A scan of U.S. banks’ financial reports for 3Q11 shows that many of the leading banks reported strong year-on-year increases in their marketing spend. Banks reporting double-digit growth rates include:
- Chase: increase of 42%, to $926 million
- Citi: up 39%, to $635 million, driven by new consumer marketing campaigns, and sponsorships
- Capital One: rise of 25% to $312 million
- Bank of America: growth of 12% to $556 million
However, the rise in marketing spending is not universal, and a number of other leading financial institutions have cut expenditure levels year-over-year. Most notable is American Express, whose marketing and promotion spending fell 14% y/y to $757 million (of course, this follows a significant ramp-up in marketing spending throughout 2010).
In general, banks must balance external and internal forces to determine the appropriate levels of marketing investment:
- External: banks are looking at capture their share of business in certain segments (e.g., affluents) and/or product categories (e.g., auto lending, credit card, commercial loans). And this need to invest in growth areas is particular strong at present, given banks’ struggle to generate meaningful revenue growth. However, if there are strong indicators of deteriorating economic conditions, banks may want to scale back on their marketing spend.
- Internal: banks must also recognize their own circumstances and challenges and how this impacts on marketing spend. For example, many banks now have programs in place to reduce expenses (see our recent blog on brand cost containment programs). And marketing is frequently one of the first casualties of a bank-wide crackdown on costs. However, there are also internal forces that may lead to significant increases in marketing spend; for example, a bank may have just completed a significant merger, and will need to invest in marketing to support the overall integration effort.