Marketing Briefing: Why banks are outsourcing their marketing initiatives
- Banks are diving headfirst into marketing, but how are they organizing their marketing strategies?
- Plus, VP head of sales and marketing at Kabbage from American Express Brett Sussman dives into the company’s latest research into SMB recovery.
As competition in the financial space increases, banks are giving their marketing tactics much more importance. But marketing often requires a data-heavy approach. Marketers onboard can have trouble navigating various sources of data. That’s where outsourcing is coming in. On average, banks are outsourcing at the very least 20%, and on average just over 70%, of their marketing operations, according to a survey by the American Bankers Association.
Branding and creative (65%), ad placement and billing (53%), and digital and social media strategy and advertising (48%) are the top categories banks are outsourcing to agencies.
The findings could indicate that banks are placing their marketing strategies in second thought territory. But that may not be the case. Rather, the move to outsource could have to do with the limited talent pool banks can turn to for their marketing hiring.
This perspective comes into play when you look at how banks go about structuring their marketing teams.
As seen from the data, for the most part, banks are maintaining a centralized organizational structure for their marketing team. One theory, as per the survey, is that skills in this domain are hard to come by for banks – specifically concerning building data-driven marketing strategies and campaigns.
Therefore, these financial institutions like to keep this skill set available to all with a structure that allows departments across the board to pick their marketing experts’ data-driven brains.
Three Questions with Brett Sussman, vp head of sales and marketing at Kabbage from American Express.
In June, Kabbage from American Express released the latest installment of its Small Business Recovery Report, tracking SMB growth and trends.
For this week’s briefing, I sat down with Kabbage’s Brett Sussman to get a deeper understanding of SMB owners’ current state of mind and what services they’re looking for most from their financial service providers.
Why are SMBs feeling optimistic?
“Small business owners are finally catching their breath from the pandemic and now there’s a potential recession on their minds. However, the good news is, our survey shows that they're feeling cautiously optimistic and resilient. We found that about 80% of small business owners surveyed feel that they could withstand a potential downturn. And it's largely due to the lessons that they learned during the pandemic. You know, it's often said that necessity is the mother of invention. And for small business owners, the pandemic was the mother of reinvention.
A lot of these companies got back to the basics. They've reported doing three things: selling online, creating a distinct brand, and expanding their marketing into more digital and social channels. These are some of the reasons folks are feeling competent.”
What are the services SMBs are looking for in light of the current financial situation?
“There are 32 million small business owners – approximately 26 million of them have no employees. 80% of the other 6 million of those have fewer than 10 employees. And so they're really time starved. So one of the biggest things we’ve found they're looking for is cash flow visibility, which plays a really important role in helping them save time.
We've also talked to small business owners who are applying for a line of credit or using a line of credit – that's really valuable for them right now, as well. And two of the reasons for that have to do with inflation: their costs have gone up because their suppliers are charging them more, and they're finding their supply chains are snarled with additional costs. So access to credit can be a big help for them there.
They're also worried about their employees and hiring. And actually, what we're hearing is 59% of small business owners are saying hiring is just as challenging as it was last year, which means they're very focused on retaining their talent – 40% of our small business owners said they're looking to have wage increases over the latter part of the year to retain their talent. And that is another use case we're seeing – having some additional flexibility from an employee payroll perspective.”
What is Kabbage from American Express doing to appeal to SMBs?
“Small businesses are really consumers with a passion. A passion that drove them to begin a business and make a living from it. Many aren’t financial experts, nor have the time to spend hours navigating their cash flow. They want to focus on their customers, their employees and community. We are building a suite of solutions that allow them to quickly analyze their cash flow, and have the products at their fingertips to take action. Another perspective is many businesses still run their company through personal accounts. Our tools can help them reclaim their visibility into how their business is doing overall without commingling these numbers with personal funds.
At the end of the day, we always aim to keep in mind what is the end benefit for small business owners and to continuously provide clarity on that. Small business owners really want to know things like, ‘how much cash do I have on hand? How much am I getting paid? How much is coming out of my business?’ And so we really try to present cash flow in a way that’s simple, easy to digest, and easy to understand – especially for folks who don’t necessarily have a deep finance background.”
What we’re reading
Should fintechs look outwards rather than inwards for all things marketing? (Finextra)
Marketing advice for financial advisors (Wealthmanagement.com)
Banks should be putting money on digital marketing capabilities, says McKinsey (McKinsey)
On TikTok and banks (ABA)