The Tipping Point in Bank Marketing

By Chris Nichols

Many banks spread their marketing dollars around thinking that channel diversity offers a benefit.

Keep in mind, though, channel diversity offers a benefit only to the extent a channel is effective. What is often overlooked is the fact that any given channel must gain critical mass and reach a tipping point before it can make an impact.

For example, a bank may spend $5,000 placing a single-page print ad and lament that they do not see a return. The reality is that placing a single ad is often a suboptimal strategy, regardless of whether you are trying to influence the purchase of a bank product or going for brand awareness.

Every message—and every channel—has a point of inflection before it becomes effective. And if you don’t achieve a certain level of saturation, it’s better to do nothing.

Locate the tipping point for print.            

The data below show that if you run an ad once or twice, a bank may pick up five points of marginal effectiveness or achievement towards its goal of getting readers to be aware of the bank’s brand. Run that same ad again, and the bank will increase that effectiveness by a marginal 14 points. Run that same ad five times and the bank will gain an additional 17 points of effectiveness.


The same is true for banks wanting to not only make the public aware of their brand but want a positive or favorable feeling associated with the brand. Here, the bank can pick up eight points upon the first viewing of the ad, 14 points upon the third or fourth viewing and 20 points after the fifth viewing. To move the public to purchase, the impact is almost as pronounced.

In some cases, if a bank has only a limited budget it might be better off doing nothing at all. Conversely, the bank is probably better off consolidating its budget on some key channels that make a difference and running an ad a number of times. This likely not only comes at a cheaper marginal cost but also at an increased effectiveness.

Make multiple impressions at once.

One tactic that banks overlook is running multiple ads with the same theme in the same publication. For a trade magazine, as an example, our favorite tactic is to place an ad on either the inside (good) or back cover (best) and again inside the magazine—opposite an important article. Here, by running an ad at least twice, recall or the call-to-action response can be increased on average by 25%, we have found.

One huge advantage is that bankers can immediately gain feedback on their results. Running a single ad over a three month period introduces an element of statistical noise as the economy, sentiment, and other environmental factors change—which can cloud calculating a return on investment.

Apply it to digital.

These days, we only like print as a last resort, and feel more comfortable with digital ads since we can measure the impressions, clicks, and conversions in real time. When it comes to digital, the same tipping point challenge applies. A single impression usually doesn’t have an impact. In our testing, five to eight impressions have worked best over a two week period. Any more and we have found we have started to achieve diminishing returns.

Though limited in sample size, our data below show lift, or the change of behavior, given display ad exposure. On average, a customer who receives an email from us may go to a landing page about 0.9% of the time. We tag anyone who opens the email and then can see how they might react if they also view a digital display ad. As you can see below, showing a potential customer one to three display ads more than doubles the traffic as it increases lift by 1.01%—while showing four to eight exposures gives us leverage as lift increases by 2.60%. After eight exposures, it appears that oversaturation occurs and lift diminishes.


Figuring out what works.

These data vary by time of year, by channel, and by medium, so it is important to experiment. Bank marketing has become more science than art, and banks can no longer afford to treat marketing as business as usual. While it might seem risky to husband your resources to focus on just a few campaigns per year, our data show that it is the less risky strategy. Bankers get quantitative when it comes to risking their capital on loans—shouldn’t bankers be equally stringent when risking capital on marketing?

A community bank with a limited market has a huge advantage against a larger bank. Not only are community banks closer to the market, but they likely have limited demographic diversity in their target customers. Over the last ten years, the cost of advertising has come down—as have the tools used to gauge marketing effectiveness. These days a small community bank can have the same tools as a large international ad agency. More important, the feedback loop for bank advertising has compressed. Ten years ago, if we could collect feedback, it would take months before we knew the impact of an ad. Now, we can not only collect real-time data within minutes after the ad being released but in digital channels, we can iterate and improve our effectiveness within days.

Successful bank marketing is the classic scientific method at work:

  • Form a theory.
  • Have a control group.
  • Let an ad out into the wild.
  • Analyze the results.

Do more of what is working and stop what is not.

Chris Nichols is a contributing editor to ABA Bank Located in San Francisco, he is the chief strategy officer of CenterState Bank, which has its headquarters in Winter Haven, FL.