Banks’ New ROA: Return On Advertising
Report Summary
Banks’ New ROA: Return On Advertising
Banks in the top quadrant of return on advertising generated nearly twice as many deposits per ad dollar as banks in the second quadrant.
Boston, MA, March 11, 2009 – A new report from Aite Group, LLC examines ad spending trends and return on advertising performance of 32 of the largest 50 U.S. retail banks from 2006 through 2008. Based on ad spending and bank performance data from 2005 through 2008, the report aims to help bank marketers understand the performance of their ad dollars. It looks at which channels produced the best results, and draws conclusions about the relationship between ad spending and bank performance.
The 100 largest U.S. retail banks spend roughly US$2 billion on advertising each year. As such, understanding the performance of ad dollars is a necessity for today's banks. Pressure to reduce expenses will cause marketing departments to determine where they can minimize ad expenditures without harming business results. But even in better times, bank marketers will be under pressure to be increasingly accountable for their ad investments.
"Many factors - including a bank's fee strategy and sales ability - ultimately impact bank performance," says Ron Shevlin, senior analyst with Aite Group and author of this report. "Nevertheless, ad spending must be accountable for more than just achieving consumer awareness or winning awards from the ad industry. Simply spending more on advertising won't necessarily produce additional deposit and loan growth, and shifting ad dollars to lower cost channels like the Internet may not be an effective strategy. The highest performers in terms of return on advertising invested a higher percentage of their ad dollars in TV than other banks."
This 43-page Impact Report contains 36 figures. Clients of Aite Group's Retail Banking service can download the report.