Advertising is starting to play a new role in finding and keeping customers for home equity loans. Not only are marketing budgets increasing, but the focus of ad content is shifting.

The addition of new players to the market is the main factor driving this change. "There is so much competition right now," said Christine Clifford, vice president at Wholesale Access, a Columbia, Md.-based consulting firm.

When home equity lenders advertise, they are more likely to concentrate on price than ever before, according to a survey of home equity lenders conducted by the University of Virginia's McIntire School of Commerce.

Teaser rates and low or no closing costs are expensive but increasingly important marketing tools, said Rich DeMong, a professor at the university.

Part of this emphasis is attributable to an increased consumer awareness of what home equity borrowing means. While advertisements in the past may have introduced homeowners to the concept, now they assume prior knowledge and compete on price.

Younger generations are especially open to the concept of borrowing against the equity in their homes, said Anne Morgan Moore, president of Synergistics, Atlanta. In response, banks are stepping into the low-equity home lending arena, a market traditionally cornered by finance companies.

Consequently, closed-end, subprime lenders have begun to pour money into advertising, Ms. Clifford added. "These companies used to have plenty of business without having to advertise much," she said.

Among finance companies, Money Store is often cited as the leader in effective home equity advertising. Its brand-name recognition can be attributed to their nationwide television campaign featuring famous spokesmen - first Phil Rizzuto, now Joe Namath. Its advertising budget more than tripled from 1990 to 1994, when it stood at $40.32 million.

The company cannot disclose any figures for 1995, as it currently is registering a stock offering, but several industry observers say that Money Store will continue to pour money into home equity advertising.

Its dedication has paid off: home equity loan originations increased 43% to $2.9 billion 1995.

Banks catering to lower-equity loans are taking their cue from the giants in subprime lending.

"Banks are beginning to mimic finance companies" in their advertising, says George Yackik, vice president at Budd Lake, N.J.-based SMR consulting firm. "If they're lending to the lower-quality side, they'll have to buck up their advertising," he said.

For many bankers, this means exploring entirely new outlets. Several regional banks have begun to expand beyond their branches, turning to direct mail and well-placed alliances to earn home equity accounts.

"It's like credit cards," said Ms. Moore. "Originally, they were offered just to new bank customers ... eventually banks offered them out of area."

Banc One's strategy has been especially successful, say many observers.

"Direct-mail marketing provides us with the ability to deliver a targeted message to a selective group, said Dave Thomas, product manager at Banc One. "General media marketing has a tremendous amount of spillover," he said.

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