trending Market Intelligence /marketintelligence/en/news-insights/trending/z-zyz4pJj5IirhNU_BU1Pg2 content esgSubNav
In This List

Credit unions' spending on advertising outpaces membership growth


S&P Capital IQ Pro | Powering Your Edge


Street Talk Episode 81: Amid strong recovery, Banc of California hearing more M&A chatter


S&P Capital IQ Pro | Unrivaled Sector Coverage


Banking Essentials Newsletter: September Edition

Credit unions' spending on advertising outpaces membership growth

Credit unions are increasing spending on advertising at a greater pace than membership is growing.

Their goal is not just to attract new members, but to also keep existing members engaged.

Membership has climbed from 93.1 million in 2011 to 110.6 million by the second quarter of 2017, an 18.9% increase. Advertising spending was $1.04 billion in 2011, and in the most recent quarter rose to an annual rate of $1.55 billion, a 49.7% increase.

SNL Image

Safe FCU spent $1.9 million on advertising during the last twelve months, up from $1.8 million at the end of the first quarter of 2017 and $1.1 million one year ago. Advertising expense represented 5.4% of the Sumter, S.C.-based credit union's noninterest expenses and 32.7% of its net income.

Vice President of Marketing Toby Hayes said in an interview that the rise in advertising spending is not surprising because the industry has become increasingly competitive. As more credit unions move their charters from Select Employee Group-based to community-based, they will compete more with each other as well as with banks and other lenders. "Add to the mix that we are now almost eight years past a major recession and it becomes the perfect storm for increased spending," he said.

Hayes said another factor is that there are now more C-suite executives who are marketers. They understand that marketing works and that it takes money to make money, so they are investing more in their brands, he said.

Safe FCU is seeing a significant level of engagement with both direct mail and digital marketing, Hayes said. Both those mediums are working, but both come with a hefty price tag. Overall, it is making the credit union's marketing plan more effective and is increasing the spending. "The good news is that other costly things have become less effective, such as newspaper advertising and yellow pages," Hayes said.

Safe FCU ran a 30-second ad during the Super Bowl this past February in the Columbia, S.C., market where the vast majority of its members live, but Hayes said the company is not doing an ad for the Super Bowl this coming February because of timing. The credit union is doing a rebrand that will launch in April and is focused on that effort, he said.

SNL Image

Navy FCU, the largest credit union in the country, spent more than four times as much on advertising in the second quarter of 2017 as the next-highest spender, Pentagon FCU. Navy spent $136.8 million as of June 30, while Pentagon's outlay was $31.1 million. Navy's advertising spending represented a 24.3% year-over-year increase for the credit union.

Pam Piligian, senior vice president of marketing and advertising for Navy FCU, said that like all credit unions, Navy Federal looks for the most efficient and cost-effective ways to share its story of strong member service and the value of being a member. It also uses member stories as a way to connect current and future members and to display its understanding of who it serves. "Our advertising continues to include a diverse mixture of live televised sports, targeted local radio and digital media," she said.

SNL Image

Baton Rouge, La.-based Pelican State CU spent $369,000 on advertising over the last twelve months, up from $346,000 at the close of the first quarter. Advertising was 1.5% of its noninterest expenses, and 9.9% of net income.

Content Marketing Strategist Frank Kerner said in an interview that he is not surprised that advertising spending has taken off, partially due to the ease of entry to advertise on Facebook and YouTube. He said banks have been advertising everywhere as well, so it is only natural that credit unions will be increasing their advertising to keep up.

Pelican's main advertising focus is digital, although the credit union has a handful of physical ads that it runs to support its members, team members' families and its select employee groups. Pelican is also heavily invested in spending money that impacts the communities its serves, such as sponsoring and hosting its own events.

"When it comes to advertising, we're pretty well-rounded in making sure that we have consistent messaging across multiple channels," he said.

Pelican's Facebook, Instagram, Google and YouTube ads have been vital in helping get its message out, although Kerner said the company does not spend as much as some might think on those mediums.

SNL Image

SNL Image

Did you enjoy this analysis? Click here to set up real-time alerts for data-driven articles on the U.S. financial sector.

Click here for the credit union regulatory tear sheet template.