Banks I Last year, financial institutions spent a whopping 34 percent more on mortgage advertising than in 2003. Creativity and GRPs are following the positive market trend. As much as the US key interest rate is only moving in one direction, namely upwards, mortgage interest rates in Switzerland remain at historic record lows. Buying an apartment or a home has never been so accessible to such a broad section of the population. The market potential in Switzerland is still very high. In a European comparison by the FSO, Switzerland has by far the lowest proportion of homeowners (2000: 35%). Statistically, a good 65 percent of the population dream of owning real estate.
Their dream was financed by rents, which have risen by over a third in ten years. On the other hand, mortgage interest rates, which have fallen significantly in the same period, and the tax package that was rejected a year ago, which would have abolished the deductibility of debt interest.
Last but not least, the discussion fueled by the pension funds about safeguarding retirement provisions played its part. In the years following the stock market crash, fewer and fewer bank customers pulled out their calculators to calculate profit-taking. On the other hand, the number of people who compared their rental costs with hypothetical mortgage interest rates increased.
The consequences can be seen in the construction industry statistics: With the exception of the construction crisis around 1993, between 11,000 and 14,000 new detached houses have been built every year since 1983. The type of property purchased is also revealing. In 2003, three out of four new residential buildings were detached houses.
Advertise while the boom lastsThe positive trend in the mortgage lending business is therefore not surprising. According to the credit statistics of the Swiss National Bank, the volume of mortgages used by Swiss private households amounted to CHF 384 billion at the end of 2004 - around seven percent more than a year earlier. This figure does not include mortgages granted by insurance companies, pension funds and the federal government.
In contrast to other loans, which continued to stagnate, mortgage products have not been running so smoothly for a long time. According to the Monthly Bulletin of Banking Statistics for April, the volume of mortgages continued to rise in the first two months of the current year.
With the active support of the banks, which operate a core business with low risks and stable returns in the lucrative mortgage business. The discontent that has affected many small savers and driven them away from the stock markets and financial investments has attracted many to the safer investment form of owner-occupied property. As they shifted their asset portfolios, the banks also adapted their advertising budgets to the new potential customer needs: Over the last four years, advertising expenditure for the "mortgages" product group has developed more rapidly than the mortgage volume itself. According to Media Focus, financial institutions spent over CHF 18 million - around ten percent of their advertising budgets - on this product group in 2004. Compared to the previous year, this represents an increase of over 34 percent. Since 2000, this item has even more than doubled (+ 229%).
This trend in bank advertising was influenced most strongly by the regional and cantonal banks and least by the big banks. While UBS and CS were responsible for 80 percent of spending on mortgage products in 2000, their expenditure accounted for around 41 percent in 2004. However, they have not lost their share of the mortgage market as a result. How can this be interpreted? Does advertising have any influence at all on the choice of lender?
The rising advertising expenditure alone is the best proof of this. But who are the campaigns aimed at? According to a recently published study by the comparison service Comparis.ch and the GfS market and social research institute, the answer is clear: the largest target group is still younger first-time buyers, as they are the most likely to switch to a new bank when taking out a mortgage - 35%. After that, the likelihood of switching decreases because customer loyalty and the effort involved have often increased significantly by the time of renewal. The influence
The potential of the big banks' mortgage advertising is therefore probably already so well exhausted that it can only be increased by disproportionately high advertising expenditure.
As practically every bank sells mortgages and the transparency of the market is high, the campaigns usually focus on the bank's top-of-mind position. In the Markom implementations, factors such as proximity and trust are implied, the benchmark rate or the image - important USPs or UAPs - are visualized or then the appearance of the homeowner is idealized.
The Association of Raiffeisen Banks in Switzerland was able to take an even bigger slice of the growing mortgage cake in 2004. With an increase in mortgage loans of over eight percent, it succeeded in "snatching customers away from the big banks and, in some cases, the cantonal banks", according to CEO Pierin Vincenz. The Group now has a market share of 13 percent "and sees further opportunities for growth". Franz Würth, Head of Public Relations at the Raiffeisen Group: "Trust in the Raiffeisen brand remains high." The high recommendation rate and the unpretentious advertising presence brought the Group an increase in membership of 44 percent between 1998 and 2002. The brand is therefore skillfully positioned with
The company is now even more clearly recognized as a reliable partner and a likeable alternative to the big banks.
They are also feeling the effects of the tougher competition, but so far they have hardly suffered as a result. The increasingly fierce competition is particularly worrying for local banks, which still benefit from the competitive advantages of local proximity and close customer contact. The Swiss would buy mortgages like they did toothpaste in the village store 50 years ago: One had it in the range, it was bought at the asking price. This is how Martin Scherrer, CFO and Head of Finance and Controlling at the comparison service provider Comparis.ch, illustrates the results of the study on mortgage purchases in Switzerland. But the criteria for deciding on a particular provider - price before personal contact and good advice - are changing more and more in urban areas as well as in the agglomeration. Many banks complain that some lenders have responded with sell-out concepts in their advertising strategies.
Roger Wiesendanger, Head of Product Management Mortgages at ZKB, told the business newspaper Cash that he was concerned about the ruinous competition, which "has now taken on dimensions reminiscent of discount strategies from the retail sector".
PostFinance annoys competitorsIt's not just the big banks that are being particularly aggressive with surprising offers and conditions. Many banks have been annoyed by the promotion of the market newcomer PostFinance. In order to quickly gain recognition, PostFinance's advertising for its "yellow mortgage" uses the familiar yellow zebra stripes on a neat detached house. So far, so good. But the real bang for the buck is in the headline, which promises new customers half a year's free living. Hardly any other institution seems to be adopting this tactic with similar offers, even though many have greatly reduced their margins and could stand up to them. This is probably because they fear that similar campaign concepts could tarnish the bank's reputable image.
What may appear at first glance to be a noble restraint, however, contradicts itself on another level: the advertising campaigns of all banks exclude the solvency of the borrower. Low target interest rates, better conditions, high advisory competence or the good feeling of home ownership are dramatized. In the advertising world, mortgages are affordable for everyone.
Thanks to the low interest rates, the current Credit Suisse mortgage campaign suggests that even the boldest architectural dreams can be fulfilled. The major bank is also promoting its mortgage products with a competition in conjunction with partners such as furniture store Interio and coffee roaster Nespresso. The lucky winner can win a dream home worth half a million francs. A further 500,000 francs can be used to purchase the property and cover other costs. The competition with the attention-grabbing prize money serves as a popular framework for the detailed presentation of CS offers and, not least, to deliberately correct the impression that CS prefers wealthy customers to normal earners when granting mortgages.
Its biggest competitor, market leader UBS (26% share of private mortgages), had its in-house agency Advico Young & Rubicam design a more emotional campaign and abandoned the house number concept with the low benchmark interest rates. Although this bold campaign was very successful, most potential customers were unable to judge whether the offer presented was actually the cheapest or not. The advertising motifs now show hands and fingers forming a house and protecting the future homeowners inside. "The subjects of the campaign appeal to a broad spectrum of potential customers: From first-time buyers and builders to so-called 'redemptioners' and existing customers. In line with the UBS advisory approach, advertising is primarily based on the advisory service. However, striking images and catchy slogans ensure that the campaign supports client advisors in achieving their goals. Internal studies show that the current campaign has achieved a very high level of relevance for the target segment," says Marc Tutzauer, Head of Mortgage Marketing at UBS Marketing & Sales Development.
The focus of UBS's advisory offering is not on the content - the "what" - but on "consistent quality of advice" - the "how". "UBS advice should become a trademark that is perceived as a benchmark by clients and competitors," says Tutzauer about the ambitions that flow into the large mix of measures at a tactical level. Ultimately, however, customer care and advice are decisive for business success. Despite the new, emotional implementation, UBS also relies on tactical notices and advertisements by Bürgi & Partner at local level, as in the canton of Aargau, which boldly advertise the attractive reference rate in the UBS corporate colors.
As client advisors have the greatest influence on the conclusion of a mortgage, they are often at the center of advertising campaigns. In order to win over potential borrowers for a consultation, mortgage market leader UBS is currently taking a new, indirect approach. With one of its popular drawing competitions, the big bank is playfully targeting children between the ages of four and six who already have a UBS account. "Build your dream house with Topsy (the friendly looking UBS fox)", the mailing invites the youngest internal influencers to take part. The coloring sheet, which is probably brought to the UBS branch by a parent, also contains an advertisement for the special Family Plus offer and a reply coupon - "From dream home to dream house. With a mortgage from UBS". The potential consultation should therefore be based on a solid foundation with a sympathy bonus.
Home advantage is played outA certain relationship to the house number platform can currently be seen in the new mortgage campaign of Zuger Kantonalbank. Its agency, Metz oder Vieli, has launched a "housing offensive" with the aim of consolidating and expanding ZGKB's position as market leader - as a "house bank" - in the mortgage sector. To this end, it wants to play to its own strengths and home advantage: The Zurich agency is using the Zuger subjects and the staged street signs to profile the bank's regional ties and avoid common real estate clichés such as happy people in their new homes. Signs such as "Gärtliweg" - for the lower middle class - or "Parkstrasse" - for the well-heeled - allude to the different aspects and preferences.
The cantonal banks that are also using new campaigns to promote their mortgages include Graubündner and Basellandschaftliche. Although their starting points are similar, the creative concepts of the agencies Clus in Chur and Schneider Berthoud in Basel are very different. While the former has the widespread multiple-choice approach of the Dove or Schweizer Illustrierte campaigns, thus suggesting a partnership with the "Bündner Haus-Bank" to the viewer, the Basel creatives have elevated the familiar, colorful building blocks to the eye-catching and uniform leitmotif of BLKB's new image.
Their creative concepts are similar in one crucial respect: both, like other regional banks and savings banks, avoid cliché images. The big banks, on the other hand, have far fewer scruples and reservations in this regard when it comes to using relevant mortgage world motifs with magnificent houses and happy homeowners.
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