Improving The Return On Financial Services Marketing

The authors of a strategy+business article estimate that the financial services industry spends more than $10 billion each year on marketing — approximately $8.5 billion of it on advertising. The authors contend that financial services firms can:

Boost their marketing effectiveness by 15 to 25%….by putting in place tools and processes that will measure marketing ROI more accurately than marketers’ intuition.”

This statement implies that: 1) the act of measurement will — in and of itself — improve effectiveness, and/or that 2) firms’ actual ROI may be higher than reported, but that financial services marketers aren’t accurately measuring results or attributing them to the appropriate investments.

Implication #1 is just flat out wrong. Changing your marketing tactics and spending levels will impact ROI — deploying tools and processes can only change how well you think you’re doing.

Implication #2 is a lot more palatable — and, if true, should have major impact on how financial firms allocate their marketing dollars.

In fact, the article cites the example of one firm that “drew on its ROI findings to slash it annual broadcast TV budget from $70 to $10 million, and shift spending to cable, online media, and sponsorships.”

But improving ROI measurement will not — in and of itself — result in change.

I’ve written before about the marketing’s civil war between the brand warriors and the database marketing/measurement army. The continued adoption of net measurement techniques — a noble effort on the part of database marketers to improve the accuracy of response attribution — actually works against them in this civil war.

At one large financial services firm, adopting new measurement techniques led the firm to conclude that it if response couldn’t be attributed to its direct marketing efforts, then the observed response must have come from its TV spend. The result: A push to decrease direct marketing investments, and hold TV spend constant. Astute readers know that this is a case of misapplication — these findings shouldn’t have been applied to media allocation.

Many financial services marketers understand that this is a misapplication. But shifting significant dollars away from traditional media, and away from branding to other purposes, is a challenge to their management religion. In other words, they’re convinced that creating brand equity is the best use of marketing dollars, and has the greatest impact on customer behavior.

But as long they’re winning marketing’s civil war, we won’t see large shifts in channel allocation like the example cited in the strategy+business article.

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