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THE GEORGE WASHINGTON UNIVERSITY – ISTM 6209 – CASE STUDY ANALYSIS

BBVA Compass:
Marketing Resource
Allocation

Alexander J. Singleton

June 1, 2017

The George Washington University
GWMSIST
Executive Summary 2

Assessment & Surveillance 3

Strategic Options 4

Tactical Plan 5

Works Cited 6

Appendix 8
US Marketing Spending by Major Banks 8
BBVA Compass’s Advertising Budget by Media, 2010 8
Online Marketing for Checking Accounts 8
Executive Summary
The Great Recession of 2008 and the ensuing economic fallout forever changed
modern-banking- practically overnight. “Responsible” banks acquired the “irresponsible
banks” as stewards of a new financial-system re-designed to become “too big to fail,”
fortified by regulatory overhaul and Basel III risk-based capital ratios that might
otherwise preclude the next market-bubble “too good to be true,” for the next Dodd-
Frank. Although consolidation engendered increased competition for accounts between
the Big-Five national banks, the regional banks limitation of resources demanded
creative marketing strategies for tactical execution on-line in order to shore-up the
fragmented landscape of more than 15,000 banks collateralizing $10 T dollars in assets
(Gupta, Sunil, and Joseph Davies-Gavin). As of 2010, the Spanish Multinational-
Corporation (MNC), Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), was the second-
largest bank in Spain, reporting 48 million customers and 104,000 employees in over 30
countries, in addition to a growing footprint in the American Sunbelt boasting over 700
branches and $49 B in deposits (Gupta, Sunil, and Joseph Davies-Gavin). Initially,
BBVA leveraged their distinct advantage at the expense of their American competitors-
language- focusing on Mexican immigrants but later re-defining their target demographic
as “strivers” who are both aggressive though anxious with personal-finances, 25-54
years-old, netting a disposable household income i/a/o $75 M in order to achieve their
BBVA objective in becoming one of the top-10 banks in the US by-deposits (Gupta,
Sunil, and Joseph Davies-Gavin). Positioned as a traditional, community credit-union
while maintaining economies of scale with financial-innovation and technology, BBVA
on-line offerings and solutions gave Big-Five legacy-systems a run for their customer’s
money by reallocating budgets shifting away from conventional marketing-strategies
offline with traditional channels like televisions and radio to inbound-driven, search-
engine marketing (SEM) online. According to Sheiludis Moyett, BBVA Director of Brand
and Corporate Advertising, BBVA efforts successfully achieved their goal to improve
brand-recognition from 48% in 2009 to roughly 53% (Gupta, Sunil, and Joseph Davies-
Gavin).

Assessment & Surveillance
The BBVA Compass marketing-mix acquired 5% of new checking accounts online, while
80% of new accounts were opened on-site at the local bank-branch; the remaining 15%
was allocated between telephone and direct-mail campaigns (Gupta, Sunil, and Joseph
Davies-Gavin). BBVA customer acquisition strategy acknowledged the top-three criteria
defining consumer-choice in personal banking: “free checking services, convenient
bank-branch locations, and easy online bank services,” and budgeted roughly $56 MM,
presumably in-line with their 2009 reported spending, according to the following
allocation: Newspaper 4%; Magazine: 1%; Outdoor: 7%; Online: 21%; TV: 53%; Radio:
15% (Gupta, Sunil, and Joseph Davies-Gavin | Appendix 2). In spite of investing less
than 10% of industry-average for online advertising, the aforementioned materially
improved BBVA brand-recognition from 48% in 2009 to roughly 53%, as previously
noted by Mr. Moyett; however, roughly 5% of overall sales came from the Internet, a
costly investment net/net compared to 21% of the marketing-allocation (Gupta, Sunil,
and Joseph Davies-Gavin | Appendix 1). The average lifetime value for checking-
accounts amounts to roughly $800.00; at BBVA, the acquisition cost is roughly $200.00,
25% above preferred returned i/a/o $150.00 per account opening in spite of almost half
of the BBVA on-line budget (21%) apportioned to checking-account acquisition (Gupta,
Sunil, and Joseph Davies-Gavin | Appendix 3).

The BBVA customer journey is indeed funneled, as the customer-journey is as follows
(Gupta, Sunil, and Joseph Davies-Gavin):

1. Roughly 10% of online visitors who click on the paid-search or display-ads files
an application.
2. Less than 30% of the people who start an application actually complete it.
3. Upon submission, only 80% of the previous-pool are approved compared to the
95% to 100% approvals created at local branches- two-thirds of which actually
fund the account within the required time-frame.

The total-expense for display and paid-search is approximately $3 MM, or roughly 30%
of the total on-line budget allocated from the total-marketing budget i/a/o $56MM; the
overall cost per click for checking-account application nets i/a/o $81.00- the cost is
simply too high if less than 3 applications per every 100 initiated are approved (Appendix
3). Furthermore, the cost per acquisition (CPA) amounts to $251.00, when factoring in
the promotion (e.g. iPod Nano), which is 150% more than the ideal cost ($100.00 per
account), defined by Mr. Moyett (Appendix 4).

Strategic Options
Assuming roughly $10 MM is the annual-budget for online advertising, there are several
proven alternatives yielding significantly higher Return on Investment (RoI):

1. Reducing overall spending PPC and keyword-auction to less than 10% of
total on-line budget: Although displayed-search and keyword-search clicks are
measurable, the “click-quality,” is questionable especially with the lack of
authentication, and the existence of nefarious boiler-room outfits like “click-farms”
or “bots” that may be “gaming” those clicks for ostensibly “performing” key-
performance indicators.
2. Re-focusing efforts and budget to curated-content-marketing (suggested
45% of total on-line budget): Quality-content is scalable whereas pay-per-clicks
are limited, or implosive, per click expensed. Quality-content, from video and
vlogs to blogs and newsletters, can be leveraged and scaled across multiple
platforms driven from social-media to the BBVA website.
3. Synergizing content-marketing with social-media for inbound-marketing
driven campaigns (45% of total marketing budget): Presumably, the BBVA
customer-journey for every user generally begins with search but they may be
“interrupted” via each social-media ( i.e. Facebook, Instagram, Twitter, LinkedIn
etc.), which is why content-marketing, especially when coupled with social-
media, is such a lucrative investment- content is leveraged via social-media and
scaled repeatedly across multiple platforms.
4. Consider re-allocating gross marketing-budget- specifically reducing
Television budget by 50%: According to Google, the average mobile-phone
user spends approximately 177 minutes on their phone per day- almost three
hours ("Realizing the Potential of Mobile Measurement."). Clearly, prospective
customers are spending less time watching television and listening to the radio, if
they’re dedicating more time on the World-Wide-Web- at the very least, consider
reducing the television budget by 50%.

Tactical Plan
Simply-stated, the BBVA online marketing model isn’t achieving a sustainable RoI in
consideration of how many new checking-accounts are approved per every 100 clicks: 3,
which amounts to $81.00 per click, which doesn’t efficiently scale when factored for total
CPA ($251.00) against benchmark ($100.00 to $150.00) (Appendix 3 | Appendix 4).
Furthermore, the aggregate marketing-budget should be adjusted to reflect the evolution
of “measured-media;” again, citing the Google study, the average mobile-phone user
spends approximately 177 minutes on their phone per day; that is 177 minutes of
attention less to divide between television and radio.

Acknowledging the evolving reality of measured media, while noting strategic-
alternatives, it may be prudent to implement an inbound-driven marketing strategy
procuring quality content for scale with targeted social-media campaigns via Facebook,
Instagram, Twitter and LinkedIn social-media networks- unless BBVA demographics
suggest otherwise. For every dollar saved from PPC, CPA and search-display
campaigns that isn’t “expensed” but instead “invested” for content, the incremental-cost
of social-media campaigns leveraging scalable-content is orders of magnitude more
profitable than pay-per-click advertising.
Works Cited
Gupta, Sunil, and Joseph Davies-Gavin. "BBVA Compass: Marketing Resource
Allocation." Harvard Business Review 096th ser. 5.511 (2012): n. pag. Web. 1 June
2017.

"Realizing the Potential of Mobile Measurement." Think with Google. N.p., n.d. Web. 01
June 2017
Appendix

1. US Marketing Spending by Major Banks

a.

2. BBVA Compass’s Advertising Budget by Media, 2010

a.

3. Online Marketing for Checking Accounts

a.
4. (0.8) * (0.67) =0.54 | 81/0.54 = $151 | $151 + $100 = $251.00 CPA