The Lindy Effect

Today at a Glance:

• What's stood the test of time is likely to endure longer
• Direct Mail and In-person are two channels that have been extremely effective in 2023
• Small Business: Where entrepreneurial spirit thrives
• Black Friday: Consumer cravings meet slashed prices
• Today's Winning Roster - Standout Brands: Brex, Ramp, Amex, BofA, Cap One, Citi, Chase

One of my first newsletters for 2023 was "The Zombie Channels Are Working" and here we are nearly wrapping up 2023 and not much has changed. The Lindy Effect implies that something?that has lasted for a long?time is likely to last at least that same time, if not longer. E.g., a book that has been sought and read for over 100 years, is likely to be sought and read for another 100 years at a minimum. This concept applies widely across all non-perishable items including ideas and in our case, marketing channels.

Per ChatGPT (gulp! I anticipate this to become a popular source increasingly and hopefully it's not hallucinating entirely in this case), Direct Mail was used for the first time in 1000 B.C. in Egypt, where a landowner advertised on a piece of papyrus that he was offering a gold reward for the return of one of his slaves who had run away. Sears, Roebuck, & Co. made DM mainstream in the U.S. as a marketing channel to reach out to potential customers starting in 1892. My point is, regardless of which starting point you use if you apply the Lindy Effect, Direct Mail has a long way to go before it really dies as a channel. It has evolved leaps & bounds, and this evolution will only accelerate but the core channel will continue to exist is my belief.

I won't bore you with the first in-person interaction details but you get the drift. Why am I obsessing over Direct Mail and In-person as marketing channels, as these two channels are proving to be the top sources for booking credit cards for 2023. Our?Q3 Application Behavior Report?is out and Marisa Frys has a ton of detail on why these channels are working. Brands that are using the tailwinds of whatever the consumers prefer are benefiting a lot more as a result.

My favorite chart in the entire report is the one below which allows me to get a quick read on which channel is working best for which issuer.

Cap One and Discover both have Direct Mail as a close second channel that worked for them in Q3. Also, when I see "Bank Website or App" as the winning channel, I am guessing that a majority of this suggests that Paid Search is working well for these issuers. I'd love to see more content from issuers that will also result in higher organic applications, as I go back to the key message from last week: it's easier to convert attention into dollars than dollars into attention.

Switching from Consumer Credit Cards to Small Business Credit Cards, Andrew Davidson has his latest presentation on Small Business Card Marketing Predictions and it may be ideal to get one last presentation scheduled ahead of the holidays. The w/c Dec 11 looks good on Andrew's calendar currently, so let me know if that can work otherwise, we'll look to find time in the new year.

The small business space has been very hot in 2023 and is showing no signs of cooling, especially if you go by the marketing spend from Chase in October for their Ink Premier card. Small Business Credit Card has historically had fewer players with Amex being the dominant one. Lately, Chase and Capital One have ramped up their attention (measured by marketing spend) to this space, and we've seen a massive race take place. Throw in Brex, Ramp, and a few other innovative fintechs and you get a hyper-competitive marketplace. I am very curious to hear what Andrew predicts for this space in the coming 12 months.

Lastly, I love to monitor consumer spending as it goes with my belief that the headlines tend to skew our opinions negatively. Based on our consumer research, I believe the American consumer is financially healthy and it's great to see that we broke records on Black Friday. Online sales came in at $9.8 Billion (up 7.5% YoY), and In-store traffic was up 2-5% as well. Forbes Article. Mastercard Article.

Estimates suggest Cyber Monday sales were higher as well and my takeaway is that the American consumer is earning higher wages (higher minimum wage, higher demand for labor at the base level) and continues to show a lot of resilience. With the markets up for 2023, my expectation is, that the higher earners will soon see their 401k and investment statements, and this resilience of the American consumer is likely to stay with us for some time.

As ever - Anuj

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