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Marketing’s test in a complex year

Higher interest rates, growing risk of recession and the possibility of smaller budgets in 2023 may present a tough environment for creative teams.

Jan 12, 2023 / Marketing & Sales

In the early days of 2023, economic unknowns remain, beginning with whether or not the U.S. will fall into a recession.

Other aspects of the current climate are also surprising, making it difficult to compare to any past economic period, says Onker Basu, senior director of strategy and execution for consulting firm Cornerstone Advisors. For one thing, he notes, hiring remains strong despite the rapid rise in short-term interest rates by the Federal Reserve that have severely reduced mortgage activity.

Steve Rick, chief economist at CUNA Mutual Group, says financial institutions on the whole should see asset yields increase due to rising rates, but he predicts they will fall short of the loan-to-savings ratios needed to lift net interest margins to “acceptable” levels. As a result, marketing centered on boosting lending opportunities are expected to be a key part of many bank and credit union efforts in 2023.

Some institutions will focus their attention on building core deposits, says Mark Gibson, senior consulting associate with Capital Performance Group, which regularly conducts economic assessments with some 20 institutions. Those surveys show that the pandemic-era influx of deposits is waning, he notes. Basu, however, doesn’t see widespread deposit drains yet.

In the event of a recession, economic challenges will increase, and this will likely leave marketing officers with fewer financial resources. “Banks have to cut costs wherever they can, and marketing is one of those areas,” says Gibson.

When Erin Pryor, head of marketing at the $85.1 billion-asset First Horizon, joined the Memphis-based institution two years ago, “I had one-to-one meetings with nearly 100 associates from various areas within the organization. Through those conversations on goals, products and operations, I gained knowledge that enabled the marketing team to better align to the business and bring actionable strategic ideas to the table.”

Ongoing communications allow marketing to more quickly craft strategies, notes Wendy Kagan, chief engagement officer at the $2.3 billion-asset BankNewport, based in Middleton, Rhode Island. “I will tell you that pricing committee discussions are getting more interactive, trying to get ahead of it.”

While close communication informs marketing officers of bank business needs, marketing can tap into research and data that allow them to present analytically based product and messaging solutions. For instance, marketing can propose strategies targeted to achieve specific results by using CRM data to reveal how particular customers are interacting with a product.

Marketing budgets are always limited, especially in grim economic times, calling for careful resource allocation.

“We don’t spread a marketing budget too thinly across channels, because that makes the impact of the messaging and placements less meaningful,” says Christine M. Landi, chief marketing officer at the $20 billion-asset Atlantic Union Bank, based in Richmond, Virginia. “People are exposed to a lot, and we want to get noticed.”

Just as simulating results from a proposed project helps define what’s worth spending on, so too can measuring campaign results as accurately as possible—using data on clicks, account openings and the like. “Quantifying campaign results accurately provides insights for future campaigns—where and how to spend,” says Landi. “We look at how (campaigns) actually perform, and at the cost to get those results.”

Promotions boosting the bottom line aren’t the only messages required. “Maybe your institution is moving into new markets,” says Pryor. “In that case, introducing potential customers to an institution’s brand difference rises in importance.”

Indeed, given the dizzying number of messages bombarding financial institution marketers—customer privacy, fraud, serving the underbanked, diversity issues and more—managing funding allocation is difficult. A disciplined approach to prioritizing helps, says Kagan. “Systems like a marketing/compliance tracker and automated request forms can help us prioritize and make us more efficient in meeting requests.”

Marilyn Kennedy Melia is a BAI contributing writer. 

Explore key topics you should be considering as you build your marketing plans for 2023 and beyond in the BAI Executive Report, “Marketing in 2023: Opportunities and challenges”