A New Study Sheds Light on the Truth Behind Banks’ TV Ads
Advertisements can sometimes tell you more about a bank than they intend to, and a recent study has brought this subject to light. This research by the National Bureau of Economic Research used AI programs to analyze 51,349 TV bank ads that aired from 2004 to 2020. The study found that banks often use their ads to highlight their real strengths over competitors. However, when these advantages don’t exist, they turn to emotional storytelling to appeal to viewers. This leads to a crucial question – should we be skeptical of any bank that tugs too hard at our heartstrings?
The Role of Emotions in Advertising
Emotion is a powerful tool in advertising. It is used to make a lasting impression and make brands memorable. According to the study, 53% of the commercials focused on “building trust and emotional connections,” while 29% focused on customer service, and 18% focused on pricing advantages. For example, a 2020 JPMorganChase ad, featuring a young man using the bank’s mobile app, was found to focus 100% on service.
However, when a bank ad depends exclusively on feelings and not facts, it could be a sign that the lender lacks a comparative advantage in prices or service. This is particularly true for advertisements that heavily lean on trust. As the research found, it could indicate that the bank has few advantages over its peers or is suffering from what the study called “reputational and systemic shocks.”
Case Study: Wells Fargo
Consider Wells Fargo, which increased its emphasis on trust-building by 14% in its ads following its unauthorized accounts scandal in 2016. One of their 2018 commercials, part of a marketing campaign titled “Re-established,” aimed at rehabilitating the bank’s image, featured a narrator stating, “We know the value of trust. We were built on it.”
The researchers also noted that during the 2007-2008 financial crisis, many banks with exposure to Lehman Brothers started “reorienting their advertising” toward trust to counteract the rising distrust in the banking system.
Advertising Reflects the Bank’s Position
Advertisements are like mirrors reflecting the realities of the banks, according to the study’s authors. They found that when a bank attempts to enter a new market, its ads heavily emphasize pricing advantages, to lure customers away from more established lenders. Meanwhile, banks with a higher market share tended to concentrate less on pricing and more on service — sweetened by a bit of emotion.
This study opens up the “black box” of what industry experts call “customer capital” or “franchise value.” It highlights the role of pricing, service quality, and, most importantly, emotion and trust in building this intangible value.
In essence, while emotions are a strong selling point, customers need to understand that a bank’s overwhelming focus on emotion, to the exclusion of factual details, might indicate a lack of competitive advantage in prices or service. So, the next time you see a heartwarming bank ad, remember to look beyond the emotions and consider the facts.
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