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Banks Marketing Budgets on the Rise

ABA survey identifies new industry trend

ABA Marketing Expenditures ChartNEWS RELEASE 2004
ABA Media Contact: Tracey Mills
(202) 663-5471
E-mail: tmills@aba.com
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SCOTTSDALE, Ariz., Sept.13—Bank marketing budgets increased again in 2004, according to the American Bankers Association (ABA) 2004 Bank Marketing Survey. Results were released today at the ABA Marketing Conference in Scottsdale, Ariz. Overall, banks increased marketing budgets by 5 percent over 2003 expenditures.

Since 2002, banks have spent more to promote products, services and their corporate brand. In 2003 total spending reached $9 billion, a 4.6 percent increase from the $8.6 billion banks spent in 2002. Banks' intentions to spend more on marketing in 2004 signify an industry trend.

"Three years of solid, consistent budget growth indicates more than a trend," said Brenda Marlin, associate director of the ABA Marketing Network." It demonstrates the desire of banks to remain aggressive with their marketing efforts."

Spending reflected the continuing boom in retail banking. On average, 66.5 percent of marketing expenditures promoted services to court consumers, 23.2 percent was allocated to the small business market. Commercial lending commanded the remainder of the expenditure pie with 7.4 percent dedicated to mid-market businesses and 1.3 percent for large corporations.

Seventy percent of banks introduced a new product or service in 2003. Checking and savings accounts comprised more that half of the new initiatives. Mortgage or real estate loans were the second most common new offering, with the smallest of banks offering more of these products.

A whopping 85 percent of banks use market segmentation – a strategy for targeting specific consumer groups – to promote products and services, up from just over 50 percent in 2001.

Banks' criteria for consumer market segmentation varied. Seventy-three percent based market segmentation on the customer's relationship with the bank, 67 percent based it on the age of the customer, 64 percent used income or net worth and 61 percent used geographic location.

For targeting businesses, relationship with the bank also ranked highest for market segmentation, followed by industry (46 percent) and sales volume (44 percent).

The survey revealed that competition from financial and non-financial institutions is considered to be the top challenge facing bank marketers. Banks that consider themselves ahead of the competition are more likely to have a full-time marketing staff, a brand marketing strategy and use a customer database, as well as methods to measure customer loyalty and satisfaction.

The survey includes an industry analysis addressing the competitive challenges facing banks. Conducted by marketing/communications research firm WirthlinWorldwide, the article compares marketing trends of the banking industry to other sectors of financial services.

Conducted from March through July 2004, ABA's industry survey of 178 banks represents a cross section of the banking industry. The survey assesses how banks across the country budget for marketing activities and how different promotional mix components contribute to the overall marketing performance.

American Bankers Association brings together all categories of banking institutions to best represent the interests of this rapidly changing industry. Its membership – which includes community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks – makes ABA the largest banking trade association in the country. ABA can be found on the World Wide Web at www.aba.com.

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