Several steps are essential for successful execution of advertising campaigns in financial services. These steps are-
The first step is to determine the
objectives of the advertising campaign, reflecting the overall marketing
strategy of the company.
For example, the objective of an
advertising campaign might be to generate new policies for an insurance product
or to increase the level of consumer awareness of the brand or the company.
Recognizing and identifying the exact objective of an ad campaign is critical
to accurate assessment of its merits and potential. Examples of popular
advertising objectives in financial services are target levels for customer
inquiries, new policies signed, and advertising recall.
The next step in the advertising
process is to determine the budget required to carry out the ad campaign.
Often, the required budget is significantly different from what is available,
and may be dictated by organizational budgetary constraints. For example, the
budget available for advertising a particular financial service might be
determined based on a percentage of the total premium revenues generated in the
prior year. Clearly, an increase in the intensity of an advertising campaign
would require higher budget allocations and may call for the abandoning of
traditional budget-setting approaches for advertising. The total budget that is
required to execute an advertising campaign is a function of the reach and
frequency (and hence the gross rating points) necessary to create consumer
response and the cost of media used to secure this level of exposure. The
associated dollar figure, therefore, needs to have been estimated prior to
negotiations with higher levels of management, in order to ensure the
availability of sufficient funds for executing an effective advertising
campaign.
The next step in the advertising
process is to determine the return on investments associated with the
advertising campaign. Four items of information are needed in order to conduct
this estimation, one of which is an estimate of the lifetime value of an acquired
customer. The lifetime value of the customer is the total profit that an
acquired customer represents to the company. It is quantified as the sum of the
profits associated with the stream of transactions that the customer will
undertake with the company over the years. In addition, an estimate of the
total number of consumers who will be exposed to the advertising campaign is
required. An estimate of the percentage of reached consumers who will
eventually purchase the advertised financial product or service is also
required. Clearly, negative return on
investment estimates would make the advertising campaign and unlikely prospect
for further action.
Once the return on investment
computation has shown favorable results, the next step in the advertising
process is to develop the contents of the ad, as reflected in its execution
style and informational content. In this step, the services of advertising
agencies that specialize in producing financial services ads are required.
These specialized agencies often also engage the support of legal experts who
can determine the compliance of advertising content with existing regulations.
Often, testing of ad content using small-scale samples, focus groups, or test
markets may be needed.
The next step in the advertising
process is to determine the media that will be used. In general, financial
services that are more complex and require the communication of detailed
information tend to rely on print forms of advertising.
Television advertising, which
capitalizes on multiple sensory inputs, tends to be the most effective although
often the most expensive. Once the media to be used for an ad campaign has been
determined by the ad agency, a media schedule needs to be developed in order to
achieve the original objectives of the ad campaign which had been identified.
There are specific media scheduling and campaign execution strategies that are
most effective in certain forms of financial services. For example, an
effective ad-scheduling tactic is to advertise in pulses with heavy advertising
in one month, reduced advertising the following month, and a return to high
advertising levels in the third month.
There are specific media scheduling
and campaign execution strategies that are most effective in certain forms of
financial services. For example, an effective ad-scheduling tactic is to
advertise in pulses with heavy advertising in one month, reduced advertising
the following month, and a return to high advertising levels in the third
month.
This tactic tends to result in more
sales and higher levels of consumer response than a constant and steady level
of ad spending.
The final step in the advertising process
is to assess the impact of the ad campaign through formal market research or
examination of company records. It is critical to measure and record sales
levels and other advertising responses following an ad campaign in order to
determine the financial effects of the invested advertising dollars.