Magazine article Marketing

Banking on Change

Magazine article Marketing

Banking on Change

Article excerpt

Banking on change

A shake-up of advertising represents the tip of a marketing iceberg. The banks are having to rethink everything as competition intensifies. Never has there been such an upheaval in bank marketing. Over the past five months National Westminster, Midland, TSB and Abbey National have switched ad agencies (almost 50m [pounds] of ad budgets have changed hands). Barclays announces its own agency verdict soon. Job hopping has become common. Jan Smith, marketing director, jumps Midland subsidiary First Direct for the TSB; TSB marketing controller Malcolm Hughes moves over to NatWest as head of media communications.

Each time, the announcement heralds a shift in approach. In January, when Abbey National's new marketing director John Berry dumps Publicis for new agency Barker and Ralston, he talks of the need for a "more single-minded message".

A month before, new broom Smith brings in Howell Henry Chaldecott Lury to review its marketing communications -- part of a "complete overhaul of marketing strategy". Two months before that, after years of to-ing and fro-ing, the NatWest plunges for Bartle Bogle Hegarty (BBH). NatWest's ads have been "too product -driven". "We will be building brand values around the bank, as opposed to just products," declares Malcolm Hughes.

And then Midland chooses Chiat Day Mojo for a new campaign which, it is widely speculated, will herald a change of emphasis - if not a departure - from its heavy product branding approach.

Behind each move there is a sense of crisis. None of the banks are satisfied with their marketing or advertising strategies. They have flung money at marketing over the last decade and begun wondering what it has achieved. And looking forward, none of them can honestly say where they think they will be in five years time - or how to get there.

"All banks are going through a fundamental reappraisal of the relationship with customers," says David McLaren, managing director of CDP, which lost the NatWest account last year. "In an attempt to appear approachable, banks have trivialised what is fundamentally important - their position as financial planners and safe places for money. The jocular themes that prevailed in the late 80s have collided with the way the banks see the future."

The crunch is coming as the marketing expertise of each institution is tested by a new environment. Building societies are encroaching on the banks' core market, the current account. Costs continue to rise, And lucrative money spinners like mortgage lending and credit cards have lost their shine as demand collapses. "The 80s was a terrific party, the 90s is the morning after the night before," says Midland marketing director Kevin Gavaghan. "There is a very clear climactic change."

The new defensive mood is reflected in shifting marketing priorities." When you have 4.5 million customers and a 16% market share, the likehood of increasing that share dramatically is nil. The main job all banks face is to retain existing valued customers," says Gavaghan.

He sees his way forward in terms of segmentation. Midland's controversial product branding strategy rests on the targeting of groups such as home formers and empty nesters. The over 40s, for instance, who have jobs, and for whom savings become increasingly important. "These people don't just sit on their hands and do nothing, they are becoming extremely discerning. They come into branches and ask questions. And we are not keeping up with them -`traditional' banking is not good enough for them. …

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