Marketing Matters
In the most recent earnings calls issued by the major US banks terms such as cost control, cost management and cost transformation featured heavily. It’s repetition of a theme that has endured over previous quarters and echoes the agenda set among smaller players who are also taking a closer look at costs in this difficult climate.
Although costs have crept up across functions over the past few years marketing is normally the organization to first to feel cost cutting pressures. What’s made this planning season even more challenging is that marketers are positioned to aggressively hunt for deposits and new business in 2024, and CFOs are scrutinizing budgets with intensity.
Here are four key considerations CMOs must acknowledge this planning season, as they aim to justify marketing dollars.
1. Marketing Costs Have Shot Up Across The Board
Over the past couple of years spend across all lines of business (LOBs) have shot up as costs have inflated.
For consumers, the rise in new providers and economic uncertainties have created reason to reconsider primary banking partner, and on the industry side the shift to digital channels has led to a decrease in valuable deposits and a significant surge in marketing noise.
With cost per acquisition (CPA) having shot up 59.4% last year, this is a challenging environment in which CMOs need to justify every dollar spent.
2. Incentive Spend Efficiency Needs To Be Closely Assessed
Direct mail is most used by banks on both coasts, but various competitive forces are at play in different states.
Average new to bank incentive offers have ballooned. At the top of the market, incentives have hit $2,000, making this an area where CMOs must think carefully about efficiency and weigh up affordability.
3. Think Of The Brand
In conversation with finance heads, CMOs are being challenged to push all marketing dollars into deposit production and cut brand spending in order to prove efficiency.
However, there is a case to be argued that by investing in brand thoughtfully and against industry and range, marketing driven sales percentage will increase. Marketing’s argument that brand spend must be sustained or built over time holds true – a claim we believe may be particularly acute for regionals and super regionals.
4. Track Digital Differently
More dollars are being allocated to digital marketing, but how it performs and the way marketers should assess efficiency is different to the traditional approach to analyzing spend allocation. Banks are constantly changing their digital marketing strategy, with search patterns and production conversion rates shifting continually. Banks need to have constant and accurate industry level measurements, regular targets and conversion metrics.
Most financial institutions are looking to lift their prospect targeting capabilities and are aware of the opportunities that attribute analysis through digital engagement holds, but that means having the ability to assess strategies on a regular basis. In most instances banks are evaluating their position on a daily basis. Considering capabilities and keeping a much more regular eye on budget performance will be critical for 2024.
