Commentary

Industry Watch: Burn, Banking, Burn

Industry Watch-Burn, Banking, BurnThe Internet could be a bank's best friend

Everyone loves to gawk at a gory accident - unless it involves their own money. The shitstorm that was banking in the last quarter of 2008 was like watching the Hindenburg go down: awe-inspiring in its carnage. Which leaves the retail banking industry - what's left of it - with an obvious but unappetizing messaging strategy. "We're too
big to fail." As bank swallowed bank, as other banks gulped down billions of taxpayers' dollars the way an suv burns through gas, the three left standing scrambled to reassure their customers.

Maybe that's why none of them want to talk about advertising right now. McGarryBowen, agency of record for JPMorgan Chase had nothing to say about the banking giant's online advertising. Bank of America: "No comment." ddb Los Angeles, agency of record for Wells Fargo: "We never talk about this client. Never."

Experts say that the remaining big banks do need to talk to consumers, emphasizing stability and security. And this need could fuel a boom in interactive advertising later this year.

Down on the Upside

To date, interactive media has gotten short shrift from financial advertisers. Bill Wreaks, chief analyst for the Journal of Financial Advertising & Marketing, estimates that banks spend only 5 to 6 percent of their marketing budgets online. But this crazy marketplace is going to change that.

"The accountability of online media is steering the ship in many respects," Wreaks says. "As well as the responsiveness of the medium. Nobody wants to lock themselves into big grandiose campaigns or big contracts. People are playing it week by week."

There's one more thing that could steer ad dollars online, Wreaks says: the concept of appropriateness. "If a bank has gotten tarp money, is it appropriate to spend some of that on a two-page spread in The Wall Street Journal? We'll see less chest-beating, and less big branding initiatives. Big is out, accountable is in - and online is built for that."

As of October 2008, according to market-analysis firm snl Financial, the top three banks controlled nearly one-third of the nation's retail market share. Bank of America held the top spot with $719.8 billion in total u.s. deposits, followed by Wells Fargo at $711.5 billion and JPMorgan Chase at $649.3 billion.

But that doesn't mean they'll need to advertise less, according to James Van Dyke, president of Javelin Strategy & Research. Even the hugest banks are desperate for deposit accounts - that is, people giving the bank actual money to use.

"Financial services has always been a very competitive industry," Van Dyke says, "and in a turbulent period, customer acquisition is still very important, especially in the credit card market, where there tends to be a lot more customer churn." Javelin's research found that the maxed-out consumer we've heard so much about is largely a myth. "There are still individuals who want to borrow more, and small businesses that need lines of credit."

It's a Marketing 101 concept that tough times are the best times to grab share from your competitors, but so far, the banks have cut back on offers and promotions across all media, Javelin found. The winning strategy, according to Van Dyke, is Internet banking and bill-payment services that are convenient, easy to use, and give a complete picture of the customer's accounts.

Tell Me Another One

Wells Fargo, now the nation's second-largest retail bank, has already begun the digital discussion. It used its Web banking interface to explain the Wachovia buyout, via a special message from ceo John Stumpf that appeared when customers logged in. It also premiered a new ad campaign on January 13, with the tagline: "One team, twice as strong." Broadcast, cable, radio and print ads were likely created by ddb Los Angeles, the bank's agency of record, with no love shown to Tribal, which handles Wells Fargo's online advertising. (Wachovia was in the process of signing on with Ogilvy when it tanked.)

In a highly unusual move for this industry, Wells Fargo also turned to social media, launching a blog in early January to cover its digestion of Wachovia. After an initial post by Stumpf, Matt Wadley of Wachovia and Ann Marie Quinn from Wells Fargo began almost daily missives - with comments turned on. The tone is friendly and quite un-banker-like. For example, in a post explaining that customers can't deposit checks at atms for the opposite bank, Wadley writes, "There are still a lot of whose-its and whats-its that need to get synched up between our two companies."

Industry Watch: Burn, Banking, BurnAlso in January, Bank of America, the u.s. financial top dog, launched a Web-only offer for new customers featuring Betty Boop. In addition to free online banking and bill pay, checks, check cards and statements are pretty in pink and decorated with the image of the adorable flapper character.

"If you want to be brought directly back to the 1929 depression, Betty Boop will do it. But the value message is right on," Wreaks says. "In this new, austere environment, messaging needs to play on value and sensibility - not talk about all the bucks you're going to make." For example, Citibank's "Live Richly" campaign was one of its most successful campaigns ever, he points out, but now it's back to "Citi Never Sleeps."

Other examples of repositioning and comfort-messaging include SunTrust's new tagline: "Live Solid. Bank Solid." The media buy includes Sunday Night Football, along with other primetime tv, radio, print and Internet. pnc Bank, which came from obscurity to use $5.6 billion in bailout money to buy National City Corp., used a cross-media campaign to say, "Two of America's best-known banks. Now simply one of America's best."

You Old Savings and Loan

There's also an opportunity for community banks to take customers away from the giants, according to Sharon Lyon, principal of Lion's Share Marketing Group, a consultancy specializing in financial services companies.
"It's the trust factor," Lyon says. "Banks went in and made stupid choices in how they conducted their business. But the problem with the banking industry is, you must have trust. It's a big challenge for community banks, in particular, to dissociate themselves from what's occurring at the national level."

Community banks, which may serve a city or a region, tend to do minimal online advertising, Lyon says. They may do a small amount of paid search, or put a few banners on the Web site of a local news or sports station. Community banks haven't rushed into providing online banking services, either. "They were a little gun-shy," he says. "They didn't have sophisticated online applications like the big guys did."

According to Javelin, small- to mid-size banks lag behind bigger banks by more than 10 percent in households that use online banking. At the same time, consumers think they provide better online security than the biggies. This creates a window of opportunity for them to beef up or jump-start online offerings while BofA, Wells and Chase are busy digesting their acquisitions.

Internet banking and bill-pay will be the competitive edge for banks large and small, according to Javelin. And the window of opportunity for community banks is tight, Van Dyke says. "While the big banks will be preoccupied with m&a activity, that won't take terribly long. All of a sudden, they'll want to add other customers as well."

And when they do, let the digital marketing spend begin.

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