Financial spend on the mend

With Nortel stock actually rising and mutual fund ads no longer eliciting bitter laughter, the financial services ad spend is showing early, cautious signs that it may return. However, at the same time, there is a larger trend that's seeing both fund companies and banks spend more on newspaper, database and direct and less on TV.

With Nortel stock actually rising and mutual fund ads no longer eliciting bitter laughter, the financial services ad spend is showing early, cautious signs that it may return. However, at the same time, there is a larger trend that’s seeing both fund companies and banks spend more on newspaper, database and direct and less on TV.

The plummet in the financial services spend from a robust $380 million in 2000 to $319 million in 2001 was primarily blamed on the sluggish economy and the effect of Sept. 11 on fourth-quarter spending by both marketers and consumers.

But Nielsen Media Research numbers show a modest increase of $10 million in 2002 (see graph below), the first positive step in a trend that is expected to continue this year.

Industry insiders say the big banks have been fairly consistent in their spending over the past few years. The decline, they say, was driven by fund companies weathering a bad economy and the resulting decrease in demand for mutual funds.

Daily newspapers drew the majority of spend in 2002, due to the trend toward more targeted buys by the industry.

Bill White, president of W. White and Associates, an Aurora, Ont.-based marketing consultancy working in the financial, packaged goods, technology and retail sectors, says it’s a very competitive marketplace so banks have continued to support their efforts with consumer advertising but they’ve done so prudently.

White says financial institutions in general have tried to get more targeted, making huge investments in database marketing over the last few years so they can be more ‘rifle versus shotgun’ in their approach.

‘I think out of necessity the financial institutions are responding to a broader fragmentation of the marketplace,’ says White. ‘Coupled with that has been a very difficult environment financially. They’ve had to take a hard line in terms of spending, not just [in] advertising, but in all areas of the business,’ he says. ‘It’s been very difficult, but as the economy continues to improve, the situation will improve in the media-spend area as well.’

Karin Macpherson, managing partner at The Media Company in Toronto, believes that the spend is trending up after hitting rock bottom in 2001, but stresses that the banks and fund companies are in entirely different situations.

‘The banks have really maintained their spending and they’ve been able to do that because they have other ways of making money. So they can advertise their funds, and it’s a good opportunity for them to do so because there is going to be less clutter.’

Macpherson says most of the spending will still come from the big banks because the fund companies haven’t fully recovered yet.

‘I think fund companies are acting tactically, because with television they’d have to book well in advance. Print will give them the most flexibility if they’re not making the sale because they can take the ads out much more easily than if they were in television.

‘I don’t see a massive recovery yet, although I think the banks are steady spenders. They’re not going to cut back.’

Tammy Scott, director of advertising and marketing for Toronto-based AGF Management, says at this point, she can’t say for sure whether she’ll have a larger or smaller media budget this RSP season. But she is taking a positive approach to her planning, and predicts that there will be some spending increases for virtually all companies this year.

Scott says many financial services companies have increased their use of print and direct response over the last few years, but AGF has decided to take a different route.

‘I don’t know if they consider it more targeted, but I’ve noticed that trend the last couple of years. That seems to be the way most companies are going. Not us. I still believe television is the best medium through which to build a strong brand.’

Scott noted that AGF received a lot of positive feedback and requests for copies of its latest on-screen work from TBWAToronto. Three different AGF trailers ran in movie theaters during the Toronto International Film Festival earlier this month. One version may show up during selected television programming this season.