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Effectiveness of Advertising and Promotion in Financial Services - UKProduct Type: Market Research ReportPublished by: Mintel International Group Ltd. Published: April 2004 Product Code: R560-1110 Description Nearly a third (31%) of adults say they generally like advertising, but less than one in twelve (8%) claim to be intrigued by financial services advertising. Financial firms are well aware of consumers' general lack of interest in personal finance, and use all manner of incentives and creative ploys to arouse the curiosity of their audiences and hold their attention.Table of Contents Introduction and Abbreviations Providing an insight into the effectiveness of promotion... ...and how it shapes consumer perceptions and behaviour Report methodology and key sources Global information and research Consumer research ACORN Nielsen Media Research Abbreviations Executive Summary Advertising is multi-functional High adspend of smaller players carries high risk Identifying key prospects with the help of technology Common problems with promoting financial products Generic advertising useful for creating brand saliency Financial adspend ascending strongly Figure 1: Advertising expenditure on financial products and services, by media type, 1999-2003 Highest-spending sectors are credit cards and personal loans Successful advertising necessitates immediate effectiveness mixed with continuity The key findings of Mintel's consumer research: apathy reigns Assessing the motivational force of financial advertising Figure 2: Proportion who have sought information or bought a product in response to financial advertising, February 2004 Is direct mail spend justified? Figure 3: Treatment of direct mail by consumers, February 2004 How to improve the effectiveness of your advertising: the universal appeal of humour Customer typologies Figure 4: Segmentation of customer base, February 2004 Likely future developments: Mintel's view The Financial Services Environment The financial services environment has changed considerably over recent decades The removal of competitive boundaries and barriers to entry allowed new entrants to emerge... ...including retailers and utility companies Figure 5: The key dynamics of the financial services marketplace in the 21st Century Technological advances and the development of customer databases Understanding consumer needs and behaviour is central to any marketing proposition Market Dynamics Steady economic growth... ...has helped the profitability of the finance sector Figure 6: Gross operating surplus of financial corporations, 1995-2002 Rationalising the cost of advertising Difficulty of predicting the 'ready-to-buy' windows Consumer apathy regarding financial services remains a key barrier Figure 7: Level of interest in financial services advertising and information, 2001-03 Getting round the problem of intangibility Appealing on an emotional level tends to be more effective Is the integrity of the marketing message under threat? Stricter rules governing the promotion of financial products ..have helped to reduce the number of complaints about misleading advertisements The Promotional Mix Press advertising and the power of the written word Useful for conveying detailed information TV advertising - expensive but pervasive Direct Line and the little red phone Few finance companies invest in cinema advertising despite low production costs Too much advertising on a radio station can deter listeners Outdoor advertising - anywhere and everywhere Figure 8: Proportion who agree with statements about outdoor advertising, 2002 and 2003 Finance companies are heavy users of direct mail... ...and direct-response advertising New media - Internet and mobile phone communications Sponsorship - fostering positive brand associations Size and market position will impact on how much a company can spend Trends in Advertising Expenditure Finance sector experienced fastest growth in adspend from 1999-2003 Figure 9: Total advertising expenditure, by industry sector, 1999-2003 Direct mail adspend has grown spectacularly... Figure 10: Total advertising expenditure - finance sector, by media type, 1999-2003 ...while press adspend has languished Direct mail constituted 44% of the total in 2003 Figure 11: Distribution of advertising expenditure - finance sector, by media type, 1999-2003 Adspend on personal loans, plastic cards, insurance and general banking products has shown the greatest growth Figure 12: Total advertising expenditure - finance sector, by main product category, 1999-2003 Plastic cards account for a fifth of total adspend in the finance sector... Figure 13: Distribution of five-year advertising expenditure total, by main product category (illustration) ...while mortgages and related products account for just 6% Top five products by adspend Figure 14: Top five specific products advertised in the finance sector, by advertising expenditure, 1999-2003 Leading Advertisers in the Finance Sector Figure 15: Top 20 advertisers in the finance sector, by expenditure, 2002 and 2003 Top ten rankings by the three main media types Figure 16: Top ten direct mail, TV and press advertisers, by expenditure, 2003 Top ten press advertisers in 2003 were a mixed bag... ...while most of the largest direct mail advertisers were credit card providers Niche players make greater use of the airwaves Figure 17: Top ten outdoor, radio and cinema advertisers, by expenditure, 2003 Making a difference... ...and spending it shrewdly Figure 18: Main financial services providers: customer share, March and December 2003 The Role of Advertising and Promotion The purpose of advertising is multi-layered Promotion has a key part to play in customer recruitment and retention What makes advertising effective? Figure 19: Level of agreement with selected statements about advertising, 2002 and 2003 Becoming a topic of conversation Being creative and clever and the value of using celebrities Aspects which decrease effectiveness Measuring Advertising's Effectiveness Providing an overall framework for assessing advertising effects The four main advertising response categories Figure 20: Advertising response matrix The importance of pre-testing Measuring short-term effects Evaluating the long-term effects to justify adspend One in every two adults consider HSBC's TV advert in favourable light Figure 21: Consumer views on seven TV adverts, by selected finance companies, February 2004 Getting the right balance - the likeability factor Being too clever can cause confusion Abbey - developing a more 'simple' and 'customer-centric' marketing message Figure 22: Recall of and attitudes towards Abbey's TV advert about its mortgage range, by gender, age and socio-economic group, February 2004 Barclays' big-budget 'fluent' ad particularly appeals to younger adults Figure 23: Recall of and attitudes towards Barclays' corporate TV advert, by gender, age and socio-economic group, February 2004 Direct Line - maintaining market dominance Figure 24: Recall of and attitudes towards Direct Line's TV advert about motor insurance, by gender, age and socio-economic group, February 2004 Halifax - repositioning as a financial services retailer Figure 25: Recall of and attitudes towards Halifax's TV advert about personal loans, by gender, age and socio-economic group, February 2004 HSBC - striving for a consistent brand and communication strategy Figure 26: Recall of and attitudes towards HSBC's corporate TV advert, by gender, age and socio-economic group, February 2004 Mint - aggressive advertising by the new credit card entrant Figure 27: Recall of and attitudes towards Mint's TV advert about its credit card, by gender, age and socio-economic group, February 2004 Scottish Widows - using advertising to reassure consumers and instil confidence Figure 28: Recall of and attitudes towards Scottish Widows' corporate TV advert, by gender, age and socio-economic group, February 2004 Three Campaign Histories Barclays: challenging the traditional way banks communicate The creative idea Initial reaction versus results of tracking studies Subsequent advertising: extending 'fluent' strapline to Openplan Mintel's verdict The need for consistency Future intentions Halifax: talking like a retailer and taking on the high street banks Background The 'extraordinary' business plan Devising a proposition that would shake up the market Communicating like a retailer 'Staff as Stars' Proving its effectiveness Mintel's verdict MORE TH>N: monitoring effectiveness and testing new ideas Core brand values The origins of the 'Lucky the dog' idea Creating a brand icon in Lucky Developing the theme Appealing to the target market A multi-channel and multi-tiered approach A change of emphasis Measuring effectiveness Plans for 2004 Mintel's verdict Consumer Attitudes Towards Advertising Almost a third of adults 'like advertising' Figure 29: Proportion of GB adults who are interested in financial advertising and like advertising in general, by gender, age, socio-economic group and working status, 2003 Men and the over-55s appear to pay more attention to finance advertising Amusing ads help to foster positive images of the brand Some 28% of adults have bought a finance product in response to an ad Figure 30: Proportion who have sought information or bought a product in response to financial advertising, February 2004 Internet advertising offers fresh ad opportunities... ...since its appeal is continually growing Financial advertisers are less effective at appealing to women Figure 31: Proportion who have sought information about a finance product, service or company in response to advertising, by gender, age and socio-economic group, February 2004 Men, younger adults and higher socio-economic groups show a greater propensity to respond to financial advertising Response rates are influenced by customer needs... Figure 32: Proportion who have sought information about a finance product, service or company in response to advertising, by matiral status, lifestage, Mintel's Special Groups and working status, February 2004 ...thus pre-/no family and family lifestage groups are key targets... ...as are mortgagors and higher household income groups Figure 33: Proportion who have sought information about a finance product, service or company in response to advertising, by tenure, gross annual household income, TV region and ACORN category, February 2004 The greater the exposure to media, the higher the response rate Figure 34: Proportion who have sought information about a finance product, service or company in response to advertising, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, February 2004 Supermarkets can promote financial products cost-effectively to their loyalty card holders Identifying the main target groups Figure 35: Main target groups for financial advertising, by media type, February 2004 Advertising has a more persuasive effect on the buying patterns of men and the under-45s Figure 36: Profile of those who have bought a financial company's product as a result of their advertising, by gender, age and socio-economic group, February 2004 While under-represented in all of the media categories, retired consumers are most likely to be swayed by press advertisements Figure 37: Profile of those who have bought a financial company's product as a result of their advertising, by marital status, lifestage, Mintel's Special Groups and working status, February 2004 Different groups require different approaches Figure 38: Profile of those who have bought a financial company's product as a result of their advertising, by tenure, household income, TV region and ACORN category, February 2004 Traditional forms of advertising complement and support new media channels Figure 39: Profile of those who have bought a financial company's product as a result of their advertising, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, February 2004 Strong brands have the greater power of persuasion Figure 40: Treatment of direct mail by consumers, February 2004 35-54-year-olds are most inclined to read direct mail Figure 41: Treatment of direct mail, by gender, age, socio-economic group, lifestage and marital status, February 2004 Over a fifth of mortgagors will read direct mail if it is sent by a company they recognise Figure 42: Treatment of direct mail, by working status, tenure, TV region and ACORN category, February 2004 Those who read most of the direct mail they receive are twice as likely as the sample as a whole to respond Figure 43: Proportion who have sought information and have bought a finance product in response to direct mail, by treatment of direct mail, February 2004 A small but significant proportion do not receive direct mail Figure 44: Profile of respondents who do not receive direct mail versus the total sample, by gender, age, socio-economic group and working status, February 2004 Humour an audience and hold their attention Figure 45: Aspects which make consumers take note of financial adverts, ranked in order of significance, February 2004 Customer typologies: employing different strategies to attract different audiences Figure 46: Customer typology groups, by gender, age, socio-economic group, lifestage and martial status, February 2004 Around a third of full-time workers and those living in the South are discerning recipients Figure 47: Customer typology groups, by working status, tenure, TV region and ACORN category, February 2004 Easier to appeal to Internet users than light TV viewers Figure 48: Customer typology groups, by new technology usage, newspaper readership, commercial TV viewing and supermarket usage, February 2004 Those who have previously responded to advertising are most likely to be 'discerning recipients' Figure 49: Customer typology groups, by type of media responded to, February 2004 The Future Standing out from the crowd... ...and building brand salience will be the key to success Increasing emphasis on accountability Direct mail will continue to be used heavily despite a relatively high level of consumer resistance Sales promotions to remain prominent Keep innovating and stimulating The future of online advertising Infrared technology will give outdoor advertising an interactive quality Entertaining a captive audience with in-store TV advertising Adapting communications to appeal to the growing female market Forecast Finance adspend to grow by 55% over the 2003-09 period Figure 50: Forecast of finance sector advertising expenditure, by media type, 2003-09 Financial adspend will account for nearly a fifth of total adspend by 2009 Figure 51: Forecast of total advertising expenditure, 2003-09 Factors incorporated |
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