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Bank’s online marketing is a waste of time

Jeffry Pilcher at the Financial Brand ran an interesting survey this month to see how US banker’s are getting on with online marketing. Most of the banks surveyed were smaller credit unions, although 49 retail banks took part too. 64 of the 154 participants had $1 billion in assets or more, whilst 66 had less than $500 million in assets.  Most (46%) described themselves as “novices” at online marketing with just 12 (8%) thinking that they were advanced marketers online.

Considering the age we live in and the fact that most banking is now self-served over the mobile and internet, that’s pretty dire.

The real shocker from Jeffry's survey however is this chart …

Marketing activites

… showing that most US retail financial institutions spend only 5% of their marketing budgets for online activities.

Mind you, they could be quite cluey as Deloitte and YouGov just polled over 4,000 UK consumers and found that more than half (52%) believe that television is the most memorable advertising media; only 10% went for newspapers, whilst online banner ads garnered a mere one in a hundred votes as a useful advertising media.

You can download a raw Excel file with data from the Financial Brand’s 2010 Online Marketing Study by clicking here (see end of Jeffry's blog entry).

Meanwhile, talking of surveys, if you haven't taken our European Payments Survey yet, then click here to join in.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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  • I’m struggling with understanding your thought process here. How do you from “many bankers considers themselves novice online marketers” and “many FIs spend a small percentage of their budget on online marketing” TO “banks’ online marketing is a waste of time”?
    In the scheme of things, online marketing is a relatively new field, with new sub-disciplines (SEO, SM, etc.) emerging every year. I’d be more worried if a majority of the respondents had demonstrated dementia and considered themselves experts.
    And since a small % of marketing spend is going towards online marketing… and that overall, marketing effectiveness really isn’t getting a whole lot better… isn’t the REAL waste of time all the money going to NON-online marketing efforts?

  • Not sure if the title fits the content. I think the fact that most describe themselves as novices really tells the tale. The financial institutions I have dealt with have only scratched the surface with Online Banking marketing.
    Some hosted Internet Banking vendors have seen good success in getting users to utilize different features (e.g. bill payment) within the Online Banking site.
    The jury is still out on how effective Online Banking marketing can be.

  • I think as online marketing increases in importance – I agree with Ron that we’re still early days, especially in financial services – TV will inevitably become relatively less important in terms of the overall mix BUT might become more important in order to achieve certain specific goals. In particular in building mass market trust/ubiquity which is essential to providing (retail) financial services. The irony is that (traditional/incumbent) banks have done so much in the past decade to piss away their most valuable asset (imo) which is trust. They’ve manage to mitigate this so far to a large extent by combining TBTF with the natural inertia of consumers in this space but the resulting relationship with their customers is – perhaps irremediably – more brittle. Whether or not they can repair this over time with multi-hundred-million dollar brand campaigns (sports, events, television) is I think an open question.
    However, for new innovative, “web-native” competitors – perhaps somewhat paradoxically – television and other mass market brand advertising (billboards, etc.) – will, at least for the next several years, be increasingly important if they are to break-out and conquer the mainstream consumer. I like to call it the ‘oh yeah I’ve heard of them’ syndrome; familiarity is key to overcoming the energy barrier that surrounds consumption of financial products. Two examples not in banking that I think illustrate this are Betfair and more recently (yesterday! so jury still out admittedly) Zoopla. Betfair was already a very successful business when it launched its first TV/billboard campaign but subsequently was able to break-out of it’s niche customer base to reach a much wider market. I think Zoopla will do the same, and go from being the property search site of choice for the ‘web-savvy’ to challenging Rightmove as the property search site of choice full-stop.
    Coming back to financial services, I think one business that has done reasonably well so far with a very lean, guerilla, ‘online/social’ marketing focus is Zopa. And yet to be frank, they should/could be doing so much better. If I were Giles, I would go raise a few million pounds and spend it on a traditional media campaign. Sure it’s a bet – and the lack of risk appetite / imagination of the European VC community is a potential stumbling block – but they’ve done the heavy lifting of build & prove, now they need to scale and I think they will struggle unless they can achieve the broad level of consumer awareness and ‘brand ubiquity’ that traditional mass media brand campaigns are still best placed to deliver.
    Perhaps I should give him a call. 😉

  • Chris Skinner

    I think you should Sean and, in case you’re wondering, my response to comments: