Effectiveness of Financial Services Marcoms - UK - February 2007

Table of Contents

• Issues in the Market
• Scope of the report
• Definitions
• Abbreviations
• Market in Brief
• Sector profitability boosts marketing activity
• The core challenges facing financial marketeers
• The benefit of branding
• Standing out from the crowd
• How advertising can help
• The finance sector spends more than any other on above-the-line advertising
• Assessing ad recall -- Mintel' s consumer research findings
• More people are responding to online advertising...
  • Figure 1: Proportion of adults who have purchased products in response to financial advertising, by type, 2004 and 2006
• ...while direct mail is being read by a declining proportion
  • Figure 2: Treatment of financial direct mail, 2004 and 2006
• So what makes marketing work?
• Some final points to consider
  • Figure 3: Aspects which make consumers take note of financial adverts, 2004 and 2006
• Looking ahead
• Trends from Mintel Inspire
• Trend 1: "The Influentials"
• Definition
• Context
• Market touchpoints/implications
• Trend 2: Marketing as decipherment
• Definition
• Context
• Market touchpoints/implications
• Trend 3: The Name Game
• Definition
• Context
• Market touchpoints/implications
• The Business Environment
• Industry transformation
• The economic climate
• Sector profitability
  • Figure 4: Gross operating surplus of financial corporations, 1998-2004
• Prospects
• Marketing activity and expenditure
• Funding relies on a host of factors
  • Figure 5: Factors impacting on marketing activity and expenditure, 2007
• Marketing Concept and Orientation
• Matching business capabilities with customer wants
• Customer ' needs' and ' wants'
• Creating customer demand
• Identifying the target audience
• Understanding consumer needs and behaviour
• The most common marketing models
• The Marketing Mix
  • Figure 6: The Marketing Mix
• Plenty more Ps
• Converting Ps into Cs
• An evolving science
• Communicating ' benefits' via advertising and promotion
• An explosion of channels
• Television
• Cinema
• Radio
• Outdoor
• Printed advertising
• New media
• Different approaches
• Direct marketing
• Direct-response advertising
• Product placement
• Sponsorship
• Public relations
• All publicity is good publicity: the Abbey approach
• Marketing Obstacles
  • Figure 7: Summary of main obstacles to financial services marketing
• The nature of the beast
  • Figure 8: The product life arc
• Identifying ' ready-to-buy' consumers
• Product complexity and consumer apathy
  • Figure 9: Level of interest in financial services advertising and the financial press, 2004-06
• Certain sectors fare worse than others
• Tackling the intangibility issue
• Using imagery
• The good life
• Risky business
• The fear factor
• A matter of trust
• Misleading claims
• Financial companies must adhere to strict regulatory controls
• Consumer Credit Regulations 2004
• Distance marketing regulations 2004
• The regulatory process is not tough enough, say MPs
• Brand Power
• An indelible mark
• Branding concepts
  • Figure 10: Hierarchy of branding concepts
• In the limelight
• Brand extension
• Multi-brands
• A common phenomenon
• Brand dominant
• The Role of Advertising & Promotion
• Advertising and promotion fulfil many purposes...
• ...one of the most important is customer communication
• Customer retention is also vital
• An uphill struggle
  • Figure 11: Attitudes toward advertising, 2004-06
• Stimulating purchase behaviour
• What makes advertising effective?
  • Figure 12: Factors which increase and decrease effectiveness
• The celebrity bubble
• Use of humour
• Responsible advertising
• Making the right noises
• Talking the talk
• Advertising Expenditure Trends
• Advertising requires a big investment of time and money
• The finance sector spends the most on advertising...
  • Figure 13: Total advertising expentidure, by industry sector, 2002-06
• The impact of regulation
• ...but companies have reduced their spending on direct mail since 2004
  • Figure 14: Total advertising expenditure -- financial sector, by media type, 2002-06
• Increased investment in Internet advertising...
• ...benefiting other channels
  • Figure 15: Distribution of advertising expenditure -- finance sector, by media type, 2002-06
• Internet advertising pulls ahead
• Adspend on savings accounts, mortgages and general insurance has risen strongly
  • Figure 16: Total advertising expenditure -- financial sector, by main product category, 2002-06
• The more commoditised financial products attract the greatest adspend
  • Figure 17: Distribution of advertising expenditure, by main product category, 2006
• General insurance products claimed the largest share of advertising expenditure in 2006
• Falling demand for consumer credit products will impact on adspend on loans and credit cards
• Leading Finance Sector Advertisers
• Lloyds TSB was the highest-spending finance advertiser in 2006
  • Figure 18: Top 20 advertisers in the finance sector, by expenditure, 2005 and 2006
• Multiple media options
  • Figure 19: Top ten advertisers in the financial services sector, by media type, 2006
• Direct mail appeals to plastic card issuers and insurers
• Personal Loan Express and Virgin Money are proactive online
• Top ten TV advertisers
• The press holds wide appeal
• Measuring Effectiveness
• Types of advertising response
• Advertising Response Matrix
  • Figure 20: The four main types of advertising response
• Different levels of response
• Primary processing
• Secondary attention
• The goal of brand loyalty
• Defensive advertising
• Testing the waters
• Short-term effects
• Tracking
• Single-source research
• Market response modelling
• Long-term effects
• Reinforcement
• Brand equity
• The Consumer -- Ad Recall
• Survey background
• Halifax' ' Big Brovaz' ad achieves highest recall rate
  • Figure 33: Consumer views on seven TV adverts, by selected finance companies, November 2006
• Barclays' personal loan ad is the least recognised
• Attention grabbers
• Ad frequency: getting the right balance
• Being clever can also be confusing
• Barclays' personal loan ad appeals more to men than women
  • Figure 34: Recall and view of Barclays' TV ad, by gender, age and socio-economic group, November 2006
• Capital One' s ad is viewed more favourably by younger adults
  • Figure 35: Recall and view of Capital One' s TV ad, by gender, age and socio-economic group, November 2006
• Scottish Widows evolves the brand, while remaining committed to its core values
  • Figure 36: Recall and view of Scottish Widows' TV ad, by gender, age and socio-economic group, November 2006
• Halifax' Broadway act polarises the public
  • Figure 37: Recall and view of Halifax' TV ad, by gender, age and socio-economic group, November 2006
• NatWest seeks to appeal to the disgruntled
  • Figure 38: Recall and view of NatWest' s TV ad, by gender, age and socio-economic group, November 2006
• Most consumers are not carried away by HSBC' s takeaway ad
  • Figure 39: Recall and view of HSBC TV ad, by gender, age and socio-economic group, November 2006
• Barclaycard hits the right note with men
  • Figure 40: Recall and view of Barclaycard' s TV ad, by gender, age and socio-economic group, November 2006
• The Consumer -- Behavioural Response
• Over two thirds of consumers follow up on adverts
  • Figure 41: Proportion of adults who have sought information in response to different types of financial advertising, 2004 and 2006
• Implications
• Men are twice as likely as women to respond to online advertising
  • Figure 42: Proportion of adults who have sought information in response to financial advertising, by gender, age and socio-economic group, November 2006
• Implications
• TV ads make considerable impact on the under-35s
• Implications
• ABs most likely to respond to text messages and emails
• Broadsheet readers are most likely to respond to press ads
  • Figure 43: Proportion of adults who have sought information in response to financial advertising, by new technology usage, newspaper readership, commercial TV viewing, TV region and ACORN category, November 2006
• Regional variances
• Implications
• Over a quarter of consumers make a purchase in response to ads
  • Figure 44: Proportion of adults who have made a purchase in response to different types of financial advertising, 2004 and 2006
• Implications
• TV ads are most effective at targeting the 25-34 age group
  • Figure 45: Proportion of adults who have made a purchase in response to financial advertising, by gender, age and socio-economic group, November 2006
• Implications
• The under-45s are most influenced by advertising
• Gender differences
• Ads tend to target the higher socio-economic groups
• Are providers succeeding in targeting workers via primetime ads?
  • Figure 46: Proportion of adults who have made a purchase in response to financial advertising, by new technology usage, newspaper readership, commercial TV viewing, TV region and ACORN category, November 2006
• Internet ads snaffle shoppers
  • Figure 47: Proportion of adults who have sought information or made a purchase in response to financial advertising, November 2006
• Link between ad response and product holdings
  • Figure 48: Financial products owned, by type of response to advertising, November 2006
• CHAID analysis identifies target groups
• What is CHAID analysis?
• The main target groups identified
  • Figure 49: Target groups identified for the main types of advertising media, November 2006
• Who reads direct mail?
  • Figure 50: Treatment of financial direct mail, 2004 and 2006
• Improving the odds of people reading your mail
• A small, but growing, proportion of people never read direct mail
• Younger people are more receptive to direct mail
  • Figure 51: Treatment of financial direct mail received, by gender, age, socio-economic group, lifestage and marital status, November 2006
• A fifth of mortgagors will read direct mail sent by a familiar brand
  • Figure 52: Treatment of financial direct mail, by working status, tenure, TV region and ACORN category, November 2006
• Targeting opportunities
• Getting people to read it in the first place is half the battle
  • Figure 53: Proportion of adults who have sought information and made a purchase, by treatment of financial direct mail, November 2006
• One in 20 adults do not receive direct mail
  • Figure 54: Demographic profile of adults who never receive direct mail versus the total sample, by gender, age, socio-economic group, TV region and ACORN category, November 2006
• Implications
• The Consumer -- Response Stimuli
• Advertising bells and whistles
  • Figure 55: Aspects which make consumers take note of financial adverts, 2004 and 2006
• Being humorous can help to win over consumers
• Celebrity saturation backlash?
• Entertain and inform: the best approach
  • Figure 56: Aspects which make consumers take note of financial adverts, by type of response to advertising, November 2006
• Targeting those who are already in the market
• Cluster analysis
• What is cluster analysis?
  • Figure 57: Total sample segmented into four ad-response clusters, November 2006
  • Figure 58: Aspects which make consumers take note of financial adverts, by ad-response cluster, November 2006
• Bargain Hunters
• Humour-mongers
• Motto Admirers
• Disengaged
• Bargain Hunters respond best to advertising...
  • Figure 59: Proportion of adults who have sought information in response to different types of financial advertising, by ad-response clusters, November 2006
• ...over half have bought a product directly as a result of ad exposure
  • Figure 60: Proportion of adults who have made a purchase in response to different types of financial advertising, by ad-response clusters, November 2006
• Bargain Hunters are selective readers of direct mail
  • Figure 61: Treatment of financial direct mail, by ad-response clusters, November 2006
• Older age groups are more likely to be Disengaged
  • Figure 62: Ad-response clusters, by gender, age, socio-economic group, marital status, lifestage and working status, November 2006
• High-income households are twice as likely to be Humour-mongers
  • Figure 63: Ad-response clusters, by tenure, gross annual household income, region and ACORN category, November 2006
• Mid-market tabloids attract a fair share of Motto Admirers
  • Figure 64: Ad-response clusters, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, November 2006
• Further analysis
• Summing Up and Moving On
• Continued investment in marketing is vital for survival
• The best advertising hooks
• Brand salience is key
• Direct mail will continue to dominate...
• ...but how effective is it?
• New media, new opportunities
• Converging technologies
• Internet advertising set to rocket