Banks in the market for CFO minds
The report, Banks, Media and the Customer - Impact of Advertising, Mind
and Media Share on Australia’s Banking Markets, shows banks that
successfully combine large marketing budgets with superior product and service
execution are reaping the rewards of greater market share.
The report reveals a clear, albeit time-lagged correlation between the amount of
dollars banks spend on advertising, their profile among CFOs, and their ability
to sell product and services into Australia’s corporate and commercial
enterprises.
Banks such as ANZ and National Australia Bank, which have traditionally been
among the lowest spenders on advertising, have seen their "mindshare" decrease
across the three year period the report covers. In the case of ANZ, only 66.1
percent of its own corporate customers named it first when asked which bank came
to mind when considering buying banking services.
Despite the recent media flurry caused by its attempt to take a larger stake in
AMP, NAB enjoys the lowest profile among the Big Four in the Australian media
with its media coverage diminishing each year since 2000.
The two biggest spenders on advertising among Australian banks, Westpac and
Commonwealth Bank, have maintained their profile among CFOs and Treasurers,
despite Westpac’s falling corporate market share. The smallest of Australia’s
domestic banks, St George, now spends more on advertising than larger rival NAB
and is reaping the benefits with a greater profile among corporate CFOs.
East & Partners principal analyst Paul Dowling said the Big Four banks’
collective share of the corporate market was falling while the commercial sector
(A$20 million to $100 million) was being targeted by regional and international
banks. As a result, it was imperative that banks sold more products and services
to existing customers.
"To achieve this, banks need to know who their business customers are, which
they’ve traditionally not been very good at. But there are examples that banks
are attempting to alter this, such as the Commonwealth Bank’s huge investment in
a customer relationship management program," Mr Dowling said.
"With customer churn rates in the commercial markets forecast at 14 to 21
percent, and one third of commercial Australia telling us that they are being
competitively hit for their business, it’s vital that banks use the media
available to them to reach these customers.
"There appears to be little consensus or consistent strategy in banks’ approach
to advertising. Westpac has said it will spend $20 million on above the line
advertising over the next 12 months whereas CBA is focussing on direct
marketing. It remains to be seen how effective these respective strategies will
be. Given banks’ ad hoc approach to advertising and marketing, this situation
could be reversed next year.
"Over the past couple of years, we’ve clearly seen a shift away from centralised
ownership of advertising/marketing budgets, with the CFO now given
responsibility for allocating funds to product line managers. Distribution of
accountability is now spread to various business units in the aim of producing a
more targeted marketing campaign," Mr Dowling said.
For more information contact:
Paul Bartholomew
Executive Editor
East & Partners
Tel: 02-9247 5955
Mob: 0410 400 156
paul.b@eastandpartners.com