If you are still spending money on print and direct mail, we ask you why? Not only is it hard to track, but it is likely the least effective form of marketing that you can do. While building a brand is good, generating an emotional connection is better. Banks that do a great job at marketing such as Umpqua, Citizens Bank of Edmonds, Bank of Ann Arbor, and many others know that it is all about gaining some level of engagement. It is hard to engage with a statement stuffer or print advertisement. In this article, we look at the data on other marketing alternatives in order to make your bank marketing more effective.
The Value of Adjustments
One valuable insight that we picked up at the Financial Brand Forum was from Gary Vaynerchuk that put forth a unique paradigm for bank marketers to consider - when it comes to marketing, what you are really paying for is attention. Attention is the currency of bank marketing and that attention comes at a price. The question is, are you overpaying or underpaying for attention?
Now, this all comes down to your bank’s marketing strategy and what your objectives are for any given campaign. If you are going for branding or awareness, those goals require different tactics than lead generation or conversion. Marketing a bank event is different than marketing a checking account, which is very different than marketing the use of the bank’s mobile app. Every objective requires a customized plan that includes a series of experiments and adjustments.
The ability to make adjustments, to change the timing, ad copy, graphics, time of day run or hundreds of other variables is a critical gift that wasn’t available to bankers a short ten years ago. These days, it is not uncommon to start off a campaign with an engagement rate of 0.10% and have it climb to 10% or more by the end of the campaign. If you are not taking advantage of that, you are missing out on a huge piece of marketing optionality that needs to be considered when you price the cost of attention. When you consider the lifetime value of a new customer, that optionality can often be worth tens of thousands of dollars for just a small campaign.
Further, to gauge the effectiveness of each experiment, banks need to be clear on what can be measured and what should be measured. In this day and age, our Bank is biased against certain forms of marketing not because we don’t believe in it, but we can’t measure it. If we can’t measure it, then there is no need to experiment since we have no way to adjust our campaign.
The Market Price for Attention
For the most part, banks need to think of a multilayered campaign that does all the above over a period of time. It is usually not a single ad or post on Instagram that converts a customer, but a series of different messages through different channels. Banks should consider building a marketing campaign like they build a credit portfolio – go for diversification and support.
If you can track the cost of placing an advertisement with a single metric, you can then start to compare these different tactics. Below, is our estimated cost over the past year of various marketing channels with those channels highlighted in orange as being our current favorites due to the ability to track, the granularity of targeting and the level of engagement. Note that we do not include the cost of creating the content, only the cost of executing and placing the content. We also commonly calculating the cost of a campaign based on either the cost of conversion, the cost per click or the cost per 100,000 of impressions (in that order based on what we are comparing).
What This Graphic Tells You
In addition to giving you the current, ballpark cost of targeting households and businesses in metro areas using conventional marketing campaign such as for deposits, a series of interesting points jump out in the chart above.
One is the fact of what is missing. Not on the above chart due to problems with the display are tactics such as direct mail. Consider that the cost of a campaign typically would exceed $200,000 to reach 100,000 people and you can see our point how that could be one of the least effective tactics available to banks when you can reach the same number of households or businesses using social media for a tiny fraction of the cost. It was not even worth discussing or trying to display on the above chart since it would dwarf all the other costs. Ironically, direct mail is a favorite tactic of banks.
Conversely, the cost of email and blog posts are so low, and its effectiveness is relatively high, that almost every campaign should contain these two components since they result in an almost infinite return with relatively little risk. Just like the cost of direct mail was too significant to compare with other common marketing forms, the cost of email, articles, and blogging is too small to compare.
Another item that pops out are some traditional channels such as outdoor advertising and radio that are relatively low cost. While you can’t target these forms of advertising to anywhere near the granularity of social media or paid search, for a general branding campaign, these old-school formats should still be considered.
Of course, the interesting piece of insight that jumps out are tactics such as YouTube, podcasts, Instagram, and LinkedIn. If you think about buying attention, then you start by trying to figure out what the cheapest cost is going to be to accomplish your goals. If you are looking for clicks and targeted views/listens, then these marketing forms are among the best when comparing per level of engagement.
Of course, cost is only one component. Effectiveness is more important. One problem with print, TV, radio, and others, is that while it may be good for brand awareness, it is very difficult to measure engagement unless there is a call to action. Unfortunately, including a call to action such as having the prospect make a phone call or go to the bank’s website takes an extra, cross-channel steps that tend to lose 95%+ of targets. As a result, ad dollars are often wasted if you are doing anything other than branding.
That said, branding alone may be worth it. A Nielsen study, done back in 2017, showed that the average recall for a TV ad was 14.8%, while a recall for a Facebook ad was only 8.4%. More to the point, that when a company ran both a TV and a Facebook ad, the recall jumped to 18.9%.
While measurement comes in many forms and is primarily driven by the channel, in general for comparison, we can test each channel by showing a bank product or service and then asking if they are favorably inclined to try the suggested product. While this measure isn’t exact, it does allow for a comparison of in-person, traditional, and digital marketing tactics.
Below, we chart how several select channels influence prospects saying yes to try a new product. As can be seen, articles, blog posts, and social media serve as a third-party validation and tend to help with conversions. Because you can easily collect this validation in the form of comments, likes, forwards or similar AND you have the ability to have a call-to-action in the same channel; effectiveness is usually much higher for product sales.
Putting This Into Action
Banks should consider looking at all their options and creating a way to compare both the cost and effectiveness of each channel. Then, think about purchasing attention in such a way that you get the cheapest diversified portfolio of marketing channels available that will hopefully reinforce each channel’s message. As the campaign runs, each day, bank marketers should review the previous day’s results and then make adjustments so the tactics can be fined tuned. For each campaign, it takes us about 20 minutes to manage keywords, increase bid prices, change copy, or create new graphics to better meet our objectives.
Stay tuned as we have many innovative campaigns planned, new tactics to try, and fresh data to share that will hopefully save you time and resources.
Submitted by Chris Nichols on June 10, 2019