Banks Shift Focus in Print Ads From CDs to Home Equity Loans

Home equity loans have become the most heavily advertised bank product, surpassing certificates of deposit, according to data compiled by Voicetrak, a research firm based in Tucson, Ariz.

Banks have traditionally spent the largest share of their newspaper advertising on deposit products, but falling rates have made them less appealing, spurring a change in strategies, the firm found.

"There's been a switch to concentrating on real estate lending, checking accounts, and relationships," said Mark Evers, managing partner of Voicetrak.

An Across-the-Board Shift

In the first half of the year, virtually every consumer loan got a bigger portion of banks' newspaper ad budgets than in the first six months of 1990, according to Voicetrak. The biggest gainers were home equity products, suggesting that is the area of greatest rate competition.

Spending for home equity loans accounted for 21.6% of newspaper ad dollars in the first six months, up from 15.1% in the comparable period of 1990 and 8.8% in the 1989 period, Voicetrak noted.

By comparison, CD advertising represented just 19.3% of newspaper spending in the first half, down from 25.9% a year ago and 37% in 1989.

Media Spending Declines

Competition is clearly waning on deposit rates, as many banks intentionally shrink and push down rates on the heels of Federal Reserve rate cuts.

A look at all media buys - television, radio, newspapers, magazines, and outdoor boards - shows the broad swath that the recession has cut into bank marketing budgets.

According to Voicetrack, bank media spending fell at least 10% in the first quarter from the year-earlier level in 11 of the country's 13 largest markets. From 1989 to 1990, bank spending in the 98 markets it tracks fell 12.2%.

The New York market - one of retail banking's biggest and most competitive - is in particular disarray, said Robert Moss, director of Competitrack, a competing ad-tracking firm in New York.

According to his data, 45 New York banks and thrifts spent 9% less on advertising in the first half than they did in the 1990 period. And the largest banks in the area are beginning to close the spending gap with mammoth Citicorp's Citibank.

"Citi is outspending its closest competitor 2 to 1, but, in years past, they have outspent competitors upwards of 3 to 1," Mr. Moss said. "This includes not only money spent in New York per se, but national campaigns that also run in New York markets."

Narrowing Gap Predicted

Mr. Moss predicted that the spending gap between Citibank and other money-centers will continue to narrow next year when Chemical Banking Corp. merges with Manufacturers Hanover Corp.

The combined bank will surpass Citibank in total branches, with 436 in New York and 132 in New Jersey. Citibank serves the market from 250 locations, all in New York State.

"I seriously doubt whether the new Chemical will spend as much as the two banks did separately a year ago, but it gives them a chance to outspend Citi," Mr. Moss said.

"It will also put pressure on other banks and Citi to increase their spending."

The expanded Chemical Bank will have a relationship with 1.2 million New York households, representing a 29% share of the market, according to Payment Systems Inc., Tampa, Fla.

Chicago Beats the Averages

While that share is still smaller than the 39% share controlled by Citibank, it will leap ahead of Chase Manhattan Bank, the current No. 2 in the market with a 22% share.

Bank ad budgets have shriveled in many markets, but Chicago banks spent 8% more during the first half of 1991, according to Competitrack.

"The country is in a recession, but it's still a localized phenomenon," Mr. Moss said.

Much of the new ad dollars in Chicago went toward home equity lending. Such spending grew 105% during the first six months of the year, Competitrack data show.

PHOTO : How Banks Spend Their Ad Dollars

PHOTO : A Shift Toward Loan Products

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