During a typical summer, Wintrust Financial gains immense publicity from its ad atop what might be the most prominent piece of real estate in Chicago: the enormous video board at Wrigley Field.
Each season, some 3 million ticket holders see the bank’s left-field sign, and many more notice it on TV. After every Cubs win, the “W” in Wintrust stays lit up.
But so far this year, no games have been played at the historic North Side ballpark. And while baseball is shut down, the Rosemont, Ill.-based bank holding company does not plan to pay either the Cubs or the two other Major League Baseball teams with which it has sponsorship deals, the Chicago White Sox and the Milwaukee Brewers.
“We would not be spending that money,” Ed Wehmer, the CEO of the $38.8 billion-asset Wintrust, said last week on the company’s first-quarter earnings call with analysts.
Across the U.S., the coronavirus crisis has upended the marketing plans of banks large and small. Many banks are sharply curtailing their spending, while others are planning to continue their marketing efforts amid a fall in the prices of digital ads.
Some banks have repurposed their existing marketing budgets to send messages that are tailored for the current moment.
But the industry’s ability to respond quickly has been hampered by the fluidity of the crisis. For example, the multimillion-dollar sponsorship deals that many banks have with pro sports franchises remain in limbo as long as games are on hold.
“There’s no playbook for this environment,” said Justin Morcelle, the chief marketing officer at Cleveland-based KeyCorp.
Since the pandemic’s arrival, many banks have reduced their ad spending dramatically, some by as much as much 90%, according to Sharona Sankar-King, an executive vice president at Bain & Co. Banks are generally in belt-tightening mode, and marketing is a large, discretionary budget item where cuts can be made quickly.
The pullback in marketing expenditures has been most apparent so far in the credit card business, which has close ties to the hard-hit travel industry. Credit card issuers typically tighten their lending criteria during economic downturns.
American Express, a top issuer of travel-related cards, is stopping traditional advertising, marketing, sponsorships and customer acquisition activities, Chairman and CEO Stephen Squeri said on the firm’s most recent earnings call.
Discover Financial Services, another large card issuer, will reduce its marketing expenses and account acquisition costs as part of a plan to cut its expenses by approximately $400 million over the rest of this year, according to a company securities filing in late April.
And Capital One Financial, which often takes pride in zigging when competitors zag, also plans to reduce its marketing spending in the near term. “Because downside risks can be nonlinear, we take a very cautious approach at this very moment while the economy is descending,” Chairman and CEO Richard Fairbank said during the firm’s April 23 earnings call.
One bank that appears poised to defy the industrywide trend in marketing spending is JPMorgan Chase. “My experience has always been that downturns create opportunities,” Chairman and CEO Jamie Dimon said during the company’s April 14 earnings call. “They create opportunities with sales forces, with marketing.”
Banks that continue to spend have a rare chance to create closer connections with consumers who are seeking out trustworthy sources of financial information, according to marketing experts.
“I think it would be prudent for banks to pull back a little back on promotional-led messages, and use this opportunity to proactively provide reliable information,” Sankar-King said.
Many seem to be heeding that advice. In the first part of April, banks’ marketing communications prioritized messages about government stimulus programs, contactless payments and fraud prevention, according to a report by the market research firm Mintel Comperemedia. All three topics relate to questions and anxieties that consumers have amid the pandemic.
Digital marketing channels offer good value, since prices have fallen sharply, Sankar-King said. “This is an opportunity for banks really to get more for less.”
Financial services companies have been spending much more money in recent weeks on marketing their mobile and digital support, according to the Mintel report, whereas spending that is focused on acquiring and retaining customers has fallen sharply.
The $156.2 billion-asset KeyBank is among the companies shifting their marketing efforts during the crisis. Key is a major sponsor of pro sports, including hockey and basketball, both of which have had their seasons interrupted.
Amid the hiatuses, Key has been partnering with players on teams that it sponsors to buy meals from local restaurants and deliver them to first responders. The athletes,
“You can leverage the clout of the teams and the leagues,” Morcelle said. “You can do well for your brand at the same time you’re doing well for your community.”
Still, the value that banks derive from a social media campaign likely pales in comparison with the exposure they get from having their names on stadiums and arenas where games are being held.
The National Hockey League’s Buffalo Sabres played their last home game in the KeyBank Center on March 9. A KeyBank spokesperson declined to comment on whether the company expects to get a rebate on its long-term naming rights deal.
Other banks that have naming rights deals were generally tight-lipped about the pandemic’s potential impact on their financial arrangements. A spokesperson for Citizens Financial Group declined to comment on matters related to rights fees the Providence, R.I., company pays for Citizens Bank Park, home to baseball’s Philadelphia Phillies.
Truist Financial, which has the naming rights at the Atlanta Braves’ baseball stadium and the arena for the NHL’s Florida Panthers, said that the terms of its partner agreements have not changed.
Pro sports are a major marketing channel for U.S. banks. A total of 144 different banks and credit unions have naming rights deals or other sponsorships with major league baseball, basketball, football, hockey and soccer teams, according to the data provider SponsorUnited.
Those financial institutions spend an average of $2.78 million annually on the sponsorships, which works out to a total of $400.7 million across the industry. And those are just the direct payments to teams.
Banks and credit unions likely spend two or three times as much money on other sports marketing, including TV and radio advertising, according to Bob Lynch, the president and founder of SponsorUnited.
To cite one example: Discover is the title partner of NBC Sports’ "Hockey Day in America." With the NHL season currently suspended but not canceled, a Discover spokesman declined to speculate about how much money the Riverwoods, Ill., company will spend this year in connection with pro hockey.
“I think we would be able to provide you a clearer picture once decisions are made at the league level,” the Discover spokesman said in an email.
With so many games having been postponed, pro sports teams will likely be open to discussions about how to make things right with their sponsors, said Tony Schiller, an executive vice president at Paragon Marketing, who has worked on naming-rights deals.
But the situation remains murky, since the sports leagues have yet to announce when they will return. “You really can’t negotiate against lost value until you know exactly what you lost,” Schiller said.
BBVA USA has the naming rights at the soccer stadium that is home to the Houston Dynamo. The Dynamo played just one home game this season before Major League Soccer suspended play.
BBVA USA’s chief marketing officer, Enrique Cornish, said that Birmingham, Ala.-based bank is working with the Dynamo and associated entities to explore creative ways that it can continue its marketing collaboration and obtain full value for its investment.
“Examples of this include digital assets and content, and brand amplification through digital channels,” Cornish said in an email. “The bank is fully dedicated to keeping its sponsorships both alive and meaningful.”
Terry Lefton, who writes about sponsorships for Sports Business Daily, said that adjustments are being made to business partnerships across the industry in light of the COVID-19 crisis.
But he added that teams generally want to find other ways to get their sponsors to spend the dollars they had previously committed. “I don’t think anyone wants to refund money,” Lefton said.
