Following the pandemic, more marketing leaders were asked to justify their expenditures and programs in terms of what tangible results were being generated.
By Mark GibsonThe ABA’s July 2023 survey of bank marketers reveals where they are investing more of their marketing budgets, and how those decisions are being made. While digital marketing tools are most likely to see increased funding in 2024, what they are being used for is changing. And using customer data and analytics to inform those decisions is becoming essential.
Shifts of emphasis for 2024
When asked where they anticipated investing more of their budget next year, marketers were most likely to choose digital advertising, SEO or paid search, social media or email. While this is not surprising—the shift from traditional to digital media has been occurring for years—what might be unexpected is that more than 20 percent of respondents see increased allocation to direct mail, outdoor and network television.
Another reason digital continues to garner a large piece of the marketing budget ‘pie’ is that results are more measurable. And what gets measured often receives greater budget allocation. What can’t be ignored is how other media channels that are harder to measure might have helped drive digital’s success.
These findings reinforce a critical realization beyond the banking industry. While digital media are excellent at some things—converting at the bottom of the funnel, for instance—there are other functions where traditional marketing techniques are more effective.
For instance, many marketers have found that traditional media like TV and outdoor are essential to building awareness of a brand or a new product. They often have broader reach and are harder to ignore. And, in the case of TV or video, they are able to communicate brand attributes and evoke emotion far better than most other media channels.
Direct mail is another example of this. For many target customer groups, adding direct mail to a digital media plan can more than double product sales and new customer acquisition. Mail can reinforce the message delivered by digital media, but often becomes a tangible ‘to-do item’ on the kitchen counter, reminding the prospect to take action. And the use of QR codes or personal URLs do effective jobs of marrying the off-line with the digital world, driving prospects to your website where they can be tracked and remarketed.
Marketing budgets increasingly driven by business results
Another key finding is that nearly half the respondents stated that their banks’ business lines have direct input on how marketing spends its money. This is another trend which has been emerging since at least the financial crisis of 2009. In the past, Marketing was often left alone to build brand, run communication programs, and reactively meet the fundamental needs of various bank departments.eliminate waste and improve efficiency. More and more marketing leaders were asked to justify their expenditures and programs in terms of what tangible results were being generated. Financial types sometimes call this ‘zero-based budgeting,’ where you start with a budget of zero, and you justify each program to build up to your total budget. In some institutions, this is done each year without regard to past performance.
As a consequence, marketers at these institutions needed to do several things. First, they needed to understand what results were expected from each program or campaign. Second, they had to put measurement processes in place to ensure that the expected results were generated. Finally, they needed to understand the financials associated with those results to prove that the return on investment was sufficient to justify the amount of money being spent.
This is a discipline that serves marketing well, since it allows us to speak the same language as the CFO and line of business executives. A side benefit is that, if a program is particularly successful, this approach makes it much easier to justify spending more money to expand it.
Deposit growth becomes a top marketing priority
What a difference a year makes! Last summer, most banks were flush with deposits and were focused primarily on loan growth. But, with stimulus dollars being spent down and the Federal Reserve pulling dollars out of the system with quantitative tightening, this situation has been turned on its head. The bank failures exacerbated the situation, reducing deposits from all but the largest banks as customers with large deposits sought to diversify their holdings.
Therefore, a totally expected outcome of the survey was that marketing efforts aimed at growing deposits became much more prevalent this year, attracting on average 26 percent of the entire advertising budget. Furthermore, 24 percent of respondents said they received additional budget this year to fund the deposit growth battle being waged in most markets across the country.
Given the current rate wars in most markets, many management teams are prioritizing growth in checking and cash management to tame the growth in cost of funds. This is expected to be a focus for marketing teams moving into the 2024 planning cycle.
Customer data becoming essential
The final key learning was that marketing’s access to customer data is becoming even more essential. Of the banks surveyed, 45 percent house the customer data within the marketing department, often in an MCIF, while the remainder house it either within the core system or in a data warehouse outside marketing.
Marketers are expanding their usage of customer information. They have historically used it for service announcements or to promote products. However, personalization initiatives increase the frequency and amount of data that are required.
For instance, personalized onboarding implies that marketing knows whether a particular new customer has activated a debit card or signed up for mobile banking. If not, those customers receive tailored messaging encouraging them to do so. This approach can significantly improve customer retention and profitability.
Another example requires not just internal bank transaction data but external data about your customers. Increasingly, bank marketers are purchasing and appending data on their customers to help prioritize which customers are most likely to need a loan or have deposits at another institution. Using this type of insight to create personalized sales and marketing programs can dramatically increase both the dollars generated and the ROI of a marketing program.
Navigating uncertain waters
Bank marketers are no stranger to adapting to rapidly shifting priorities, as the pivot to deposit growth proved once again. While there are bound to be surprises in 2024, marketers have outlined a path to prosperity. Make sure you are working with senior management to achieve desired business results.
Find the right allocation of digital and traditional tools to accomplish that objective, and put measurement in place so marketing can take rightful credit for the results. And continue to enhance your utilization of internal and external customer data to improve the performance of your most important programs. Charting this course should allow bank marketers to avoid unforeseen obstacles and optimize the value they are adding to their banks.
Mark Gibson is marketing practice leader at Capital Performance Group, a strategic consulting firm that assists banks in making the most of their marketing efforts. He can also be reached on LinkedIn.