It’s been a big year for bank marketers. The SEC greenlighted financial institutions to post customer reviews, interest rates are climbing, digitalization is changing how everyone operates, and that late-2022 Kanye West flareup was a cautionary tale for marketers. Compared to all that, 2023 ought to be relatively restful.
Or maybe not. Experts tell The Financial Brand that there are big changes in store for marketing budgets, talent, and strategies. Here’s how to prepare.
The first order of business is the marketing budget, always a tempting target when the economy goes wonky.
Marketing Budgets Face Cuts — What to Do
The economic news has been jerking up and down for months. With interest rates likely to remain elevated (mortgage rates are at a 20-year high) and talk of a recession getting louder, many bank and credit union C-Suites will pare spending back to the essential revenue drivers. That may threaten marketing’s budget.
If you’re facing cuts, draw a bright line between the strategic alignment of marketing to business goals. “Good strategy work is always about making tough but smart decisions,” observes Joseph Cady, managing partner at CS Consulting Group. “There isn’t much guesswork in this economic environment. So this is a time for products and lines of business to strategically evolve with economic conditions.”
“Maintain your visibility and presence in your communities, and stay top-of-mind with consumers. Tides turn.”
— Joseph Cady, CS Consulting Group
Moreover, Cady recommends aligning marketing budget to the products and business lines that most correspond to consumer needs — highlight deposits, for example, rather than mortgages — and match budget to opportunity. “The instinct is always cut, cut, cut,” he says. “But the better, more strategic decision is to maintain your visibility and presence in your communities, and stay top-of-mind with consumers. Tides turn.”
Fortunately, CMOs have more influence over those strategic decisions than they used to. Gartner reports that financial and strategic responsibilities are shifting to CMOs, which can help them clarify the impact of marketing budget on business strategy. Indeed, Chase is boosting its marketing budget because customer acquisition is core to their strategy.
So there’s a good argument for keeping your budget, though perhaps reprioritizing the product mix. There’s also a good argument for expanding your budget. Multiple studies, including some from McGraw-Hill, American Business Media and Meldrum & Fewsmith, show a long-term increase in net revenue among companies that advertised aggressively during downturns.
The CEO of Edge Multimedia, Stephanie Chadwick, has some advice to help with that. “Compare your budget expenditures against your KPIs and determine what it will take to meet your goals for the next cycle,” she wrote in a blog on justifying marketing budgets. “To those who love data, marketing can seem fluffy and fun. That’s why it’s important to have your data organized and be able to speak to your boss and/or your board in a way that they will understand.”
Read More: Why Banks Shouldn’t Slash Their 2023 Marketing Budgets
Rate Card Price Hikes Expected in Some, Not All, Media
Whatever budget you have, it may not go as far as it did last year.
In 2022, financial services marketers spent $32.09 billion on digital advertising, 42.2% of it just from banks. That expenditure was initially expected to grow in 2023, but the Wall Street Journal reports that forecasters are scaling their predictions back as the economic environment becomes more dubious and social media companies lose revenue on platforms that block third-party cookies.
Does that foretell lower ad rates or higher ones? “It’s a bit more complicated than that,” says Manuel Reyes, CEO at Cortex Media. “Rate cards are not really relevant anymore since discounts off rate card vary a lot and can change from one period to another.”
Still, a research report Cortex produces with AuditStar indicates several different probabilities for media costs in 2023: print prices rising minimally and in tandem with production costs, declining prices for digital ads and radio, and slight increases for out-of-home ads. But Reyes expects very high inflation on broadcast TV spots because money from cable has moved to digital video. (Incidentally, data from MNTN Research says marketers find funny ads the most effective kind).
Mixed Picture for Media Buys:
TV rates will probably rise while print, radio, out of home and digital should remain fairly static — but discounts off rate card vary a lot.
But Reyes does expect higher prices for digital video and social. Indeed, Merkle, eMarketer, and Insider Intelligence surveys show CMOs intending to increase their digital spending, and the inexorable law of supply and demand is liable to boost costs.
Nola Morris, the VP of strategy at Denim Social, isn’t surprised. “Overall, we will likely see social ad spend increase,” she told The Financial Brand. “Social selling empowers loan officers, advisors, branch managers and others to showcase thought leadership, build trust and ultimately sell products and services through a thoughtful presence on social media.”
However, Morris says bank and credit union CMOs will need to be thoughtful and creative to reach each audience. “If you want your message to be seen, you’ll have to be intentional with your budget, ad objectives, and creative assets,” she says. “Relationships are the foundation of the industry, and that means banks need to take their social campaigns beyond the brand.”
Which brings us to conversational marketing — which some see as the most effective route to relationships in financial service marketing.
Read More: Why Content Marketing Is Important to Financial Institutions
AI-Powered Conversational Marketing: Advisory at Scale
Deloitte’s 2022 study, “A Vision for the Future of Retail Banking,” reports that three quarters of the U.S. retail bank consumers want their banks to provide financial advice or guidance and that relational and advisory conversations will “play the prime role of anchoring retail banking relationships.” Six in ten consumers told Deloitte they want the guidance delivered digitally.
But experts warn bank marketers that their home page, while prime real estate, probably isn’t the vehicle. “Most websites are static with no engaging elements, and the customer has to do all the heavy lifting,” says Santtu Kottila, CMO and Co-Founder of Leadoo Marketing Technologies. Human advisors are not always ideal either.
“People want to know a lot more than they did ten years ago, and they want answers that bank advisors may not know, or do know but get tired of answering. Enter the chatbot.”
Chatbots, along with visual engagement tools, voice messaging, and texts enable more of the conversations that consumers want — and a lot more besides. Leadoo’s internal analysis of 400 clients in 25 industry categories found that conversational marketing increased conversion rates by up to 10X. And though third-party cookies are evaporating, software can provide customer insights that banks and credit unions need for personalized, proactive, marketing.
On that, Kottila has some advice for CMOs. First, your conversational marketing tools should be tailored to your business outcomes for the sake of efficient conversion. And second, be realistic about AI. “AI can handle a really narrow set of questions, but customers have complex questions,” he says. “Getting the same question from an AI chatbot over and over is not a good customer experience.”
Ultimately, however, as Forrester states in its Predictions 2023 report, “Efforts will pay off for those with the mettle to adjust to 2023’s realities while doubling down on automation to reap overwhelming competitive advantage.”
Read More: How Ally Bank is Shaking Up Its Marketing Strategy for a Rocky Economy
Content Marketing Should Sound Like Customers, Not Bankers
Banks and credit unions have been messaging consumer-focused articles and blogs for some time — adding in videos and real-time texts more recently. But going forward, content must be more practical and personal to be effective.
“We’ve reached a point where it’s no longer an option to make the leap to hyper-personalization,” says Mark Weber, CEO of the strategic brand and analytics firm Strum. “Consumers get it everywhere. Every experience, often outside their financial institution, is hyper personalized, fast, easy, simple. They expect great experiences, not slow, old traditional experiences.”
Going forward, content must be more practical and personal to be effective.
That means successful content marketing — like all inbound marketing — is personalized to the user. Yet many banks and credit unions often have trouble understanding, much less wielding, customer and member data.
“Marketing efforts come back to ‘how clean is your data?’ Not just correct, but appropriately coded,” says Melanie Coleman, director of strategy and media at Pannos Marketing. “Your staff should be using the data to understand things like just how often the customer is going to the mortgage site, what accounts they have with you, if they actually downloaded the mobile app from the email.”
Coleman says that’s more unusual than it should be, though such data tells writers, graphic artists and video producers what to focus their content on. Unfortunately, even with good data, content creators still tend toward a financial service mindset, not a financial service customer point of view.
“When you look at how incumbent financial brands have historically operated — the lens they’re operating from — it’s mission and vision,” says James Robert Lay, CEO of the Digital Growth Institute, and author of the bestseller, “Banking on Digital Growth.” “That can often sound narcissistic [to consumers] because it’s about the organization, the brand.”
All in all, the challenge of content marketing in 2023 will be creating practical, informative text and videos, with none of the “heavy lifting” Kottila mentioned, and useful advice targeted to the consumer. It may be a challenge for most bank marketers. Innovative Marketing Resources posted a piece called “Why It’s So Hard to Find a Content Writer That Doesn’t Suck” — but the ones who solve the content creation puzzle will be strides ahead of their competitors in 2023.
That’s always true, though. Bank and credit union CMOs who see around corners usually come out on top. But it appears that 2023 will bring unfamiliar changes to many. Being prepared for them may be the best advice experts can give.