Bbva Compass: Marketing Resource Allocation

BBVA Compass: Marketing Resource Allocation

What is the role of offline and online advertising for acquiring checking account customers for the bank? Is the 2010 ad budget allocation between offline and online media appropriate?

BBVA Compass uses offline and online advertising to build brand awareness product promotion and advertising is leveraged to acquire new customers. The offline advertising consisted of 50% brand building with remaining budget being allocated across business lines.

The 2010 budget allocates more funds to the online services versus offline channels when compared to the number of checking accounts open by channel. With only 5% of the new checking accounts coming online it is difficult to justify the current allocation. When the retention rate of online customers is 10% lower and the application approval is 15%-20% lower than the customers acquired through branches. BBVA is targeting younger affluent customers it needs to improve the performance of the online campaigns. The online cost per application is desirable, so more budget should be allocated to improve the campaigns performance.

What is the effective acquisition cost and lifetime value of customers acquired through the online channel?

The overall value of a customer checking account is $800 over five years. BBVA attempts to keep its blended cost of acquisition at $200 with $100 being a stretch goal. Online acquisitions cost $100 on average. With the cost of acquisition being so low focusing on online sales makes sense. With low conversion acquisition rate it could be worth investing more in increasing efficiency. This will increase revenue and lower the cost per acquisition.

What is the role of display and search advertising in acquiring new checking account customers? Is the 2010 ad budget allocation between display and