Old-fashioned TV ads still do the trick for banks that want more deposits, especially among smaller institutions, a new study finds.
Banks' deposits rose by an average of 14% at each branch in the U.S. counties where they advertised, according to the paper by London Business School PhD student Bernando Mendes. The study comes as banks continue battling each other and nonbank fintech apps for customers' funding.
Even as banks
"The effect is statistically and economically significant, implying large returns to advertising for banks," Mendes wrote in the study, which was
The study also found evidence that the increased deposits at banks that advertised on TV didn't come at the expense of other banks. Rather than fighting each other for deposits and "simply redistributing deposits across banks, advertisement increases the deposit base in the economy," Mendes wrote in the paper, though he said the reasons why are unclear.
The findings line up with more qualitative assessments from bank marketers, who argue TV ads remain a vital tool for reaching new customers. Newer, more targeted approaches — such as digital ads touting the benefits of a bank's products and enabling customers to open an account by clicking — are also essential, they say.
But TV ads are the "cornerstone" of building a brand, giving consumers a clear idea of the bank's values, said Josh Mabus, president of the bank marketing firm Mabus Agency. That brand awareness trickles down, making any more targeted digital approaches that focus on specific product lines more effective.
"If the consumer doesn't know your brand exists, there's no way they can do business with you," Mabus said.
Younger audiences are turning away from TV, and buying air time during an election season is expensive. Even so, television remains "part of the mix" and an effective way for banks to build their brands, said Martha Bartlett Piland, the CEO of the marketing firm Banktastic.
"TV is a wonderful branding medium, because you can have sight and sound and motion and color, and really bring about a lot of emotion," she said.
Increased brand awareness may help explain why smaller banks seem to benefit more from advertising, said Mendes, the study's author. A separate 2017 study
TV ads help customers be "aware of more banks, search more, find better options," Mendes said in an interview.
Mendes did not examine banks with only a few branches, since his county-based approach allowed him to look only at banks with a large enough geographic footprint. The median bank in the study had 46 branches spread across 15 counties.
One question he explored is whether TV ads became less effective as digital ad options and social media usage ballooned. The positive effects of TV ads didn't move much between 2017 and 2021 compared with the 2011-2016 period, suggesting TV remained a strong medium for increasing brand perception.
Mabus, the bank marketer, said the effectiveness of TV ads became clear to him during the COVID-19 pandemic, when one bank he worked with decided to cut its television budget. When the bank's TV spending went down, so did organic searches by people researching the bank, he said. Later, the bank increased its TV ad spending. "Sure enough, the numbers went back up," Mabus said.
Banks tend to start looking at running TV ads when they surpass $1 billion of assets, Mabus said, though he argued that doing so when they are smaller may prove effective in their quest to compete against larger institutions.
Nowadays, banks aren't just "competing with the other community bank across the street," but one that got "bought by a megabank," he said.
In that environment, copying the strategies of banks that blanket TV with ads may be wise. Just by being on television, community banks can send a message that they have the heft of bigger institutions — all while offering more personalized services.
"When we get on television, I think we do get more bang for our buck as community banks," Mabus said, recalling the
"Because now it's like, 'Oh, I thought that was that little bank. No, no no, that must be a big bank. They're on television again.'"
