New Zealand's five biggest banks spent a collective $117 million on advertising last year - a 69 per cent jump on 2017. Photo / Dean Purcell
New Zealand's five biggest banks spent a collective $117 million on advertising last year - a 69 per cent jump on 2017. Photo / Dean Purcell
New Zealand's five biggest banks spent a collective $117 million on advertising last year - a 69 per cent jump on 2017.
Figures from Nielsen put that growth in spending by the banking sector at the top of the big-spending advertisers followed by ad spend on travel and mobile phones.
Tony Boyte, executive director at Nielsen Media, said the increase across the five big banks - ANZ, ASB, BNZ, Westpac and Kiwibank - was significant.
"It's definitely ahead compared to other categories. Banking is among the top 10 categories with the highest advertising spend, and it is the fastest-growing among those categories followed by travel and mobile phones."
Boyte said deeper analysis showed the big drivers of the increase were more spending on advertising home loan products and overall spending on brand.
"Between these five banks, they've all collectively increased their advertising spend on their home loan products by approximately $16.2m between 2017 and 2019. The amount these banks spend on brand advertising has increased by approximately $14.4m in that time also."
Tony Boyte, executive director at Nielsen Media. Photo / Supplied
The spend up comes as the banking sector has been under pressure following revelations from the Royal Commission into misconduct in banking and financial services in Australia and a conduct and culture review by New Zealand regulators.
David Tripe, head of banking at Massey University, said he couldn't rule out the bid to negate negative publicity as a driver of higher spending.
"But I couldn't say that is the reason for it either."
He said mortgages were an important and highly profitable part of the business for banks and banks had identified it as an important area of competition.
"It doesn't surprise me they are spending more on mortgage advertising. That is a relatively profitable area."
With higher capital requirements coming into force for the banks from July there had been a lot of publicity around how it could get harder to get a mortgage, Tripe said.
"The banks will be trying to weaken that view."
Cuts to the official cash rate last year which saw it fall to an all time low of 1 per cent had driven a mortgage war among the banks in the fourth quarter of 2019 which saw strong lending growth.
Ben Goodale, chief executive of Quantum Jump advertising agency. Photo / Supplied
Ben Goodale, chief executive of advertising agency Quantum Jump, said one of the key drivers of ad spending was companies trying to differentiate themselves.
"One of the hardest things with banks is they are essentially offering the same thing, the same kind of account, apps. They are under similar pressure when it comes to branches."
He said brand was one way banks could differentiate themselves but inertia was huge when it came to getting people to switch banks.
"You want to be the preferred alternative." Goodale said one of the key life moments people switched banks was to get a better rate on their mortgage.
"It's where they make the most money in retail banking and also when people are most likely to switch banks."
He said very few people switched based on savings products.
Goodale said the other challenge was the fragmentation of the media market which meant companies had to spend more to reach the same number of people.
"It used to be simple - TV, newspapers and radio. Now you also have to be heavily in digital and social."
Banks
ANZ, which is New Zealand's largest bank, had the biggest spend of all the banks last year at $37.5m.
That was $8.5m higher than its nearest rival BNZ which spent $29m.
An ANZ spokeswoman said the amount it spent on advertising was in line with its market share, and also reflected the number of new and traditional media channels in which it needed to have a presence.
"It's important we invest in our brand, and use advertising to highlight the products and services we offer our customers."
But it was BNZ's advertising which skyrocketed the most between 2017 and 2019, rising 144 per cent from $11.9m to $29m.
A BNZ spokesman said it was constantly changing the way and where it advertised to ensure it reached as many people as possible.
"Early in the period cited there was a relatively small increase in budget, reflective of this. However where we spend has changed a lot, and more of it has been spent in channels monitored by Nielsen than before."
