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Brunner's Scott Morgan Comments in Brandweek's Superbrands Issue About the Financial Services Category

Brandweek.com - June 18, 2010

BofA Trades TARP Funds for a Hair shirt

By Jim Edwards
As appears on BrandWeek.com

View the original article on Brandweek.com

Bank of America was battered more than most by the credit crisis and the recession that resulted. Its August 2008 shotgun wedding with Merrill Lynch required $45 billion in taxpayers' Troubled Asset Relief Program (TARP) funds to consummate—and about $4 billion of that went to bonuses for Merrill Lynch's star performers. CEO Ken Lewis resigned with his tail between his legs after being dragged before Congress. The bank still faces a variety of litigation, including a suit brought this year by New York attorney general Anthony Cuomo, over whether losses at Merrill were disguised to make the merger more palatable to shareholders.

"An appropriate, though unfortunate, analogy of the financial services category right now is that the industry is dealing with its own Gulf of Mexico—polluted not by oil but instead by its own risk-taking and poor management," says Scott Morgan, president of Brunner, a Pittsburgh-based ad agency that works with clients like the American Bankers Association, BNY/Mellon, and Wes Banco.

BofA's image among consumers plummeted to -18 on the BrandIndex scale, which tracks corporate reputation on measure from -100 to +100. Most Americans blame banks for causing the mortgage crisis that led to the recession, so no one in the banking sector is smelling like roses among consumers right now. But as BofA is the nation's largest bank by adspend and the second largest by revenues, it took more than its fair share of heat. The challenge for BofA this year is to turn that around.

Even in normal economic times, bank marketing is a thankless task, says Ted Marzilli. svp and global manager of BrandIndex. "Large national banks are viewed more like utility companies than consumer brands. When you turn on your lights, you expect them to turn on. The company gets no credit. Likewise, with ATMs, you don't get much credit for being available when [consumers] want to make a deposit or withdraw cash." And with all banks offering checking, savings, mortgages online banking, the category is largely commoditized in the eyes of customers.

So it is not surprising that BofA has spent a lot of time thinking about its corporate image, and how to promote it. The bank, which had been product-focused in its advertising in 2008, virtually stopped product promotion for a period, according to Joseph Goode, a BofA spokesperson. Product ads have been brought back, but now everything the company does in its advertising and marketing revolves around restoring BofA's reputation.

"It has changed quite a bit," says Meredith Verdone, Bank of America's svp for brand, advertising, research and sponsorship. "We were very concerned about the problems in the industry and the consumer mindset, which was very distrustful of banks. We wanted to respond to the critics out there and, frankly, the misinformation that existed, and demonstrate the role a bank plays and that we matter. It was important to recognize the recession."

Among that "misinformation" was the idea that the credit crisis was exacerbated by banks refusing to lend. "Last year we were the No. 1 U.S. bank in lending. That was something we never communicated before," says Verdone. "We lent over $3 billion a day."

On the product side, the bank's big move occurred this March when it eliminated overdraft fees on debit-card purchases. The move will cost BofA tens of millions of dollars, but "We really listened to consumers," Verdone says. "The overdraft issue is a prime differentiator for us."

On the corporate-image side, BofA has assigned itself the task of re-educating the nation on the banking's role in the country's civic, economic and social life. It's creating, via BBDO, 12 mini-documentaries to run in the commercial spaces between episodes of the History Channel's America: The Story of Us. One of the 2-minute spots describes how, during the Revolutionary period, the British cut off the American colony's access to capital. There were no banks in America and the British had banned the printing of money. Massachusetts Bank was founded in 1784 as the country's second bank and Paul Revere and John Hancock were among its customers.

Each episode concludes with a modern (often less dramatic) example of BofA's societal role. "Our desire is to demonstrate how we're making an impact. We do matter. We're not a utility. We have an impact on the largest level and the local level," Verdone says.

Welcome to Chase. Recession, Please Wait Outside.

On May 16, JPMorgan Chase Bank CEO Jamie Dimon stepped up to the lectern in front of Syracuse University's 2010 graduating class. A handful of students—angered over Chase's "antihumanitarian" activities—protested his presence by taking off their gowns. Then Dimon made a joke: "Graduating today means that you are through with final exams, and through submitting term papers. All that nervousness, the cold sweats, the sleepless nights, preparing to answer seemingly impossible questions—that's a feeling we banking executives know pretty well these days," he said. "We call it testifying before Congress."

Bad-dum-bump! The zinger stands in stark contrast to the earnestness projected by Chase's chief rival, Bank of America, whose communications with customers seem to be atoning for the sins of the banking category generally by being as earnest as possible. You can see this in Chase's current advertising, via McGarryBowen, which features a flirtatious, "rich 50" couple who charge luxury hotel rooms and designer dresses on their Sapphire card. Unlike BofA, there's no apparent recession going on with Chase.

"It doesn't appear that the ... JPMorgan Chases of the world are utilizing advertising to tackle the lingering trust and perception issues head- on," says Scott Morgan, president of Brunner, a Pittsburgh-based ad agency that handles banking clients. "Chase is probably best known for its television spots featuring a man and woman enjoying the perks of life to the fullest." And its junkmail envelopes (arriving weekly, it can seem) encouraging homeowners to take out a new credit card.

The bank—which declined to comment—is also in a rush to be seen on the cutting edge of technology. It paid The New York Times $500,000 to sponsor the newspaper's iPad app and it recently gave away $5 million to a set of charities as selected by the votes of Facebook users.

The fact is, the recession has left Chase relatively unscathed. Chase's TARP funds were repaid by June of 2009. Dimon said his bank never needed the $25 billion it was forced to take. And the bank's acquisition of Washington Mutual wasn't as controversial as BofA's rescue of Merrill Lynch. Chase BrandIndex rating is -3.5, whereas BofA is still at -16, according to Ted Marzilli, managing director of BrandIndex.

"Jamie Dimon is one of those guys who's a little bit smarter or luckier than everyone else," he says. "[Chase] didn't get hurt as bad in the financial crisis and came off viewed as being little bit more responsible." - J.E.

Brunner is a $200 million independent advertising agency with 200 employees and offices in Pittsburgh, Atlanta, and Washington, D.C. The agency provides a broad range of services in research and planning, branding, advertising, digital marketing, direct/one-to-one marketing, public relations, promotion, and design services to clients, such as Cub Cadet, CONSOL Energy, The Dow Chemical Company, GlaxoSmithKline, GNC, Philips Respironics, and Zippo. In addition to being a Top 100 U.S. ad agency, Brunner ranks among the Top 75 digital marketing firms in the country.