Steady Growth in Marketing Spend and Marketing Ratios for Top U.S. Banks in 2019

EMI’s annual analysis of marketing expenditure for 25 leading U.S. banks reveals that they grew marketing spending by 7% in 2019 to $15.4 billion. This rate was down from the 13% growth between 2017 and 2018.

The banks’ marketing ratio (defined as advertising and marketing spend as a percentage of net revenue) has risen steadily in recent years, growing 18 basis points (bps) to 2.92% in 2018, and by an additional 21 bps to 3.13% in 2019.

The chart below summarizes marketing ratios, marketing budgets and y/y change in marketing spending for these 25 banks.

The following are some additional takeaways from our bank marketing spend analysis:

  • 16 of the 25 banks increased their marketing spending in 2019, with 5 increasing their budgets by more than 10%.
  • 6 banks invested more than $1 billion in advertising and marketing. Wells Fargo joined this group for the first time in 2019, with marketing spending rising by 26%, driven in large part by the launch of the ‘This is Wells Fargo’ integrated marketing campaign in January 2019 . It has invested strongly in advertising in recent years as it seeks to rebuild its reputation following the fallout from fake account and mortgage mishandling scandals.
  • 11 banks increased their marketing ratios in 2019, with 6 of these growing the ratios by more than 10 basis points. The largest rise was reported by Bank of America, whose 15% increase in its marketing spend led to a 38 bps rise in its marketing ratio (to 2.3%).
  • Banks that do not have branch networks and have national credit card franchises (American Express and Discover) had the highest marketing ratios. Capital One’s credit card bank charter – Capital One Bank (USA), National Association – had a marketing ratio of 10.3% in 2019, while its retail banking charter – Capital One, National Association – had a ratio (3.2%) more in line with peer regional banks.

It is almost impossible to project bank marketing spending for 2020, given the impact of the coronavirus pandemic on the U.S. economy in general, and the banking sector in particular. In the short term, marketing budgets will trend downwards as bank revenues are impacted by decreased economic activity. However, unlike the 2018-09 Financial Crisis, the country’s fundamentals were strong heading into this disruption, which increases optimism that the economy can recover quickly once the pandemic abates. This may lead to a robust bank marketing spending in the second half of 2020. What is more clear is banks will continue to shift their marketing budgets from traditional media (e.g., TV and print) to digital and other nontraditional media.

Soulmates: Marketing and Change Management

Their eyes meet across a crowded room. Drawing together, they begin a conversation and discover that they have much in common – core values, personality, life goals. They make plans to meet again, filled with wonder at how the hand of fate has seemingly led them to find each other.

Who are these two souls? Marketing and Change Management. Two disciplines that aren’t typically thought of together, but which are in fact very similar in their goals and objectives and who powerfully complement each other when combined. At their cores, marketing and change management are about influencing behaviors and attitudes of a target audience to move it in a desired direction. For marketers, that direction is purchase; for change management practitioners, that direction is adoption of new processes or technologies. The terms change, but the concept is the same: persuade individuals to move from their current state to a desired future state.

There are two ways you can get people to do what you want them to do: force them or persuade them. Needless to say, while there have been times in history when force has been coldly effective, companies in the free world today have to rely on persuasion. This means that they not only need to have a clear picture of where they want their audience to go, but to do this they also need to have a strong understanding of the attitudes and motivations of the audience. This is true whether your audience consists of internal users of a new technology or prospective customers of your product or services.

Whatever the audience and whatever the desired action, marketers and change managers therefore need to begin by making sure they can answer the following six questions:

  • What audience need is addressed by the solution?
  • What is the audience’s current way of addressing that need?
  • Will the audience immediately understand the benefits of the solution?
  • Will the audience need guidance on how to implement the solution?
  • How does the audience typically consume information that relates to this solution?
  • For any of the questions above, are there any significant segments of the audience for whom the answer would be different?

When marketing strategies and change management initiatives aren’t supported by answers to these questions, they fail. The failure might be immediate, or it may be longer term, but ultimately any effort to influence decisions and actions not built on the foundation of this understanding cannot succeed.

At the end of the day, then, marketing and change management are really just two sides of the same coin. For practitioners of either, this should be cause to rejoice as the thinking and experience of both disciplines can be mined for ideas that help improve outcomes. And perhaps both disciplines will end up living together happily ever after.

Marketing in the Coronavirus Crisis: Notes from a Discussion at the Boston Meeting of the Gramercy Institute

Just before everything shut down in the face of the pandeminc, a group of financial marketers convened in Boston for a meeting of the Gramercy Institute. The session was billed as focusing on the topic of ”What’s New and What’s Next in Financial Marketing“ and indeed much of the content touched on the future, but, taking a cue from the news at the time, the host initiated a discussion of marketing in a crisis.

Broadly, the conversation fell into two buckets: communication “best practices” and the role of marketing. Two key take-aways:

  • Communication “best practices.” There was agreement that transparency and authenticity were key to building connections with customers, but also that there was no clear playbook for communication frequency and channel. Discussion participants recognized the need to respect the limited time and frayed nerves of customers but also saw potential value in providing clear guidance in an environment filled with uncertainty. Likewise, they recognized the need to find a balance between communication overload – exacerbated by the worldwide turn to digital communications in light of severe restrictions on face-to-face contact – and the value of demonstrating presence and building community when so much of the current crisis feels (and is) isolating. Finally, participants expressed mixed feelings about finding opportunities in the crisis. Many said that this was definitely not the right time to be promoting products. Some made the argument that people are looking for concrete assistance and that there was a place for tasteful promotion of solutions that could meet the needs of customers in the current environment.
  • Role of marketing. As the discussion turned to the role of marketing amidst the crisis, there was widespread consensus that in some ways the environment was one in which marketing could really prove its value in building relationships with customers and prospects and in delivering timely, conscientious, clear communications. Even more, though, there was agreement that marketers at B2B financial services companies should seize on this as a chance to forge a closer partnership with their sales colleagues, who are likely to be struggling to adjust to a world in which face-to-face contact is minimized or even completely foregone. Everyone agreed that if Marketing could find a way to enable sales to leverage digital and voice channels to nurture relationships at a distance and at scale, it would have a significant impact on the ability of the company to navigate these difficult times.

While the event was likely the last in-person meeting for the near future for most in attendance, it was a valuable opportunity to share ideas with colleagues and learn from each other as chaos seemed to be descending. It has given us much to think about as we all now hunker down, socially isolate to try to stay safe, and think about what the future might hold in store.