Consumer confidence in the health of financial institutions, including insurance companies, is dramatically influenced by advertising and marketing efforts, says a new study by Nielsen IAG.
At a time when some financial institutions are pulling back on their advertising, the survey suggests, that advertising may be one way to regain or retain consumer confidence in financial institutions’ brands.
When asked about their own banks, insurance companies and investment firms, 55 percent of consumer respondents who said they had seen more advertising for their financial institution reported having “complete confidence” in the financial health and soundness of their financial company and only 18 percent said they had “little or no confidence” in their company.
But when it came to those consumers who said they had seen less advertising, only 18 percent had “complete confidence” in their financial company and 45 percent said they had “little or no confidence” in their company.
“This research shows that ‘out of sight’ can mean ‘out of business,'” said Richard Khaleel, executive vice president 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 and this study clearly demonstrates the link between advertising and confidence levels. 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.”
“This recession is now driven by consumer spending,” said James Russo, vice president of marketing, The Nielsen Company. “In 2008, Nielsen data shows that consumer’s concerns were around food and fuel. Today consumers are driven by fear aligned to the weakening job and equity markets. Companies that will thrive in this climate of fear are those that manage consumer confidence through the turbulent times. Companies that deliver a message of value will be key to turning around the economy and determining who survives in the months ahead.”
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 percent in 2008 compared to 2007. The drop off was even sharper (-23.3 percent) for the forth quarter of 2008 vs. the same period in 2007.
More Study Findings
The study also found that confidence was linked to age and affluence as well as the amount of risk associated with the financial institution.
Older adults aged 55-plus and those with assets over $100,000 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 percent had confidence in their checking and savings bank.
— Only 28 percent were confident of the company that manages their investment or retirement accounts.
— Only 28 percent 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 percent)
— Receiving regular mail or e-mail offers from that institution (25 percent)
— Regularly seeing internet offers/advertising from that institution (21 percent)
— Reading positive stories in the press about that institution (44 percent)
The Nielsen IAG Financial Brand Confidence Study was a national online survey of 5,500 U.S. respondents. 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 their life insurance company. Respondents were also asked about the amount of advertising they had seen in the last six months for their financial companies. Finally, respondents were asked about factors that might positively or negatively affect their confidence in these financial companies.
Source: The Nielsen Company
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