Individual Case study BBVA Laura Carranza Mayo 6-2018 SWOT analysis:
Strengths:
Weaknesses:
- 15th largest bank in the USA, very dominant
-The top ten largest banks control 46.6% of market share
-$755 Billion in assets owned by parent company worldwide
-The financial crisis has reduced revenue in retail banking considerably
-Already a household name with Mexican immigrants
-32% online brand awareness, meanwhile, nearest competitor is at 78%
-Official bank for NBA and WNBA -Agreement with ESPN Opportunities:
Threats:
- Significant population growth to take place in sunbelt region
-Competitors are very powerful established brands with significantly higher budgets for ad
- Currently BBVA only allocates 5% of their budget to internet growth so there is room for improvement -Small enough to offer customized solutions while big enough to offer break through innovations
-Brand loyalty -Regulatory changes are estimated to reduce fees in the banking industry from 6-15 billion
Problem:
BBVA Compass wants to achieve the following marketing goals with limited resource allocations: * Building awareness and trust in the brand. * Improve satisfaction and retention customers and cross sale to them. * Bring in new customers and increase total number of accounts through online and offline marketing.
Assignment questions: 1. What is the role of offline and online advertising in acquiring checking account customers for the bank?
Offline advertising: Its main objective was on brand building and this was done through sponsorship. This type of advertising includes changing the trade name to BBVA Compass, into others. There was a multiyear sponsorship deal with the National basketball association, also with the WNBA, and the NBA development League in the US, Spain and Puerto Rico. They also get a sponsorship agreement with one of Europe´s top football leagues and with ESPN. Online advertising: This type of marketing was focused in acquiring more customers. BBVA Compass used search and display advertising. It was usually accompanied by a promotional offer to encourage customers to open a new account. The company paid mayor search engines like Google, Yahoo! And Bing. They buy consumer checking, checking account, free checking etc. Display advertising entailed buying advertising space on websites that would lead customers to the BBVA website. 2. In 2010, the bank allocated $1.22 million or 21% of the total ad Budget to
online advertising for acquiring checking account customers (see Tables 2 and 3), while allocating the rest of the Budget to offline marketing efforts for this account. However, only 5% of the new checking account customers came from the online channel, while offline branches accounted for 80% of the new checking accounts. Is the 2010 advertising Budget allocation between offline and online media appropriate? On the general vision it might look like online spending yield is less than the one of offline spending. It is appropriate only if the cost per acquisition is less tan 100. For offline its 18,9, and for online marketing its 80.5. As reach of the online marketing is huge, it’s safe to spend on online. In the case was mention that consumers go through multiple exposures before opening an account. Online advertisement helps gaining consumer awareness, which is the primary goal of the organization. 3.Why did BBVA sign multiyear sponsorship deals with NBA and ESPN? Do you agree with this decision?
To increase the brand recall of the company. As changing the name of the bank, the awareness of the company was not up to the mark in the US. The company, therefore, correctly signed a multiyear sponsorship deals with NBA and ESP. With these agreements with such known and popular entities the company would be able to create the desired level of brand awareness amongst the customer segment of the company. People love sports in the US, particularly NBA. It is the most watched league in the country. So, the company´s association with the sport will definitely increase the brand awareness. BBVA advertisements being advertised or aired between the prime time all over the US would significantly affect the brand awareness levels for the bank. Marketing activities of such nature are credible and are good for the company. The company has learned from its success in Spain by associating with La Liga.
4. What are the various steps in the online acquisition process and how can the bank improve this process?
1. People go online and search for checking account 2.There are 2 types of online marketing that company does-Paid search and Display ads. 3. Customer applications. 4.Submission of completed applications.
5. Bank verifies to ensure the consumer meets a minimum credit score and able to pay any potential overdrafts and account service charges 6.Opening of new checking accounts 7.The consumer needs to fund the account by depositing money within certain time period to avoid cancellation 5. What is the effective acquisition cost and lifetime value of customers acquired through the online channel?
BBVA follows both offline and online to acquire the customers. Channels include branches, website, telephone and direct mail. Break up for source of new checking
account as follow:
80% of the new checking accounts had been set up through BBVA`s branches 15% through telephone and direct mail 5%came from the on-line channel
BBVA´s goal was to keep the customer acquisition cost below $200 per new account. The bank considered acquisition cost between $100 and $15o to be good and bellow $100 to be great. The online channel has the least acquisition costs of all; the effective cost of this promotion was about $100 for each new online checking customer. The average lifetime value of a new checking account, with expected life of five years, is approximately $800. 6. What is the role of display and search advertising in acquiring new checking account customers? Is the 2010 advertising Budget allocation between display and search appropriate?.
The largest portion of BBVA´s paid search budget was allocated for Google, as it had the biggest share of search queries. Words purchased included generic keywords, such as “consumer checking”. Buys for these keywords were analyzed and tracked through the big management tool, which evaluated competitive prices, search volume and share of voice. Display advertising involved purchasing advertising on websites that BBVA`s potential customers were expected to visit. BBVA Compass worked with advertising networks and directly with publishers and portals to place their ads The 2010 budget allocated 55% ($677,000) of its resources to display advertising and 45% (%545,000) to search advertising. While display ads delivered a much higher number of impressions, they generated fewer clicks and were more expensive than the search ads-cost per application for display ads was $88 compared with $73 fir search ads. BBVA would make a better use of its money if a higher portion of its online marketing budget would be allocated to search ads, which appears to be more effective. 7.Is the Budget allocation among various search engines appropriate? The three main search engines are: Google, Yahoo and Bling according with the BBVA´s Compass case.
The presence of Google, MSN and Yahoo! Enables them to be allocated the biggest sharing the Media Spend Budget among other search engines. The allocated budget was distributed among Google (55%). Yahoo! And MSN (7%) and the remaining, among other unidentified competitors. The two most popular are Google and Yahoo! The total budget allocation of $516,000, excluding the media spend of Superpages that is $70, it generates less number of impressions (116,922) and the number of clicks that is (1,410), this results are because there is not enough credibility on the website.
8. Why is the bank spending money across various display ad networks? Which ad networks are working better than others are and would you change the Budget allocation among them?
Each display ad network provides reach across multiple publishers and domains. So the bank is spending money across various display ad network. AOL display ad network is the one working better, as it has better reach compared to other display ad networks. Also it has a conversion ratio of 0.003% (Applications completed/impressions) along with less cost of application.
