The Five Pitfalls of Digital Marketing Banks and Credit Unions Must Avoid

Financial institutions that load up on digital and put their faith in Google, Facebook and other ad networks could be making a huge mistake.

Everyone hears so much about the benefits of digital marketing and how consumer behavior is gravitating away from traditional channels. Bank and credit union marketers have responded, shifting a substantial portion of their budgets to digital advertising.

They are not alone. Digital ad spending exceeded marketing budgets for TV for the first time ever in 2017.

The questions are: “Have we deployed digital effectively to accomplish our business objectives?” and “Have we deployed the right mix of digital and traditional tools?”

Here are five common pitfalls to digital marketing that banks and credit unions need to avoid in order to maximize their ROI, and the steps you can take to make sure your strategy dodges these potentially dangerous pot holes.

1. Digital Marketing Is The Wrong Tool For Many Jobs

While digital marketing can be a powerful weapon, it’s not the right tool for every job. You wouldn’t use a screwdriver to change your flat tire. Marketing is similar, in that it provides a toolbox — traditional media, digital media, direct mail, content, events and many non-advertising based tools like PR. Which tool you select should be dictated by what you are trying to accomplish.

Who are you trying to reach, and how do they consume information to make a decision about your product? In the typical buyer’s journey, a combination of traditional media like TV and radio can be necessary to create awareness, while digital and social media might work better moving a prospect from the “interest stage” through to “purchase.” The customer journey will always differ by category, segment and product, which is critical to understand. Otherwise, you may be spending money and not achieving the desired result.

There are some objectives that digital can be very effective accomplishing all by itself. For instance, if consumers are aware of your brand and already think favorably of you, you may be able to leverage a combination of digital display, search, and social to capitalize on that established positive perception into an actual purchase.

But there are other marketing goals that digital struggles to achieve alone. Brand building is a great example. Building a brand involves establishing an emotional connection with an audience over time. Very few media beside TV, one-on-one personal interactions and actually trying the product can foster this type of emotional bond. And there is only so much emotional connection a marketer can hope to create with banner ads.

As a result, digital media should usually be part of an overall strategy that includes traditional media, mail and other tactics. Remember, determine who you are trying to reach, what media they use to make buying decisions, and what outcome(s) you are trying to achieve.

2. Digital Often Gets More Budget Than It Deserves

Ten years ago, digital advertising was underused, inexpensive, and had much lower cost-per-acquisition than traditional media. But like all good things, the advantage eventually disappears. Unfortunately, 2017 was the year that happened to digital advertising; it is no longer the bargain that it once was.

It’s understandable why marketers flocked to digital a few years ago for purely economic reasons. But why now?

Like all other groups of humans, we tend to follow each other… even if it’s off a cliff. Once someone hears that Bank X or Credit Union Y is spending half its budget on digital, they have a tendency to do the same. And when we hear that Megabank Z moved 100% of its budget to digital, some might start to seriously question TV and print. Never mind that the megabank’s sales may have plummeted, and they recommitted to traditional media the following year. Of course we never hear about that.

But digital is more measurable. For many marketers who have a bit of “bean counter” in their personality, moving money to digital makes a ton of sense because you can track each dollar you spend and figure out if you’re getting a return (or not). As a result, digital can get disproportionate credit for its contribution to sales, and receives more funding as a result.

However, there’s the challenge of appropriate budget allotment within digital channels. If online display, video and social assist the efficacy of search engine marketing, how much of the overall digital budget pie should be provided to each of those channels?

Digital attribution firms help here. Artificial intelligence is beginning to automate this process, taking the guesswork (even if it is informed guesswork) out of the process and greatly increasing the speed and accuracy of budget optimization. But AI can not only require a large volume of creative iterations, it is still out of the reach of most smaller community banks and credit unions.

So how much of your budget should be allocated to digital? The solution for firms that can’t afford to use an attribution firm is to build your budget from the ground up. What are the tasks you are trying to accomplish for the organization? If your primary challenge is brand building, work to understand what media your target consumer uses, and build your media plan around those choices. Typically, a brand building plan will emphasize much more traditional media like TV, print and outdoor.

For sales-oriented product campaigns, identify the target audience and use media tools like Scarborough and Comscore to craft a digital and traditional media mix to present your message where your target consumer spends their time. In terms of weight or spend in each medium, reach and frequency still matter. Many advertisers are spending way more in a some digital media than they really need to, resulting in an audience that’s annoyed rather than more conversions. In other words, an additional million impressions is not always a good thing (more on that in a minute).

So how much is the right amount of digital? Unfortunately, there is no right answer because every institution’s goals and customer segments are different. But generally speaking, if you are spending more than 70% of your budget on digital, you probably want to take a step back and reassess its effectiveness.

3. You’re Not Reaching All The People You Think You Are

Your digital audience is probably much smaller than you think it is due to two growing trends: (1) ad blocking, and (2) impression/click fraud.

Consumers are utilizing ad blocking software at an astonishing rate, particularly with mobile, where adoption of ad blockers grew 38% in the past year.

What’s even worse is click fraud, where automated bots pretend to be users clicking on ads to generate more revenues for the publisher.

The magnitude of the problem is sobering. Online advertising campaigns using automated (or programmatic) technologies are at high risk for fraud. According to research by &Partnership, 29% of the $27 billion spent on programmatic advertising globally in 2016 was on fake traffic — equivalent to $7.8 billion in wasted ad dollars.

A real-life example highlights the severity of the problem. In January, Procter & Gamble’s CMO Marc Pritchard said that digital advertising networks are built around “a non-transparent media supply chain with spotty compliance to common standards, unreliable measurement, hidden rebates and new inventions like bot and methbot fraud.”

So what’s to be done? Some large advertisers have chosen to work directly with advertising sites rather than rely on advertising agencies or programmatic solutions. But this isn’t practical for most companies, particularly in the financial industry where most banks and credit unions have limited resources.

Marilois Snowman, CEO of Mediastruction, recommends financial marketers find and work with a digitally-savvy media partner.

“They can help you create ads that aren’t going to get caught in the blockers and work with sites who actually deliver the viewers they promise,” she explains.

4. Potential Brand and Reputation Risks

Relying on technology to find audiences can strip away the power of context and relevancy. Do you really want your ad showing up on Breitbart or GunsRUs or Marijuanatoday? Some programmatic ad networks allow advertisers the option to white-label or black-label campaigns according to certain parameters. Google is supposedly best in the space. And, yet, it continues to happen, even on Google and its YouTube property. Consider this AdAge headline.

P&G Slashes Digital Ads by $140 Million Over Brand Safety… Sales Rise Anyway

AdAge, July 27, 2018

Speaking of YouTube, JPMorgan Chase told The New York Times that after it (and many other brands) experienced questionable adjacency issues, it was adopting a white listing approach for display, reducing its advertising portfolio from 400,000 sites to just 5,000 for digital ad buys… with no decrease in sales.

5. People Don’t Like Intrusive Marketing

The final pitfall might be the most serious, because it could end up “killing the golden goose.” It’s undeniable that consumers are spending more and more of their time with their digital devices. Arguably, some are addicted to their technology, particularly social content.

Unfortunately, some advertisers have chosen to take the easy way out. Rather than taking the time and attention to understand their intended audience and create interesting compelling content, they have opted for “page take-overs” and “pop-ups” and other annoying irrelevant out of context advertisements.

Advertisers need to remember the reason why consumers are going on line in the first place. To talk with friends. To research topics. And yes, to search for products to buy. But you need to start where they are, not where you want them to be.

It’s this type of insensitive behavior on the part of advertisers that is driving the significant growth of ad blockers.

“Bottom line, it is time for marketers and tech companies to solve the problem of annoying ads and make the ad experience better for consumers,” declared Marc Pritchard, Chief Brand Officer of Proctor and Gamble, in an AdAge article.

The problem has grown so acute that Google, the 800 pound gorilla of digital advertising, announced that it will block “annoying ads” in its popular Chrome browser.

What can a single advertiser do to stem this rising tide? Not all ad blockers are as promising as what Google promises, but the right answer is to take the “high ground” and give consumers what they want and need. It starts with understanding who your target is and why they are going online. Your message and creative needs to be relevant and contextual.

Ideally, you are answering a question or filling a need they have expressed online. And if users aren’t going on line to research a product or topic, chances are they are keeping up with friends or entertaining themselves. This is where the “creative” in advertising is still critical. The concept needs to be compelling and engaging so the target wants to engage with it and (hopefully) share it with their friends.

Pulling It All Together

The days of two or three campaigns a year and predictable media plans are over. Traditional media alone doesn’t cut it (unless your target is the Silent Generation), but neither does a steady diet of digital. What’s more, digital media comes with its own set of unique challenges that make TV and radio planning feel like Mayberry RFD.

The right answer isn’t to harken back to traditional media. Nor is it to blindly load up on digital and put your faith and trust in Facebook and Google.

No, the right answer is to roll up your sleeves, find savvy partners that know a lot more about this stuff than you do, and do the legwork. Build a brand that people know and like. Think strategically about who you’re going after, what you’ve got that is going to make them choose you rather than the brand across the street, and get that message in front of them in a way they find helpful and entertaining.

Hey, maybe great marketing hasn’t changed that much after all.

Mark Gibson is senior consultant at Capital Performance Group, a strategic consulting firm that provides advisory, planning, analytic, and project management services to the financial services industry.

This article was originally published on January 15, 2018. All content © 2018 by The Financial Brand and may not be reproduced by any means without permission.

Comments

  1. Great insights, Mark.

  2. Nate Shahan says:

    Do you include engaging existing customers on digital channels with data-driven and personalized messages under your definition and opinion of digital marketing? It seems this is primarily focused on digital for acquisition. For example, if the bank is using online banking to deliver a message to an existing customer encouraging the activation of a debit card. This message could be a banner that details the benefits of rewards for debit card use. Ultimately, this is marketing and when successful in influencing a behavior change of the existing customer results in benefits for the bank. Do you include experiences like this in your position?

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