WASHINGTON - Community banks are sticking to simple, cost-effective promotions, even as competition for deposits heats up.

"Small banks rely heavily on word of mouth, reasonably heavily on direct mail, and very heavily on community events," said Ed Furash, president of Furash & Co., a financial services consulting firm here.

Moreover, "the top two officers are the bank as far as representation and behavior are concerned," Mr. Furash adds.

Mark N. Evers, managing partner of Voicetrack, a media research firm in Phoenix, said that taking a prominent role in the community is one advantage small banks have over big banks, which are viewed as distant and uninvolved in small-town affairs.

Big banks take as a matter of course the ability to target their audience with more sophisticated approaches, such as data base marketing. But using an outside data base is not considered cost effective for small banks, particularly since those that operate in a compact market already know their target audience.

"When someone is a boutique institution in a big marketplace, they may do data base to reach small-bank niches," Mr. Furash said. He added, however, marketing to a particular niche is most effective through personal referrals from people in the industry or group.

Thus, small banks - save for the few that try to lure deposits with extraordinary rates for certificates of deposit - confine their print advertisements to local newspapers.

At financial institutions with assets of $249 million or less, print advertisements ate up the biggest piece of the advertising pie - with radio, direct mail, and television following, according to Cost Control Survey and Budget Guide for 1993-94, published by Cost Control News.

Where the Money Goes

The financial institutions surveyed, which include community banks, savings and loans, and credit unions, spent an average of $7,333 on newspapers advertisements, $3,781 on radio advertisements, $1,370 on direct mail during the period.

Institutions with $50 million to $249 million in assets spent an average of $23,881 on newspapers, $17,787 on radio, $11,243 on direct mail, and $2,151 on television.

Those with assets of $250 million and over spent about $76,000 each on television and direct mail, $73,179 on newspapers, and $42,167 on radio advertisements.

Going beyond the traditional media, some community banks have taped "infomercials" and offered seminars on money management, starting up small businesses.

Ms. de Guzman is an intern with the Medill News Service.

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