Currently online advertising is 21% of he marketing budget but is only responsible for 5% of new customers. VIVA has believed in the past that this was worth investing in for future growth. We are also of the opinion that future growth will come through the online channel and that we should continue to invest in this. We also think that it is possible that customers may see the online advertising but decide to open the account in a branch because of online security concerns or a desire to visit a branch.
We do not have metrics to gauge this but our suggestion would be to implement a tracking system where the bank records where customers eared about VIVA for all new accounts. This would allow us to better track the effectiveness going forward. Another reason that we do not believe in reducing the online advertising budget is that the customer lifetime value is positive $61 9 ($634 for paid search and $604 for display advertising) for new customers acquired online. A comparative analysis is attached in annexed as Table 1 . Within online advertising, VIVA uses two methods to acquire customers online: paid search and display advertising.
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They currently allocate the online advertising by using 55% of the budget for display ads and 45% for aid search ads, and they accompany these with a promotional offer. With the first method, BAA buys keywords from search engines such as ‘free checking account’ and ‘BAA Compass’. The goal of this is that when people search for these, that BAA will be one of the top search results. The other method that BAA uses is called display advertising. This involves buying advertising space on websites that prospective customers are likely to visit.
The customer then clicks on the ad and is directed to the BAA website. A detailed analysis is attached in annexed as Table 2. The click through rate for the paid search is higher than for display advertising (4. 9% vs.. 0. 05%) meaning that a larger percentage of people who view the search results click through and visit Ova’s site than customers who view the display advertising and visit Ova’s site. However, the percentage of people who click through and complete an application is higher for the customers that visited the site through display advertising than through search (5. % vs.. 1. 5%). Overall click through rate is 0. 19% and the percentage Of customers that then complete an application is 2. 3%. One way to improve his process would be more targeted search words or more targeted display advertising. Perhaps they could refine the search terms and display advertising to be more region specific since they felt that one of the main reasons that customers did not open an account after visiting the site was that the bank locations did not meet their needs.
We would change the current ration between display advertising and paid search to allocate slightly more to paid search. As aforementioned display advertising has a higher rate of customers who apply after clicking through, paid search has a higher click wrought rate, higher customer lifetime value and lower cost per customer acquired. This leads us to believe that it is slightly more efficient. However, we feel that these two options reach different customers.
The paid search is for customers who are actively searching for a new checking account and the display advertising raises brand awareness and reaches potential future customers. Therefore, our recommendation is to allocate the budget for these close to equal with 55% for paid search and 45% for display advertising. What we think should change with the online budget is that we should be ore selective in Our paid search terms and Our display ads. Of customers who click through and visit the site, only 10% start an application.
VIVA attributes this to these potential customers finding that their branch locations are not convenient. We believe that the display ads should focus on regionally appropriate sites and that they might consider adding in state or regional terms into their search words. This would allow them to better reach their target market. Within search, we should stop marketing spend on Superposes because though it appears attractive in cost terms but we are not sure of the attention. It may be a good idea to test but spend is too low for any meaningful conclusion.
For the present, we recommend focusing on touch points with larger scale. Within display ads, we should follow a similar strategy, removing Trans Media and Debate. A detailed analysis is attached in annexed as Table 3 and Table 4 To conclusively identify the search sites and display sites to be selected, we have ranked them as per CLC values they generate. The spend saved from low CLC generating sites has been redistributed to the other sites in the proportion of their CLC generation. A detailed analysis is attached in annexed as Table 5 and Table 6.
As for offline advertising, the main goal is to build brand awareness and to create a positive reputation with prospective customers. We believe that that BAA is on track to achieve their awareness goal of 53% since they are already at 48% awareness and are trending up. This leads us to believe that we do not need to invest a higher portion of our advertising budget in offline advertising since we will reach our goal with the current budget proportion. However, we can make it more efficient. BAA also signed multi-year sponsorship deals with NAB and ESP. Regional Television.
These sponsorships also have the goal of these sponsorships is to build brand awareness and to improve their reputation. They believe that this is a way to connect with customers and their passions. They also believe it is a way to build reputation and to draw parallels between their bank’s brand and sports in regards to passion, teamwork and fair play. One concern with this strategy is that it is not reaching Abs’s target market. The NAB sponsorship reaches customers throughout the US, Spain and Puerco Rice, yet BAA only as branches in the sun-belt in the US and no branches in Puerco Rica.
This means they are wasting advertising on people outside their potential market. This might make sense if BAA is planning on expanding to the rest of the US in the near future, but we do not have any indication that this is the current strategy. In the case of the ESP. partnership, the regional reach of the sponsorship matches perfectly to Abs’s US customer base. Our only concern is that Abs’s target market is ages 25-54 and most of their exposure via this sponsorship is at college football games.