The financial services industry has surged back into the market with increased advertising spending across virtually all media.
The sector's ad spending totaled $2.1 billion in the first quarter, up 10.5% from the $1.9 billion spent in the year-earlier period, according to marketing research company Kantar Media. Spending on TV spots rose 27.5% year-over-year to $821.8 million, and magazine advertising climbed 22.8% to $173.2 million.
Radio advertising saw the biggest jump, with spending hitting $191.6 million in the first quarter, up 49% from the year-earlier period, according to the Radio Advertising Bureau. By comparison, overall radio advertising increased just 6% to $3.68 billion in the first quarter.
“While financial services is a very diverse category, ranging from credit cards to banking, investment products, loans and more, the gains in advertising spending are disproportionately coming from the credit card sector,” said Jon Swallen, senior VP-research at Kantar.
A number of factors are driving the financial services sector's increased commitment to advertising, said Brad Strothkamp, principal analyst at Forrester Research. Among these is the desire to repair its shaky reputation following the meltdown of late 2008 and the federal bailout that followed, Strothkamp said.
“They've been kicked around over the past 18 months by everybody, and maybe in a way they're getting back on the offensive here,” he said. “As much as anything I think it's PR.”
A wave of mergers in the industry is also having an effect.
“A lot of merger-related advertising is going on right now,” Stroth-kamp said. “Wells Fargo bought Wachovia, which is being progressively transitioned over to the Wells Fargo brand. And I fully expect that to continue in the case of Chase's acquisition of Washington Mutual.”
JPMorgan Chase & Co. confirmed that assessment. “We were strong during the recession and acquired Washington Mutual,” said Michael Fusco, a spokesman for the company. “We had to spend a good amount of money marketing the Chase brand in California and Florida where we had never been before.”
American Express Co. took a big step forward in terms of radio advertising in the first quarter, spending $20.5 million on the medium, up from virtually no spending in the year-earlier period, according to RAB.
“For the small-business portion of our portfolio, radio is the No. 1 consumed media by small-business owners,” said Lou Paskalis, VP-global media, sponsorship and mobile communications at AmEx. “A lot of our appeal on the small-business side is rational. [Radio] lends itself to conversational marketing, talking through points to consider.”
One medium that has not seen recent growth is newspapers. According to Kantar, financial services companies spent $369.1 million on newspaper advertising in the first quarter, down 3.1% from the year-earlier period. Some companies, though, remain strongly committed to newspaper advertising. Among these is JPMorgan Chase, whose “The Way Forward” campaign, aimed at small businesses, has been running regularly in The Wall Street Journal.
“We wanted to get the word out to small businesses that, yes, banks are still here, still open, lending and doing other things to help,” Fusco said.
JPMorgan Chase has also launched “Chase Loan for Hire,” a campaign about the company's program that rewards small businesses with progressively lower rates on lines of credit for every new worker hired. The campaign debuted June 30 using print, radio and TV.
While first-quarter numbers showed a drop in Internet advertising among financial services companies—Kantar reported that Web-based ad spending in the category totaled $506.1 million, down 18.1% from the year-earlier period—Strothkamp sees that as a temporary lull. “We're forecasting that by 2014 financial services will make up the biggest percentage of interactive spending on the Web,” he said. “They were slow to the game but are really coming on.”
AmEx typifies this trend. The company was one of the advertisers in Vanity Fair's inaugural iPad edition in June. Its ad featured an embedded long-form video, a mashup of print and interactive elements appropriate to the new medium. “We wanted a more immersive experience for the ad,” Paskalis said.
In a January report, Forrester projected that financial services companies will surpass retail as the largest investors in various forms of digital marketing, expanding at a 14% compound annual growth rate over the next five years to almost $11 billion.
“The financial services industry overall is investing more in marketing,” said Jim Speros, exec VP-CMO at Fidelity Investments. “In general we'll see an increase in online marketing, as well as TV and radio.”
Speros said the “Guidance” campaign, launched last year to underscore the company's financial advisory role, has increased Fidelity brand preference by almost 66%. M