The advertising battle raging among banks speaks volumes about the mind-set of the industry and its customers.
Some companies have gone back to basics, emphasizing attributes such as dependability as they try to reassure customers in uncertain economic times. Others have taken a bolder (some would call it negative) approach, seeking to paint themselves as different from their troubled rivals.
Which tone is the correct one inspires debate among bankers and ad experts, since results are often hard to quantify for any ad. But most agree on one thing: Banks must devote a good portion of their scarce resources to advertising.
"It's more important than ever to have a strong brand today, because you really have to gain your customers' trust and loyalty," said Maggie Kelly, vice president of marketing for the American Bankers Association's professional development group.
This week the ABA announced its choices for the best bank advertising and marketing campaigns, and one winner was the $4 billion-asset Chemical Bank in Midland, Mich. Chemical launched the "Save Michigan" campaign last summer, when the state was already mired in a deep recession. John D. Hatfield, Chemical's director of marketing, said the economic conditions actually prompted Chemical's new brand campaign, which said Chemical would be there for Michigan for a long time to come — even as others were faltering.
"We felt we could take advantage of the market opportunities, by letting people know that were financially solid and committed to the communities we serve," Hatfield said.
He said the effectiveness of the campaign could be measured in the several millions of dollars of deposits that the bank attracted after simultaneously launching a savings account with no minimum balance requirements. The banking crisis also caused the $268 million-asset Alliance Bank in Francesville, Ind., to adjust its brand campaign, said Stephanie Parish, its marketing director.
Alliance had been running colorful, humorous ads featuring kids. But after the crisis hit it switched to a more "traditional" campaign, Parish said.
The new ads' colors were more muted, the graphics basic and the wording more serious: "We believe that working together we can keep our communities safe and strong … like we've done for generations," they read. "We're a safe place to keep your money and have money to lend. We're all about you."
Though the ABA honored the lighthearted ads, Parish said management at Alliance believed it had to make a change because "banking's not funny right now."
Though Parish said it is difficult for Alliance to measure the effectiveness of its brand ads against ads promoting specific products such as special rates on certificates of deposit, it received positive feedback from customers after the ads were placed.
Banks need to reinforce their brand, which likely suffered during the banking crisis no matter how strong their brand has been, said Carola Jain, senior director of strategy at Interbrand New York.
According to Interbrand's report, "Best Global Brands 2009," released Thursday, all of the banks on the list, including JPMorgan Chase & Co., Goldman Sachs Group, Morgan Stanley and Citigroup Inc., at June 30 had declined in brand value from July 2008 — before the crisis.
As if on cue, a New York Post story on Thursday said Citigroup plans to kick off a major ad campaign in October that seeks to rebuild public confidence by showing how it has used taxpayer money to help consumers.
Jain said that banks should not take for granted that customer trust will automatically rebound once the economy recovers and the crisis fades.
"Companies need to position themselves — as well as the industry — in a positive light," Jain said.
However, there have been some notable examples of banks dismissing that type of advice, including the $42.5 billion-asset Ally Bank, GMAC's online bank. When GMAC rebranded the bank and added more retail offerings this spring, Ally sought to set itself apart from all other banks, said Sanjay Gupta, chief marketing officer of GMAC Financial Services.
"The ads are essentially highlighting practices that do exist in the industry and that customers are upset about," Gupta said. "Customers are lacking trust because they had been fooled by fine print and other tactics, but we don't do those kinds of things."
Ally's TV ads feature children who are hoodwinked out of toys by a banker from an unnamed institution, with copy such as "Even kids know it's wrong to hide behind fine print — why don't banks?"
In print ads stating that Ally will send an e-mail alert if money sitting idle in a customer's account could be working harder and earning more, the copy begins, "Is not saying something a lie?" It continues: "There's profit and there's integrity. There shouldn't be a choice between the two."
Gupta said the bank, based in Midvale, Utah, gauges the effectiveness of its ad campaign in two ways: retail deposits in the second quarter rose 32%, to $14.5 billion, from the first quarter; and more than 80% of its customers have reported they would recommend Ally to others.
Michael D'Esopo, a senior partner at New York brand strategy firm Lippincott, said banks generally shy away from such strong negative ads against the industry, but "there's a time and place" for some negative advertising, and such ads could work for nontraditional banks like Ally, he said.
"Similarly, everyone hates political attack ads, but if they didn't work, no one would run them," D'Esopo said.
Dave Martin, a retail banking consultant at NCBS, a unit of SunTrust Banks Inc., doesn't agree that negative ads about the banking industry would work in the long term for any bank, because they perpetuate bad feelings toward banking as a whole, which may backfire on the bank running the ads.
"I don't think there's any long-term benefit from disparaging the industry. The old argument, 'I'm the tallest of the seven dwarfs,' is just not a good one," Martin said.