Marketing Management II

MNG615
Case Study – BBVA Compass

Submitted by
Group No 1 – Section A
Suruchi Mhasde (179278036)
Vishnu Prakash B (179278038)
Sri Sharan (179278052)
Navya Kiranmai (179278063)
Medikonda Pavankumar (179278071)
Athukuri Gopichand (179278106)
1) What is the role of offline and online advertising in acquiring checking account for the bank?
Offline advertising:
The offline advertising was mainly focussed on brand building and this was done through
sponsorship. The offline advertising included changing the trade name to BBVA Compass among
others. Sponsorship was mainly used for offline advertising. They had signed a multiyear
sponsorship deal with the National basketball association (NBA), also with the WNBA and the
NBA development League in the US, Spain and Puerto Rico. They also signed a sponsorship deal
with La Liga, one of Europe’s top football leagues with football giants like Real Madrid and FC
Barcelona. They also signed a deal with ESPN Regional Television, Inc. (ERT), a subsidiary of
ESPN to become the title sponsor of major college league football which is one of the most
popular sports in the US.
Online advertising:
Online marketing was more direct in the sense of acquiring more customers. BBVA Compass
used both search and display advertising. The advertising usually was accompanied by a
promotional offer to encourage customers to open a new account. The company paid major
search engines like Google, Yahoo! and Bing for the search advertising. They buy generic
keywords like consumer checking, checking account, free checking account etc. Display
advertising entailed buying advertising space on websites. These displays would lead customers
to the BBVA website directly where they can find the application for opening a checking account
although the conversion rate was not 100%.

Advertisement Type Expenditure Conversion Rate Cost per application

Paid search $516,000 1.5% $73
Display Marketing $637,000 5.1% $88

2) Is the 2010 advertising budget allocation between offline and online media appropriate?
On the peripheral it might look like online spending yield is less than that of offline spending. But as far
as the cost per acquisition is less than 100, it’s beneficial for the organisation. For offline it’s 18.9,
whereas for online it’s 80.5. As reach of the online marketing is huge, it’s safe to spend on online
advertisements.

Medium Online Offline

%checking Account 5% 80%
Ad Spending 1222000 4597048
Actual Spending 1153000 4337476
checking Account 14316 229056
Cost per Application 80.5 18.93631
Retention Rate 0.55 0.65
Ad Network Media Spent Cost Per Application %Reach
AOL 176000 60 21%
Revenue Science 74000 86 11%
Casale 90000 102 12%
 Tribal Fusion 107000 107 12%
Datran Media 15000 238 4%
AdBrite 3000 200 3%
Yahoo 30000 172 7%
ValueClick 10000 156 3%

In the case it has clearly mentioned that consumers go through multiple exposures before opening an
account
A consumer may see a display ad on site A, another on site B, do a search on Google and finally click on
a paid search in Yahoo to open an account. So, we may assume that online ads help a lot for consumer
awareness which is the primary goal for the organisation.
But we can tweak some of the online spending into other online platforms. Cost per application for
Adnetworks such as Datron Media, Adtrite, are above 200 which is above our desired limit, and for yahoo
it’s 172. The total spending for these three amounts to 48000.So we may divert this to Ad networks as
AOL, Revenue Science.

3) Why did BBVA sign multiyear sponsorship deals with NBA & ESPN? Do you agree with these
decisions?

 The major goal of offline advertising was to build brand awareness and improve consideration
among potential bank customers. From the data provided in the case we can see that in 2007 and
2008 Brand Awareness for the Compass Bank was over 80%.
 In 2009, Compass bank acquired BBVA brand name to maximize the global awareness. But this
adoption of new name further affected their image as the brand awareness dropped down to 48%.
As a result the company had laid down the goal of achieving 53% Brand Awareness in 2010.
 Thus, BBVA got into a multiyear sponsorship deals with NBA & ESPN. As BBVA
advertisements aired between prime-time slots all over the US would help them in achieving
maximum reach through offline mode.
 Also from a press release statement made by BBVA it is evident that they thought this was the
best platform to display their core values to their target customers which were passion, teamwork
and fair play. As Sports leagues are the best medium to reach to the passionate audience who will
associate with their values and build trust in them.

I do agree with these decisions on the basis of following facts that are given in the case.
1. One of the goals of the company in December 2010 was to instill TRUST in their BRAND. As
during the then prevailing economic conditions in US people had lost faith from financial
institutions.
2. Also the company has a prior engagement with Spain’s top professional soccer league-La Liga
which might have proved fruitful in creating brand awareness in Spain and hence they must have
taken a similar decision in US.
4) What are the various steps in online acquisition process and how can the bank improve the
process?
Ans.
BBVA Compass uses both search and display advertising accompanied by promotional offer to encourage
customers to open a new checking account.
Various steps involved are:
1. Consumer searches online for checking account on Google or encounter a display on AOL or Yahoo
2. Clicking on Paid search or Display ad takes him/ her to the bank’s landing page
3. Consumer starts filling an application
4. Completed application gets submitted and has to be approved by the bank
5. Bank verifies to ensure the consumer meets a minimum credit score and able to pay any potential
overdrafts and account service charges
6. Once approved, Consumer opened a new checking account and BBVA acquired a new client
7. The consumer needs to fund the account by depositing money within certain time period to avoid
cancellation

Observations:

 Only 10% of online visitors who click on Paid Search or Display ads start an application process
 Others might be curious about offers but might have felt their branch locations inconvenient for them
 Less than 50% complete the application filling process
 Among the submitted applications, 80% get approved
 Only about 2/3rd of online accounts approved get funded on time

Some of the steps that can improve the process are:

 Improve online application process - making it more interactive and elaborative to consumers
 Specify what information consumers need to provide for the online application and what credit score
is needed to be approved by the bank
 Provide constant reminder to consumers for funding the account within the specified time frame
 Asking the consumers feedback pertaining what can be improved in terms of the application process,
what made them inconvenient to maintain minimum deposit etc.,
5) What is the effective acquisition cost and life time value of customers acquired through the
online channel?
BBVA follows both offline and online channels to acquire the customers. Channels include the branches,
website, telephone and direct mail. So, new checking accounts come from different channels. Break up
for source of new checking accounts 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 $150 to be good and below $100 to be great. The online
channel had the least acquisition costs of all - on average; the effective cost of these promotions was
about $100 for each new online checking customer.

In the banking industry, the average lifetime value of a new checking account, with expected life of five
years, is approximately $800. However, the net annual income generated by online customers is slightly
higher than returns from clients using the local branch.
6) Why bank is spending money across various display Ad network?
Each display ad network provides reach across multiple publishers and domains. So the bank is spending
money across various display ad network.
Display ad network that is working better:
AOL display ad network has better reach compared to other display ad networks. And it has a conversion
ratio of 0.003% (Applications completed/impressions) along with less cost of application.
Change in Media Spend:
We reduce the funds allocated to Tribal Fusion as the reach through that network is only 4%. We can
allocate additional funds to Traffic Marketplace which has a reach of 15%(the second highest among the
ad networks).