Compete recently held a webinar in which we analyzed the role that search plays in consumers’ online research for deposit products (savings, checking, CDs, etc.).  The study revealed some interesting findings about just how prevalent search is within the consumer buying cycle.  Some of the key findings from this webinar include:

• Overall online shopper and applicant volume declined in 2009, however share of online shoppers utilizing search, especially Google, increased
  • >65% of deposit shoppers who used search in September 2009 chose to use Google, compared to <60% in January 2008

Continue reading “The Role of Search in the Online Deposits Market” »

Football is in full swing as we enter the midpoint of November and are two months into the NFL season.  Many teams are still in the hunt for a playoff berth which makes for numerous exciting and must see games each weekend.  Not only are the fans of these teams enthused by this but also companies that sponsor the league. The start of the NFL season brings excitement to sponsors as this is a key time of the year to reach a vast audience with marketing and promotional materials.  One of the league’s major sponsors on a yearly basis is Visa which is hoping to use this season to further strengthen its brand name in the credit card space.

Continue reading “Visa and the NFL team up for another season” »

With the credit market still in a state of disarray, traditional credit card companies are looking for ways to diversify their sources of funding. Two of the industry’s largest competitors in the card arena, Discover and American Express, have recently begun to offer a portfolio of savings products that compete directly with longtime leaders in this space like ING Direct, and relatively new entrants such as Ally Bank. This is similar to the tactic employed by Capital One nearly 10 years ago as it spawned the Direct Banking division which offers online only accounts with highly competitive rates. What makes this push even more intriguing is the fact that both Discover and American Express are offering rates that exceed competitor products during a time when the overall rate environment has been declining steadily. The below table illustrates the rates for high yield savings accounts at the end of August. Having a high rate, especially in this difficult rate environment, is one way to grab a lot of attention in the marketplace.

While having a best in class rate is all well and good, these two companies realize that getting the word out about their new products is even more important. One of the best ways to do this in the online forum is through utilization of key search terms. In this particular case, non-branded search terms are important since these will be used by prospects without an affinity toward a specific company. Otherwise they would have just gone directly to that company’s website or at the very least conducted a search using a branded term.

As we can see above, both American Express and Discover are capitalizing on one of the most commonly used non-branded terms driving prospects in the savings industry (“online + savings + account”). According to Compete research, this term is actually the 3rd most popular non-branded search term used by prospects going to savings content pages. By bidding on heavily used non-branded terms, these banks are putting themselves in front of a large number of savings prospects that are open to exploring their options at multiple companies. The data below indicates that this strategy is helping both companies increase prospect volume over the past few months, particularly when looking at the traffic for American Express.

Due to the high interest rate and use of sponsored search by both American Express and Discover, each company was able to attract increasing prospect volumes for their savings products in both July and August. Growth in prospect numbers from June to August for both firms has been substantial with Discover Bank increasing prospects by 38% and American Express driving 238% growth during that span.

While both of these companies have a long way to go to match the current online savings leaders in terms of shopper volume (ING Direct attracted over 900,000 online savings prospects in August), having a premium rate and high exposure in search are two key strategies to make headway in the market. As these products increase in popularity, it will be interesting to see if there is a reaction from the banking community and if so, how they respond to the products offered by American Express and Discover.

Compete recently held a webinar in which we analyzed the role that search plays in consumers’ online research for auto insurance. The study revealed some interesting findings about just how prevalent search is within the consumer buying cycle. Some of the key findings from this webinar include:

• Online auto insurance shopper volume has increased and price is the key driver of consumer choice
  
  • 90% of those looking to replace an existing policy cite price as the reason
  
• Most consumers apply online and search is the second most used resource in the shopping process trailing only issuer websites
  • 56% of online auto insurance shoppers, who ultimately apply, do so online
  
• Shoppers use search frequently with application rates increasing with number of queries
  • 57% of shoppers perform multiple search queries
  
• Shoppers utilize both brand and non-brand search terms with non-brand driving better conversion
  • Non-brand terms convert at ~2x the rate of brand terms
  
• Search is used throughout the consumer shopping cycle
  • 50% of search referrals occur outside of the conversion session, thus indicating that consumers leverage search at the very early stages of their shopping process when they might not yet be ready to transact
  

In sum, despite the current economic recession we have actually seen online auto insurance shopper volume increase with price being the key driver leading consumers to look for new insurance. We also found that consumers not only use the online channel for auto insurance shopping, but are also most likely to choose this channel to ultimately apply. Finally, our data indicates that search plays a significant role in consumers’ online research for auto insurance. Auto insurance shoppers use search frequently and at multiple stages of their research process.

Please note that a replay of this webinar can be viewed at the following link: http://compete.na3.acrobat.com/autoinsurreplay/

The results of the stress tests conducted on some of the nation’s largest banks were announced on the 7th of May. The tests were intended to distinguish the ‘strong’ banks from the ‘weak,’ and to instill confidence in the market. Of the nineteen banks that were stress-tested, nine banks were deemed ‘strong’ while ten were asked to raise more capital in case the recession runs deeper and longer than expected. Some experts have argued about the thoroughness of the tests. Meanwhile, some banks have suggested that the tests had overly pessimistic assumptions, and as such they do not agree with all the assessments.

These debates led me to wonder – how did the results impact investors and average consumers? Were the tests successful in achieving the objectives?

I assessed investor reactions by comparing the stock price of three ‘strong’ banks (JP Morgan Chase, American Express, Capital One) and three ‘weak’ banks (Bank of America, Wells Fargo, Citigroup). Chart 1 below shows this comparison. The stock price of all banks, including the weak banks, increased leading to, and following the announcements. The stock prices have since decreased, but remain higher than pre-result prices indicating improved investor confidence. However, the interesting point to me was that all the banks seem to trend together. It, thus, looks like investors are still not differentiating between banks.

How about consumers: are they more confident about banks and are they differentiating between banks? To assess average customer sentiment, I decided to look at the number of online visitors. My hypothesis was that if people care about the results, there would be an increase in online visitor volume for strong banks and a decrease for weak banks.

Read as: In the week of May 17-23 Chase had 1% more visitors to its website than the average number of visitors during April 12-25.

There was a dip in online visitor volume across banks in the week that the results were announced. This could just be due to caution prior to the results. The following week, online visitor volume increased across banks indicating that people were happy with the results or at the least not overtly concerned. Again, all banks trend in similar directions. Looking at the two charts above, I would have a hard time distinguishing a ‘strong’ bank from a ‘weak’ bank.

Experts may continue debating about the validity, need, and timing of the tests, I however think that the tests were successful in instilling confidence but not in distinguishing banks.

It seems that every day we hear different news about the economy in terms of a turn towards recovery. The stock market is continually fluctuating based on news in the job market, housing prices, and the nation’s financial institutions. While the hope is that there is nowhere to go but up, many of our banking centers are still struggling within the current climate. As a result, 36 banks have already failed in 2009 before we have even reached the month of June.

Due to the current economy, both banks and consumers have focused even more on the quality of their relationships. Many bank struggles have been due to relationships with consumers of questionable credit rating. As consumers have been unable to make good on loans, banks have struggled with the consequences. Not only are consumers with better credit appealing on a stability level, but they also are more likely to carry higher bank balances than the average consumer. In a recent survey of savings shoppers, Compete discovered that about 2/3 of those with excellent credit have an average savings balance of greater than $10,000 compared to 1/3 for those with a lower rating (Figure 1).

On the other end of the spectrum, consumers are also looking for stability within the financial institutions they choose to do business with. In light of the many bank failures, it is not surprising that consumers in market for savings products are increasingly seeking out institutions that will still be operating well into the future. The Compete survey found that 41% of savings shoppers are now looking specifically at the financial security of the bank as part of their search criteria. Even more interesting is the fact that those with an excellent credit score are more likely to be concerned about a bank’s stability when compared to those with a less than stellar rating (46% to 35%) (Figure 2). Consumers with excellent credit built their rating with smart financial decisions and want to have relationships with firms that are built on solid ground.

The question for banking institutions is where to find these high quality consumers. The technology to be able to look at someone and immediately know their credit rating does not yet exist, right? In fact, this is something we are able to accomplish with Compete’s clickstream data. When looking at individuals that have opened a deposits account online by credit rating, we can determine sites that those with a higher rating are more likely to visit when compared to the average internet user. Below are a few examples of sites that deposits applicants with excellent credit are more apt to hit. For example, deposits applicants with a high credit rating are 97% more likely to visit latimes.com when compared to the average internet user.

Detailed information like this is very valuable when trying to target high quality consumers with messaging that fits the mold for what they seek in a financial institution. Consumers are looking for financially secure banks because of our economic environment. It is up to these institutions to put themselves at the forefront of these individuals’ web experience so the matchmaking can begin.