WASHINGTON — A war has heated up to win a greater share of the wallets of veterans and military families.
Two credit unions — Navy Federal Credit Union and Pentagon Federal Credit Union — along with USAA all focus on the military and have all increased advertising this year.
From Navy Fed pitching low rates on mortgages, to USAA television spots featuring military families, the stepped-up marketing is boosting name recognition, particularly in cities with big military populations.
The increased advertising has drawn the attention of groups such as the American Bankers Association. For instance, Navy Federal "is carpet bombing the D.C. market with its ads," according to Keith Leggett, the association's senior economist.
During the first half this year, Navy Fed boosted ad spending by 66% from a year earlier, to $7.8 million, according to Nielsen. The data cover broadcast, print and online ads. PenFed's spending rose 33% from a year earlier, to $5.8 million, while advertising from USAA increased 22%, to $69.3 million.
Members of the military and veterans are desirable clients and USAA, in particular, knows how to target that group, said Dick Evans, chairman, president and chief executive of the $23.5 billion-asset Cullen/Frost Bankers (CFR).
USAA is "probably better at their niche than anyone in the world," said Evans, whose company, like USAA, is based in San Antonio. Cullen/Frost and USAA often partner on charitable events in their hometown, according to Evans.
Navy Fed, PenFed and USAA are especially active in forming marketing partnerships with military affiliated groups. In July, PenFed inked an insurance alliance with the
To be sure, commercial banks have also increased their advertising. Digital ad spending by all U.S. financial services companies is projected to rise 13% this year compared with 2012, according to eMarketer in New York.
Several banks have shown a renewed interest in star power. Capital One recently debuted a TV ad with
While many commercial banks are looking for growth opportunities,
"Even though they’re large national organizations, the operating model of those firms is much more like that of a community bank," Reider said. None of those institutions "loaded up on speculative real estate development loans or any of the other high-risk instruments that afflicted so many large banks."
USAA's assets at Sept. 30 rose 8% from a year earlier, to $62 billion. Its loan portfolio increased 7% over than time, to $37 billion. USAA increased ad spending because it still detects untapped potential, said spokeswoman Dana Martinez.
At PenFed in Alexandria, Va., assets at Sept. 30 were up 9% from a year earlier, to $16.5 billion. It added roughly 113,000 members over that period.
A PenFed spokeswoman declined to comment.
Assets at Navy Fed, the nation's biggest credit union, rose 7% from a year earlier, to $55 billion at Sept. 30. Membership increased 11% from a year earlier, to 4.6 million. Navy Fed has also made more mortgage loans,
As business booms, Navy Fed plans to
Navy Fed tries to tailor its services, and its advertising message, to the special needs of those serving in the military, said Jeanette Mack, a spokeswoman for the Vienna, Va., credit union. "Our continuous growth in membership solidifies our confidence that we’re doing things right," she added.
The institutions' growth rates are particularly impressive once you realize the limited size of their customer bases, compared to big banks, said Jeffry Pilcher, publisher of The Financial Brand.
"Smart marketers get results when increasing their investments," Pilcher said. "The more they spend, the more they get back in return."
