Week 10 (Mar 25) - BBVA Compass

Case: BBVA Compass: Marketing Resource Allocation

Preparation Questions:
1. What is the role of online and offline advertising in acquiring checking account
customers for the Bank? The cost per application (CPA) for the online channel ($20) is
almost one-fourth of the CPA of the online channel, and offline customers have a higher
retention rate. Does it make sense to spend so much money on online?

- When BBVA changed their trade name to BBVA Compass in 2009, their brand
awareness took a toll. Both online and offline advertising was used in hopes to
retain that awareness. The role of online advertising was to acquire new customers
(almost half of the budget) and build an overall online brand. BBVA used search &
display advertising, and promotional offers (iPods, $100 for new online customer
etc.). The role of offline advertising is also to improve brand awareness, but also it
was to build trust among potential customers.
- Even though the CPA are higher, and the retention rate is lower for online venture,
it still proves to be beneficial because it can be concluded that the net income for
online customers is slightly higher than offline customers. This means the growth
opportunity of the online channel is to be noted. Online channels will also reach a
wider audience that BBVA will be able to measure and track the effectiveness of.

2. BBVA Group in Spain signed multiyear sponsorship deals with the NBA and ESPN.
Although the case does not specify the exact amount spent on these deals, sponsorship
can be very expensive. Does it make sense for BBVA to spend so much money on
sponsorships? Give pros and cons.
- It does make sense for BBVA to spend so much money on sponsorships because it
name change that the bank undertook greatly affected their brand awareness. With
these sponsorship deals coming into play, the bank will be able to advertise to a
wide audience during prime slots, which will increase their brand awareness. The
con of this not knowing how many people are actually paying attention to the
advertisements while they are on, which means there is not a real way to from a
metric on just how effective they will be. Although taking into consideration the
high audience count that tunes in to NBA and ESPN, the investment will ensure that
BBVA Compass reach an audience that it was not reaching previously.