Product promotion works when it comes to home equity loans, according to a recent study by American Bankers Association.

Midsized banks that actively promoted home equity lines of credit last year grabbed 21/2 times more new accounts than peers that did not promote, the study found. Among big banks, promoters snagged about 50% more accounts.

"Marketing pays," concluded David Olson, an independent consultant who helped the ABA with the report.

Big Bank, Big Advertiser

Large banks -- those with assets of $5 billion or more -- generally spent much more on advertising than smaller banks, the survey found.

While the typical big bank spent $275,000 on ads for home equity lines, the outlay was just $1,000 among banks with less than $100 million in assets.

Big banks consequently posted the fastest growth in home equity volume, Mr. Olson said. Those with more than $5 billion of assets saw home equity lines rise 24% last year, compared with a rise of 15% for all banks.

Favorite Ad Vehicles

A separate study by the Consumer Bankers Association found that banks are increasingly turning to newspapers to promote home equity credit.

One of every four lenders listed newspaper ads as the most important marketing tool in 1989, and the proportion increased to 36% of lenders in 1991, according to the trade group.

Other key marketing methods: cross-selling to existing bank customers, elimination or reduction of closing costs, and direct mail.

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