Consumers are more likely to have confidence in ailing financial brands if they see ads for them during the economic downturn, according to research from Nielsen IAG, which supports the theory that companies that do not advertise are risking widespread public perception that they have failed or are otherwise on their way out.
At a time when many financial companies are pulling back on their advertising and marketing efforts to cut costs and to avoid the appearance of wasteful spending, the study suggests that these institutions are actually putting their long-term brand health at risk.
When asked about their own banks, insurance companies and investment firms, the study found that 55% of consumers who say they had seen more advertising for their financial institution reported having “complete confidence” in the financial health and soundness of their financial company, while only 18% said they had “little or no confidence” in their company.
On the other hand, among those who said they had seen less advertising, only 18% had “complete confidence” in their financial company and a significant 45% said they had “little or no confidence” in their company.
Nielsen also found that confidence was linked to age and affluence, as well as the amount of risk associated with the financial institution. Older adults ages 55+ and those with assets of more than $100K were more confident than average. Banks fared much better than life insurance companies and investment firms.
Overall, a minority of respondents said they had “complete confidence” in their financial institutions:
- Less than 38% had confidence in their checking and savings bank.
- 28% were confident of the company that manages their investment or retirement accounts.
- 28% had confidence in their life insurance company.
When asked what factors would increase confidence in the safety and soundness of their financial institution, respondents cited:
- Seeing regular advertising for that institution (25%)
- Receiving regular mail or email offers from that institution (25%)
- Regularly seeing internet offers/advertising from that institution (21%)
- Reading positive stories in the press about that institution (44%)
The study comes as data show year-to-year reductions in advertising expenditures in the financial services and insurance categories. Year-over-year ad spending on financial services and insurance was down 13.4% in 2008 compared with 2007. The dropoff was even sharper (-23.3%) for Q4 2008 vs. the same period in 2007.
“This research shows that ‘out of sight’ can mean ‘out of business,'” said Richard Khaleel, EVP of Nielsen IAG’s Financial practice. “The current economic climate makes it more important than ever for financial institutions to bolster confidence among their clients. With constant scrutiny on the industry, it’s clear that taking control of the message in advertising and press can make all the difference for a brand.”
About the study: The Nielsen IAG Financial Brand Confidence Study was a national online survey of 5,500 US adults. Respondents were asked questions about their confidence in the bank where they have their personal checking and savings accounts, the company that handles their investments and retirement accounts, and their life insurance provider.