How To Manage The Cadence of Bank Marketing

Let’s say you want to introduce a new product – online commercial account opening for example. Being the savvy bank marketer that you are, you already advised your team that you will need a $30,000 budget to hit the required reach and penetration that your product team desires. Now, as the product is getting ready for testing, you have to decide how best to spend the budget. Do you send it all at once, spend it over a quarter or spend it over a longer period? The answer lies in understanding your marketing cadence.

The Average Life of the Message

Like bonds, loans, and deposits, a marketing message to has an “average life.” Just as an average life of a loan is when you get half your principal back, the average life of a marketing message is the time it takes to receive half your responses. Send a Tweet and your average life is about seven minutes but run an ad on a popular local podcast about politics/issues in your state, and your average life in months. By estimating the average life, bank marketers can set the cadence of the message.

Bank marketers had it easy ten years ago. Back then, few banks quantified their marketing, fewer tracked response times and how media was consumed was less complex. A bank radio ad aired for a newly introduced interest checking account during the drive time 5 pm hour for ten days and your response rate was fairly compressed. The graphic below shows the response rate we estimated in grey (derived from past advertising) and the actual response rate in orange. 

Here you can see the ten-day campaign run and the response rate over time. Of the 253 responses that were garnered out of the almost 20,000 listeners, 127 of them came by “Day 8” - this was the average life of the radio campaign. Total responses came over a 30-day period.

Changing Media

Luckily, bank marketing has evolved to be more effective, but also more complicated in many respects. The rise of search engines, podcasts, video, television DVRs and the like have allowed content users to time, place and device shift media. While this occurred ten years ago, the impact was negligible. Now, more content is shifted than not. Further, content is now more frequently shared and with greater “power” or reach. As a result, marketing benchmark metrics, and models have changed.

Marketing now is largely more effective and definitively more quantitative. Put that same radio message with an influencer on a podcast, and you are likely to experience a 30% to 200% better response rate. Banks can better target their market on video, podcast and social media channels to their desired audience, have greater reach, have a longer average life and give their audience the ability to capture the message for more effective action. These days, it’s common for media consumers to bookmark, screenshot, or notate your message for later action. This “message storage” is a previously unheard of phenomenon and now plays a major role in marketing.

The other cataclysmic shift is the ability for bank marketers to gather data from similar campaigns. AdWords, video and podcasts channels, for example, can all provide banks data on their impressions, clicks and often conversions for similar messages. This quantification of effectiveness allows for better planning, placement, and effectiveness.  

Frequency and Power in Bank Marketing

For the bank marketer, estimating the reach and average life of campaign is central to planning and budgeting. This highlights one of the most common problems in bank marketing in that we create too few impressions so that we don’t deliver an effective message to drive behavior as a result, the campaign is ineffective. Conversely, deliver the message too many times, and your target tunes out and even becomes annoyed. While we presented our data and thoughts in a previous article on this topic (HERE), the short lesson is through testing, bank marketers want to try to get in the right ballpark for each media channel.

Our Average Life Data

While this varies based on the strength of your brand, target demographics, the quality of your creative/content and the emotional sentiment of your audience, the below is a useful guide for banks to use to plan their marketing campaigns and determine their cadence until they can gather their own data.

Keep in mind that a longer average life is just one part of the equation. While magazine and TV ads have long average lives their response rate is usually not great for banks. Further, they are expensive. Bank marketers want to layer in different channels and different times until they achieve their desired result or until the tactic proves ineffective. 

Seven Rules of Thumb That Will Make Your Bank More Effective

Before we leave this topic, there are some general rules of thumb based on the above data that can save bank marketers time.

1. The more known your bank’s brand is the better response rate is likely to be for almost every channel.
2. A large marketing spend on an effective channel is worthless if the creative or content is weak. This is why bank marketers need to test their content and creative prior to placement.
3. “Lag” or “reaction time” varies by media channel. Instagram, Facebook, Twitter, and email have very little lag between when the audience hears a message and reacts. The more memorable the message and the less friction there is to react, the better response rates will be.
4. The “decay rate” or rate at which a message becomes ineffective varies by channel and audience. No surprise that social media has the fastest decay rate for banks. Target 1,000 people and if ten response those are your low hanging fruit. It will now take more energy to convert the remaining population. This effect is called the decay rate of a message.
5. For most bank channels, hitting the target two or three times is usually optimal frequency. The first message gets them thinking and the second or third moves them to action.
6. The more emotionally connected and loyal a channel audience is, the more effective your ad is likely to be. This is why a politically charged podcast (conservative or liberal) is much more effective than advertising on a general news channel. Unfortunately, most banks stay away from emotionally charged media. 
7. Banks almost never spend enough to reach a saturation point so that is rarely a concern for bank marketers.

Putting This Into Action

One of the simplest ways and most effective ways to gather data like the above is to run a campaign and then track the time series of responses. While outcomes will vary, they are generally directionally correct and can help banks layer different marketing tactics together in order to achieve the desired result.

The critical item for bank marketers to remember is each message and channel has its own average life, reach and decay. Marketers can use the average life model to assemble a campaign plan that more effectively achieves the desired result. 

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CenterState Bank is a $10B, publically traded community bank in Florida experimenting our way on a journey to be a $25B top performing institution. Financial information can be found HERE. CenterState has one of the largest correspondent bank networks in the banking industry and makes its data, policies, vendor analysis, products and thoughts available to any institution that wants to take the journey with us. For more information about why we share you can go HERE.