKS

Key points

Figure 66: Factors affecting consumers’ decisions to open emails, January 2008

Figure 67: Factors affecting consumers’ decisions to open emails, by gender, January 2008

Figure 68: Factors affecting consumers’ decisions to open emails, by age, January 2008

Figure 69: Factors affecting consumers’ decisions to open emails, by income, January 2008

Figure 70: Factors affecting consumers’ decisions to open emails, by race, January 2008

REPUTATION: THE VALUE OF BRAND QUANTIFIED

WHOSE EMAILS GET OPENED?

Key points

Consumer response

Figure 71: Consumers’ likelihood of opening emails, by type of financial institution, January 2008

Figure 72: Consumer likelihood of opening email from leading financial services companies, January 2008

Banks

Figure 73: Consumer likelihood of opening email from generic and well-known banks, January 2008

Insurers

Figure 74: Consumers’ likelihood of opening emails from generic and well-known insurers, January 2008

Credit card issuers

Figure 75: Consumers’ likelihood of opening emails from generic and well-known credit card issuers, January

2008

Mutual funds

Figure 76: Consumers’ likelihood of opening emails from generic and well-known mutual funds, January 2008

Brokerage firms

Figure 77: Consumers’ likelihood of opening emails from generic and well-known brokerage firms, January 2008 73

ACQUISITION VS. RETENTION

Key points

Consumer response

Figure 78: Importance of various factors to consumer decision to open email from known and unknown sender,

December 2007

Frequency of customer contact

Figure 79: Consumer preferences for various types of email communication, frequency from known companies,

December 2007

Figure 80: Consumer preference for receiving relevant product offers, by gender, December 2007

Figure 81: Consumer preference for receiving relevant product offers, by age, December 2007

CLUSTER ANALYSIS—IDENTIFYING THE HIGHLY MARKETABLE CONSUMERS

Key points

First responders

Stable, sometime responders

Leave-me-aloners

Figure 82: Financial service consumer clusters, January 2008

Figure 83: Increase in concern about online security in last five years, by consumer clusters, January 2008

Figure 84: Non-response to financial services emails due to security concerns, by consumer clusters, January

2008

Figure 85: Concern about handling of responses to financial services email solications, by consumer clusters,

January 2008

Figure 86: Concern about handling of responses to financial services email solications, by consumer clusters,

January 2008

Figure 87: Factors affecting consumers’ decisions to open emails, by consumer clusters, January 2008

Figure 88: Change in amount of spam received, by consumer clusters, January 2008

Figure 89: Change in likelihood of opening financial services emails, by consumer clusters, January 2008

Figure 90: Financial service consumer clusters by gender, January 2008

Figure 91: Financial service consumer clusters by age group, January 2008

Figure 92: Financial service consumer clusters by income group, January 2008

Figure 93: Financial service consumer clusters by race, January 2008

Figure 94: Financial service consumer clusters by Hispanic origin, January 2008

Methodology

APPENDIX: ADVERTISING AND PROMOTION

Figure 95: A financial services email advertisement targeting a niche demographic market, 2007

Figure 96: An email advertisement embedded in an outside non-business newsletter, 2007

Figure 97: Example of an email advertisement featuring affinity partnerhsip offer incentive, 2007

Figure 98: Example of an email advertisement featuring affinity partnerhsip offer incentive, 2008

Figure 99: A financial services email advertisement attached to a message from an affinity partner, 2007

Figure 100: An example of an email advertisement including account information, from American Express, 2007.91

Figure 101: Citi Card security newsletter, 2008

Figure 102: An example of an email advertisement designed to get consumers to go paperless, 2007

Figure 103: Example of an email advertisement featuring green marketing, 2007

Figure 104: Green cause marketing, 2008