1909

The Wasting of Advertising Power

Jan. 16 — In these days of conservation of energy, when every effort is made to reduce the cost of production, when the waste of a few years ago is utilized in the manufacture of a profitable bi-product, it does not seem possible that any avenue of waste has been overlooked — at least in the banking profession. Still such is the fact. The eyes of the banker have been turned so intently upon the avenues of finance that he has failed to observe the waste in the avenues of disposition.

Advertising has done much in the past. It has introduced various lines of goods; it has provided a respectful hearing for the salesman; it has aided the retailer by fully explaining the selling points and advantages of the goods, and in the case of banking has, and is, creating demand for bank service. Where, then, is the lost energy? In the preparation and distribution of copy. This department has had much to say in the past about this important question and it will have much to say about it in the future.

The Stereotyped Bank Card

There is the question of the old, stereotyped bank "card" or "statement." This formal, stilted, unchanging card announcement style of advertising is yet all too common. Many banks still cling to this lifeless and totally ineffective kind of publicity, using practically no other means to let the people know that they want them to deal with the institutions. This sort of advertising is the banker's plea of "dignity." He is afraid that if he issues any other kind of advertising that it will be "undignified" and reflect discredit upon his institution. This sort of advertising is entirely too cold and austere, like the cold walls of the bank building, and reflects too little of the common sense and human feelings of the men who work for the institution or have dealings with it. Is there anything appealing or effective in such an advertisement as this?:

FIRST NATIONAL BANK

Capital ………………………….. $50,000

 

Surplus …………………………. $50,000

 

Deposits ……………………….. $8,670,000

 

WE SOLICIT YOUR BUSINESS

Yet hundreds of newspapers are filled with just such senseless bank advertisements as this. All they do is just occupy space. Nothing else, and valuable space at that. It would not cost the banks any more to put a live, forceful, intelligent message in that space, and every bank can do it if it knows how. If it does not know how then it should find out. This department will help it.

Service the Foundation of Advertising

As confidence is the foundation of banking so is service the foundation of bank advertising. The banker may write excellent copy for his advertisements, they may be inserted in excellent mediums, and his institution may be placed before the prospective customer in the best possible manner, but if the service back of the advertising lacks in the essential points, the success from the advertising, if there is any success, will only be temporary. A service that pleases retains customers, whose business with the bank may steadily increase year by year, and also help to secure new customers because the present ones tell others about it and the information quickly spreads.

You probably know about the popularity of the various kinds of breakfast foods. You have heard of "Force" and have no doubt eaten it often at your breakfast table. Do you know that the success and popularity of these breakfast foods are due entirely to advertising? The advertisements about these breakfast foods may not always tell the truth in the exact sense of the word, yet if the foods did not really have some merit and were not palatable to the taste all of the best advertising in the world would not help them. The advertising manager of one of the large city banks recently wrote this department as follows: —

"Unless a banking institution has the ability and disposition to handle new business, the finest publicity in the world will be of no avail, and therefore, the most permanently effective advertising, by far, both for obtaining and retaining new accounts is the maintenance of an attractive office and building with the natural accompaniments of such an institution; pleasing and agreeable accommodations for the customers, dignified and well printed stationery, genial and considerate officials, and obliging, tactful, intelligent clerks. Given such a combination of facilities, and the advertising department has a basis whereon to build which can not fail to produce results."

The Importance of Persistent Advertising

Many banks fail to realize the important fact that the results of bank advertising are not so quick as those in some other lines of business. The banker expects quick results and is disappointed if he does not get them after a month of two of advertising. In very few instances can results be traced direct to advertising. The results from advertising are generally indirect and not direct. The editor of this department has known of several cases, some of them recent, where banks have started to advertise extensively for a period of three months and then suddenly given it up entirely "because the results did not warrant the continuance of an advertising service." This was a very serious mistake. The money spent in this advertising was entirely wasted and did the banks more harm than it did good. The banker who advertises must consider that his advertising must extend over a reasonable period of time, in fact continue as long as the bank is open for business, and be built up gradually from a small beginning. It is persistent advertising that pays. It is the only kind that will bring business. In writing upon the "value of the experiment" a well known magazine devoted to bank advertising says: —

"Sometimes results from bank advertising are not satisfactory; the campaign is not profitable. This may be due to various causes. Perhaps too much money is spent for the possible returns, or the copy is too general in its nature, not directed to particular classes who are prospective customers. Possibly the best mediums are not employed, or if they are, they are not worked to the best advantage. On the other hand, the bank must back up its advertising by giving service; the advertising must be honest, it should reflect the character and individuality of the institution accurately.

"One advertising failure does not preclude a success the next attempt. In fact, one failure or even several failures may have considerable [sic] to do with the success of future advertising; this is true if a record has been kept of the failures and the plan carefully studied to learn where the copy was weak. It is barely possible that the entire campaign was at fault; more often it is only parts that need improvement."

"Beginning anew after one or more unsatisfactory campaigns for new business, the banker is at a loss to know how to proceed. The copy and methods of other banks may be gone over for points but the material thus secured is a mass of unarranged arguments that may suit the bank or they may not. In the first place, get down to the bottom of your proposition, analyze your situation thoroughly. Study what you have to offer the people in the way of safety and service, learn just who you want to reach with your advertising and what the condition is of these prospective customers, what are their needs in the banking line. Then frame a means, the best that you know of, to reach these people. If your attempt is not satisfactory, study the means again; perhaps it will appeal to you in an entirely different light than when it was issued. Try something else if you are not satisfied. In nine cases out of ten, the chances are that you are not very far off in any of your methods, but it is the small matters that may have been overlooked that are important.

"A certain amount of experimenting may be necessary for your individual advertising because the methods that have proven profitable for others may not suit your situation exactly. There is something new in bank advertising every day; new methods that are untried, new ways of expressing worn arguments. It may not be an exaggeration to say that there are more new ideas in bank advertising that have not been thought out than those which have been tested."

Some banks make the mistake in telling people through their advertisements what they do not do instead of what they do. If you do not pay interest upon deposits is it not necessary to acquaint the public with the fact. It will probably find out for itself sooner or later. You would consider it a piece of folly if a doctor advertised that he could not cure a disease which his profession knows to be incurable. You would not expect a merchant to advertise the fact that he did not keep a certain brand of goods for sale. Your advertising will be more profitable if you tell the people just what service you can render, and if you set forth clearly what advantages a bank connection will carry with your institution.

1934

Bank Statements Public Can Understand Wanted

Atlantic City, N.J., May 25 — Telling the public more than the law requires was advocated, the importance of the unit bank was emphasized, credit policies of banks were defended and postal savings competition was condemned as unjust and unequitable in the address of Joseph F. Hill, president of the Pennsylvania Bankers Association, in his presidential address, opening the convention, here, Wednesday.

Mr. Hill, who is vice-president and cashier of the National Bank of Chester County & Trust Co., West Chester, Pa., proved himself something of a philosophical humorist in his address. "As to the important movements in Government finance," he said, "like Diogenes hunting with his lantern for an honest man, I doubt if there exists anywhere one who knows their perfect purport.

"The two things nationally in which we are most interested are our monetary system and the budget. The monetary system is like the wind. You hear the sound thereof but know not whither it comes or whence it goes.

"The code committee, with Harry McDowell as pilot, had a task similar to that mystic cleaning of the Augean stables where for every portion thrown out, twice as much flew back. Had the work of that committee in Pennsylvania been permitted to stand we would all be working today under a service code eliminating losses to the banks and one which the depositors through the publicity given at that time were prepared to accept favorably."

Telling More Than the Law Requires

Mr. Hill declared that the lack of confidence of many timid depositors has been greatly restored by the insurance of deposits," he stated, "but particularly in the country banks a far larger percentage of confidence consists in their faith in the management of the bank and in the knowledge of the integrity if its officers."

Of his faith in telling the public more than the law requires, Mr. Hill said: "I believe the time is at hand when we should take the public more into our confidence. This can be done by publishing our statements in such form that they can be more easily understood. A statement as generally published means nothing to the average depositors except a mass of figures which they cannot understand.

"Indeed, a banker knows very little more than the public. To me the indications point to a time in the not-distant future when we will be required to clean house, and figures we have given out will represent the intrinsic value of the item they represent."

Hits Accumulating Voting Power

Mr. Hill attacked the accumulative voting provision of the Glass Banking Act as something that will "give an entering wedge for undesirable directors and eliminate at the same time some directors whose services may be invaluable."

He said he could not see the advantage of the Federal Reserve ruling against "transmitting" orders of customers for the purchase and sale of stocks. This will have no effect in large cities where brokers' offices exist, he argued, but will be a great disadvantage to depositors in country towns where there are no bond salesmen and brokers' offices. The advice of bankers has been a protection to depositors who have been influenced through advertising and solicitation of salesmen, he added.

Defends Credit Policies of Banks

Defending the credit policies of banks, Mr. Hill declared: "The public criticism that banks are not loaning money is not borne out by present conditions. When money is scarce and not available for loans the rate of interest increases proportionately. Less money to loan, higher rates, more money available, lower interest charges. I cannot recall a time when rates were as low as at present. Commercial paper is offered at 1%. Loan brokers are going through the State offering for good loans two and a fraction.

"With the agricultural situation as it is, the farmer has no inducement to expand, the merchant prefers selling his present stock instead of purchasing more for an uncertain future, and industrial production has not increased sufficiently to need much additional credit.

"Except for living needs and maintaining business, borrowing for agriculture, business and industry will be at its lowest ebb during the depression.

"With the unusual liquid conditions, I believe most banks would welcome desirable loans.

"With commercial recovery will come the increased demand for loans for which the banks are better prepared than at any time in the past. We fully believe they will live up to the needs of the day when recovery shall be fully assured. There is neither justice nor equity in the continuance of postal savings under its present condition. The banks of the larger cities are cutting their interest, many of them to 2%, and even less on time deposits."

Scores Postal Savings

In criticizing postal savings, Mr. Hill said: "Now that the Government in its opinion has established the confidence of the public by the insurance of deposits, it is certainly not fair nor just that it should enter into competition by offering a higher rate than most banks can afford to pay.

"The necessity of the banks to invest in high-grade bonds paying far less return than formerly, carrying a far larger proportion of Government bonds to preserve their liquidity, will necessarily result in a reduction of interest on mortgages and loans reducing still further their earning power."

"Mr. Hill deplored the moral decline regarding debt: "It is a matter of great regret that the morale of nations including our own has entirely been destroyed in regard to debt," he declared.

"There is a multiplicity of laws, moratoriums, prohibitions in regard to collection of debts, all for the benefit of the debtor and few of the creditor."

"Turning to branch banking, Mr. Hill said: "The restriction and closing of many banks, both unit and branches, has given a great impetus to the movement in favor of branch banking.

"There are several thousand banks who consider themselves unit banks, but are really branch banks and don't know it.

"Arguments which before the depression would not have great weight can now, in the present state of public opinion, be used very effectively to further this movement.

"The usefulness of the unit bank (I do not like that title and prefer to call it community bank) has at no time been so essential as at this time.

"We are all interested in recovery, and the knowledge of the conditions of agriculture, business and industry in a community all centers in their bank. They have largely built the community and know its needs, and cannot be replaced by any other type of institution provided they are properly managed.

"Laws have been passed and more will be offered and it is encumbent upon this association to prevent the passage of legislation which will impair their prestige and destroy their usefulness."

1994

It's All Found in the Supermarket

Oct. 12 — Community banks that may lack the resources to develop alternate delivery channels with the latest technology are finding that supermarket branches can be a relatively low-cost way to reach more customers, enter new markets, and compete effectively with regionals.

At Mitchell Bank, a $75 million-asset institution based in Milwaukee, supermarket branches are being used to meet a variety of objectives. Primary goals there have been to build assets and provide convenient service to customers in and around the Milwaukee area, said bank president Timothy A. Janke.

Bank officials realized that opening in-store branches would allow them to have "alternate locations at low cost, and with high visibility," he said, adding that the bank's two supermarket branches have been "a great solution."

Since establishing its first in-store location in 1991, and its second last year, the bank has experienced an 80% growth in its deposit base, said Mr. Janke.

The branches are "a low-cost way to reach a lot of people who are not your customers," he said, giving the bank an opportunity to increase its market share.

According to the bank's records, for the past four years, a significant amount of traffic and transactions have moved away from the main office to the full-service supermarket locations.

The main office, for example, which, in 1991, did an average of 9,000 monthly transactions, today does 8,000. The drive-through location at the main office has gone from 13,000 monthly transactions in 1991 to 11,000 today.

The supermarket branches, on the other hand, have taken off, said Mr. Janke. The first supermarket branch now does over 6,000 transactions a month. The second does 2,000 monthly transactions already. Mr. Janke expects the increase in transaction volume at the supermarket branches to continue.

The activity has "helped us achieve our growth objectives," he said. The bank increased its assets from $58 million in 1991, to $75 million today.

The use of supermarket locations to provide convenient service and attract potential new customers is also a strategy that's been employed at First National Bank of North Dakota, a $435 million-asset institution based in Grand-Forks. The bank took the idea a step further by using supermarket locations to move into a completely new market.

In 1992, the bank established its first branch in Fargo in a store. Today, the bank has four locations there.

Opening retail branches in the heart of one of the largest communities in eastern North Dakota was "a tremendous strategy for us," said Randy Newman, president of the bank. "Most people [entering the stores] are not our customers," he said, "giving us the opportunity to interact with them and capture more of the market."

Mr. Newman reported that there is a "much higher" number of account openings at the supermarket locations, and that the bank's loan-to-deposit ratio "exceeded expectations" of bank officials.

"The bank is making more loans out of supermarket locations than traditional branches," he said. "Our employees can get to know customers because they see them shopping. We're providing bank services in an environment the customer creates by going to the grocery store."

The bank will be opening an additional supermarket branch, its first in Grand Forks, by mid-November. The supermarket in which the bank will be located has 80% of the grocery market, said Mr. Newman, a location that will allow the bank not only to get new customers, but to serve its existing customers and retain market share there.

Both Mitchell Bank's Mr. Janke and First National's Mr. Newman agree that supermarket branches allow the banks to be more accessible to customers, without having to rely on expensive, traditional brick and mortar.

Supermarket branches can typically be built for $150,000 to $200,000, whereas traditional branches can cost four and five times that much, according to Memphis-based National Commerce Bank Services, an affiliate of National Commerce Bank Corp., a leading provider of supermarket banking services.

In-store branches also serve as an alternative to technology-based delivery channels, which often require resources smaller banks don't have, said Mr. Newman.

"Regional banks have more dollar resources than we do," he said. "We know the community and customers, but we need to compete with the technology delivery systems. We need to outdo them on convenience and personal service, which supermarket banking meets."