The ads that banks and thrifts place on the radio tell a lot about the character and tone of the individual bank and leave an impression about the industry as a whole.

Television ads are expensive to prepare and to run, so most institutions take a lot of time in developing them. But radio is easier. It has far more stations than television, so the commercials can be used to target a small area at a reasonable price per potential customer. So the radio airwaves are saturated with bank ads, many of which are intended just to get the bank's name across rather than pitch any specific product.

I have often mentioned the meeting of the Savings Institution Marketing Society at which I heard a professional state, "If you have nothing to say, sing it."

A Discordant Note

And I can truly say that every bank singing commercial has left me with the feeling that the bank being advertised was pretty ineffective, since it had nothing worth talking about.

Banks are serious places -- they hold our money. And sensible people do not want to have their money in a place whose only message seems to be "We are friendly, la, la, la."

But while companies often use radio just to keep their names in people's minds, they also risk harming their image while trying to build it.

I am thinking in particular of the major airline whose ad -- which I heard several times in mid-April -- touted an offer of a free domestic ticket to anyone who bought one international ticket by April 1, 1993. If an airline can be so sloppy, one wonders if it has the same standards in maintaining planes.

All Talk, No Action

Banks have another problem. Their ads and their actions must have some semblance of similarity. New Yorkers, for example, constantly complain that while radio ads boast of the wonderful service a certain bank offers city residents, but when they walk into a branch at 9 a.m. they find one teller window open and long lines of people waiting.

One must wonder, "What other lies are they telling me?"

What can banks talk about?

New laws and regulations on Truth-in-Lending, Truth-in-Savings, and the like make it hard to talk about rates unless you have a good law firm go over your material several times.

Courting Disaster

Gone are the days when savings banks would advertise: "When you need money, don't pull it out of your Schmidlap account, which is earning you a full 4%; borrow what you need at Schmidlap Savings Bank's low 3% discount rate -- only $3 per hundred per year."

Any banker who tried to put that one over today would end up in court or at least get a stern lecture from the regulators.

If a bank really has a lower rate than others, it can crow about this. But most don't have such discounts. If you really have longer hours than most other banks, let it be promoted.

A Little Too Cute

Some banks are stressing their entry into annuities and mutual funds -- all to the good. It takes time to get the public to realize that such products are now available at banks. Others push their ties to the middle market. But again, ads must be backed up by actions to win over this previously neglected group of potential borrowers.

But sometimes bank radio ads are a little too cute, with dangerous overtones.

I am thinking in particular of a New York bank's skit in which a couple talk about not having enough money to pay their bills. One then mentions that the bank in question has a home equity loan program to provide the needed money, and "it may even be tax deductible."

The husband ends the skit saying, "Wow, we even can get enough money to build a pool."

Over Their Heads

We know that many people are going over their heads into home equity loans without thinking of the earning power that will be needed to pay them off. And I worry that when defaults on these loans start sprouting, the media will scream about the "dirty banks" that threw people out of their homes.

And just as Chapter 12 of the bankruptcy act now protects farmers from having to meet their full debt obligations, I fear we will see a similar chapter to protect those who used home equity lines for nonessential purchases because unscrupulous bankers made them feel this was the easy route to solving financial problems and satisfying wishes to boot.

Lender liability suits all protest that the banker almost forced the debtor to borrow and thus should be denied a return and be assessed damages -- for "it should have known the debt or would be unable to repay."

So ads like the "build a pool" skit may be cute, and may offer something for the bank to promote. But using radio advertising in this manner can have consequences that harm both the individual bank and the entire financial services industry.

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