Should Banks Spend More Money on Advertising?

Banks are Not made of Money

In the banking and financial services market space, when the ultimate goal is to steal the “all important market share,” is awareness all it is cracked up to be? What is the relationship between share-of-voice (dollars spent), awareness, and market share for banks? Do you need to increase your top-of-mind awareness in order to steal sharefrom Bank of America, Wachovia or Wells Fargo? Historically, in the financial services sector,there has always been a strong relationship between top-of-mind awareness and share-of-voice. And it is a very strong correlation. It is not a perfect 1:1 but it is close. When awareness studies are conducted, researchers expect that the bank brand that has spent the most media dollars will have the deepest awareness (top-of-mind being more important than total awareness, but this is a mix of the two).

If this turns out not to be so, heads roll and usually the advertising agency is the first in line for the guillotine. So…if a bank brand comes to an agency with a goal of increasing awareness, the simplest and surest means is to increase the bank's ad spending. Often the bank brand is told that if the goal is to increase market share, it requires the the bank have a dominant share of voice. The question is…does this have to be the case? Is reach and frequency the only answer for the bank brands that want to increase market share? (It is certainly one of the answers.)

The Relationship

To better answer this question we need to look at the purity of the relationship between awareness and market share in financial services. Here, the relationship and correlation is not quite automatic. For example, the Puerto Rico Tourism Board has a dominant share-of-voice and excellent awareness, near the top as a matter of fact, but lags terribly in market share. The reason: The creative message lacks alignment with the customers’ precepts. Look at your own market. Does the bank that leads the way in spending and top-of-mind awareness enjoy the greatest market share? Obviously, the relationship between share-of-awareness and market share is not “locked-in-step.”

Is it then possible to get into the considered set without an increase in awareness? We think so. Is it, therefore, possible to steal market share from the top spending bank like Bank of America, Wachovia, Wells Fargo and others without battling over share-of-awareness or without increasing awareness? Absolutely. While it is certainly true that a consumer cannot purchase or use a product or service unless they are aware of it, it is possible to increase preference with consumers who already have some awareness. For banks with limited budgets and less than dominant share-of-voice, the battle should be over the bank's (or credit union's) meaning and importance. If the brand becomes more meaningful to those who have awareness, you can expect the usage of your bank or credit union to increase. So the goal is to increase relevance and importance among those who already know your bank's brand name.

Impact: Not Just Reach and Frequency

To do this, the bank brand needs to have a more focused understanding of the customer’s brandface. Sure, the creative advertising needs to be edgier to have a more personal and individual impact — and it needs to be different from the rest of the considered banking set. But it also needs to be much more important to the specific bank target audience if it is to make up for deficiencies in reach and frequency. The question “Why should the target market care about our bank?” needs to be asked again and again. The importance to the highly specific target audience (this means you need to know who that specific target should be) needs to be challenged at every opportunity if the bank's message is to be both different and better.

The bank's advertising creative execution should be anything but what the competitive set is doing (more ATM's, friendly employees, and convenient locations and hours for example). Remember, this improved advertising message is not based upon standard banking target audience demographics, it is based upon a different understanding. It is based upon getting into the hearts of the minority of banking customers who have already demonstrated an ability to remember the bank's brand. Therefore the target audience summary on the media brief and the creative brief will be vastly different. The creative brief represents the finely tuned banking target audience and the media brief is the entire universe.

The Considered Set

This financial services marketing battle is totally over dominance in the considered set. Considered set is the term marketers use when describing the pool of bank brands that a customer chooses from. Entry into this banking set is most often attributed to awareness, but preference is not. Preference is a result of bank brand identification, brand equity, bank importance, and relative meaning. Its power is directly related to the level of incompleteness developed in the target audience.

The more the customer says, “That’s me. I want to be that,” the more market share the brand can expect to grab from the other considered set members. So, next time your advertising agency tells the bank that the only way to steal market share is to spend buckets of extra dollars, tell them that you demand more from their creative product, that you expect them to make your bank brand more important to those who already know you. Just make sure, as your bank brand is positioned against those heavy banking users, that you know exactly who they are.

Comments:

With the banks all going belly up and running for the help they have never given to others I am amazed that every other add on tv and the web is still for banks they should be cutting this and shareholders payouts now
posted by Mark Jones on 10/17/2008 6:34:00 AM

The problem is, that especially in this environment, banks and financial institutions MUST advertise still. This must be done for a few of reasons
1. Make existing customers feel secure in their choice of financial institutions
2. Lure customers from other institutions who may be thinking about switching
3. Build marketshare

The fact of the matter is that those financial institutions that can weather this storm have a unique opportunity to build their deposit base. Lets face it, there are only going to be a couple of national banks left and each will be fighting for market share.

Now is not the time to quit advertising, now is the time to advertise as there is great uncertainty in the market. However, unless financial institutions change their messaging and their brand to actually reflect the customers, rather than themselves, and build their brands around the core belief sets of those customers they wish to influence, this golden opportunity will be wasted.
posted by Corbin Rusch on 10/17/2008 9:03:00 AM

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