1) What do you think of the recent negative coverage in the media regarding the targeting of small business cards to consumers?

I don’t think the coverage was justified. Our numbers for business cards mailed to consumer households (including professional cards) are down, or at best flat, and I believe most card issuers would confirm this scenario.

To put it in perspective, we estimate that around 60 million business card offers were mailed to consumers in Q2 2010 compared to more than 1 billion consumer card offers. So sending business card offers to consumers is still a niche area.

A recent Wall Street Journal article lumped all business card offers mailed to consumers into the bucket of “professional” cards, which implies that marketing efforts for these cards are deceiving consumers. The reality is that most of these card offers are actually for business cards and are marketed as such.

It is true that those cards marketed as “professional” cards could be misleading to consumers. They do not explicitly state that they are business cards because they are marketed to consumers. Some do not even mention the word business. But others state that the card is perfect for “business-related expenses such as air travel or client dinners.” Professional cards do not request that any business information be provided at the time of application and this has always been the case. It’s not a new development.

For the most part, small business cards that are marketed to consumers are clearly promoted as business cards. They usually state that they are “for the business owner or an authorized officer” and usually require that a Federal Tax ID number, business name, number of employees and sometimes revenue be provided on the application form.

Most of the marketing for Chase’s Ink cards requests such information; however, some offers for the Ink Bold card have added a checkbox for “I am a business professional with business expenses.” However, the rest of the offer is clearly targeted at the small business owner so I don’t think there is a deliberate intent to deceive on the part of Chase.

The reality is that small business owners are actually seeing some positive fallout from the CARD Act, as many issuers adopt the new regulations for their small business portfolios when they don’t have to by law.

2) Why do you think direct mail is a good strategy for small business lending?

Small business loan marketing is at an all-time low right now. In July-August 2010, just 3% of Mintel Comperemedia’s small business panelists received an offer in the mail for a new loan or line of credit, down from 12% two years ago.

Some banks are building awareness of their business services through print and online advertising, but most are not reaching out directly to small business owners via direct mail – a key channel for acquiring new customers. There is therefore a great opportunity to stand out in an otherwise empty mailbox.

Also, in a survey conducted by the National Association of Small Businesses in July, 41% of small business owners said they were not able to obtain adequate financing. This comes despite the fact that SBA lending is up in 2010. An increase in small business loan marketing can help convey that funds are available and stimulate loan demand.

3) Do you track SIC code?

Yes, and we also track the number of employees, annual revenue, region and many other useful pieces of information. Comperemedia clients can search and analyze the small business panel data by all of these variables.

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