A new study reveals retail banks will continue to focus on social media marketing in 2013, but a lack confidence in its effectiveness and uncertainty over its business value is slowing investment in the area.
Retail banks and credit unions will continue to focus on social media marketing in the coming year, even as they wrestle with the importance of social media as a marketing channel. Plagued by questions about its effectiveness, business value and ROI, the financial sector will take a more cautious approach to social media in 2013 than other industries.
“Well-intentioned marketers in retail banks could inadvertently turn customers off by irritating them with their social media behaviors.”
— Kieran Kilmartin,
Pitney Bowes Software
The independent study, commissioned by Pitney Bowes Software and conducted by Vanson Bourne, examines the effectiveness of social media marketing and compares social media marketing trends among marketing directors with consumer attitudes to social media marketing across Australia, France, Germany, the UK and the US. The study encompassed seven business sectors: fast-moving consumer goods, insurance, the public sector, retail, retail banking, telecoms and utilities.
Marketing decision-makers in retail banking are split 50/50 in their confidence — or lack thereof — of being able to link social media spend with their organization’s profitability.
Barely half of marketers in retail banking (53%) are confident that their social media campaigns are effective, while less than a third rated them as not effective (31%). Only the insurance sector came out lower in terms of rating their campaigns as effective (49%).
A More Cautious Approach to Social Media in 2013
The survey showed that more than seven in ten (74%) marketing directors in retail banking had seen a greater emphasis being placed on social media in their external communications. This was a significantly higher number than average (69%), and second only to the telecommunications sector (81%).
Reality Check: Retail banking has consistently ranked among the earliest and most aggressive industries to adopt social channels, despite rampant — an unfounded — accusations to the contrary.
However, this growing importance is not reflected in banks’ marketing spend. The research shows social media spend in retail banking, as a share of marketing budgets, will only increase incrementally over the next few years. From 16% in 2011, when banks were among the biggest spenders on social media, it is expected to climb to 22% in 2013. By contrast, other sectors like telecommunications will be committing over a third of their marketing budgets (36%) to social channels.
This increasingly timid attitude towards social media is also reflected in the study’s other findings. More than half of marketing decision-makers in retail banking (53%) say that social media will grow in importance as it becomes more rooted in customers’ lives. However, more than a third (34%) are of the opinion that it will only apply to certain areas of their organization’s markets or business units, a view shared with respondents from the utilities and insurance sectors (34% and 41% respectively).
Risks and Challenges
Social media usage is not without its risks. 65% of consumers surveyed say that they would stop using a brand that upset or irritated them as a result of their social media behavior.
“It is not surprising that retail banks have been keen to jump on the social media bandwagon early on, but are now taking a step back to evaluate this new channel more thoroughly,” says Kieran Kilmartin, Marketing Director EMEA, Pitney Bowes Software. “The continued use of old-school broadcast marketing models in social channels is likely to turn people off, and at worst, trigger them ultimately to become ‘brand blockers’.”
The greatest challenge for retail banks, says Pitney Bowes, will be capturing and making sense of all the data being generated as the number of customer touch points increases (50%). Two in five struggle with ROI, as they grapple connecting online engagement with new customers. An equal number said that managing the amount of time and money spent on social networks (42% each) was a major concern.
Financial Marketers + Consumers = Social Media Disconnects
Caution among retail financial institutions is not surprising, given that marketers’ enthusiasm has not been matched by consumers’ response.
“Our research shows that there is still a disconnect between marketers’ high expectations of social media, and the lack of desire among consumers to engage,” explains Kilmartin.
Only a quarter of consumers use social media to follow and keep up-to-date with certain companies or brands (26%) — and you can be certain that “banks” and “credit unions” don’t rank high on their priority list. Most consumers are predominantly on social media to keep in touch with friends and family (78%).
Among consumers who do choose to follow brands, nearly half of social media users (48%) are positive towards receiving their marketing messages. The reverse is true of communications from companies people don’t follow, which 40% say they would find annoying. Consumers regard unsolicited marketing (‘spam’) and pop-up advertisements as the lowest form of social media marketing.
Identifying which social media channels to invest in was a challenge for all marketers surveyed. While they were aligned with consumers in their emphasis on Facebook as the most popular and trusted social media site, they disagreed about the importance of other social media outlets. Beyond Facebook, marketers devote most of their remaining spend on Twitter (57%) and Google+ (51%). By contrast, consumers prefer YouTube — rated only fifth by all marketers — over Twitter and Google+.
When it comes to interacting with brands, the research shows consumers are most interested in discount or money-saving vouchers, new products and services, and upcoming sales and events. Yet these are bottom of the list for marketers, mentioned by fewer than one in ten of those surveyed. Instead, marketing decision-makers highly rate the effectiveness of newsletters, information about their organization’s social responsibility and customer satisfaction surveys, all of which were least interesting to consumers.