Effects of intensive advertisement on credit demand

Effects of intensive advertisement on credit demand

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DDBA 8110 - Business Operations

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Effects of intensive advertisement on credit demand

Advertising agencies for banking industry institutions enable their clients to stand out in today’s

marketplace and remain competitive. Outside advertising was by far the most widely-used

promotional tool among banks, according to the most recent American Bankers Association

According to Mosley, (2005) it is widely accepted that the future of the banking industry will

change because of changes in customer behavior and advances in technology. These factors also

have had a drastic effect on the future of advertising agencies for banking industry institutions.

There are many new media channels to consider beyond traditional Television, print and radio

advertising. The Internet, social media advertising and interactive media is emerging as a

powerful tool for banks. What's more, CRM (customer relationship management) has moved to

CMR (customer-managed relationships), worlds where clients increasingly control, converse,

collaborate and co-create. A quality advertising agency for banking industry institutions will take

advantage of these avenues and enable their clients to focus segment-specific marketing

strategies to specific market segments. With performance-based advertising, the advertiser pays

and is therefore motivated to ensure that the advertisement is well-targeted, making best use of

the available inventory of advertising space. Electronic media publishers may choose

advertisements based on location, time of day, day of week, demographics and performance

history, ensuring that they maximize revenue earned from each advertising slot. Poulton, (2006)

the close attention to targeting is intended to minimize the number of irrelevant advertisements

presented to consumers. They see advertisements for products and services that are likely to

interest them. Although consumers often state that advertisements are irritating, in many

Zimmermann, (2004), and mass media. Gathering credit information is likely to increase

consumer’s perceived control of the reliability of their decisions. Several previous studies have

attempted to profile consumers who are most likely to use a particular source of advice.

According to Elmerick et al., (2002), consumers who turn to financial experts for advice on use

of credit for purchases of goods and services typically have high debt-to-income ratios. Also,

consumers who ask their friends and family for advice are young and have little knowledge

about the subject Lin et al., (2004). However, it was found that European consumers who

educate themselves through past experiences and mass media, such as literature, television,

radio, internet, and word-of-mouth, tend to have high-risk tolerance, a college education or

advanced education, and income above $100,000 per year Linet al., (2004).

demands pay a low price; non-searching buyers with less elastic demands pay a higher average

up borrowing from cheaper lenders like AFC.

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