The findings: In 2023, the financial institutions (FIs) that increased their marketing budgets the most saw the most growth, per a study conducted by The Financial Brand and management consulting firm Capital Performance Group. 

• Banks that reported marketing expenses in their call reports largely had better loan-to-deposit ratios.
• The largest and smallest banks increased their marketing spend proportionally more than regional banks. And the largest and smallest banks achieved more loan growth than regional banks over this period.
• Fintechs, which dedicated the largest proportion of their budget to marketing, saw the most loan growth of all.

How we got here: Marketing spend doesn’t go as far as it used to, because marketing costs keep increasing. And marketing budgets have trended downward since the beginning of the pandemic.

• That’s largely because higher interest rates have reduced consumer demand while driving up defaults, with effects rippling back into budgetary decisions.
• And a CMO’s value isn’t quite as easily measured as, say, a Chief Revenue Officer’s—so when it comes time to make cuts, marketing is often the first to go.

How marketers' spend has also changed: Due to budgetary constraints, some FIs reallocated their marketing budgets, even as others have invested more in marketing. Digital marketing spend continues to dominate FIs’ outreach strategies, but their digital tactics have shifted over the last two years.

• In 2022, email marketing was what FIs spent the most digital marketing money on, at 10.9% of their budgets, per The Financial Brand. 
• Since then, it’s dropped to 6.1%, with social media taking the lead at 13.4%.

Social media marketing lets FIs reach a high number of people for a fraction of the cost of traditional marketing channels, which is likely the reason behind the shift.

Key takeaways: While it’s difficult to tie growth specifically to marketing spend due to the many factors affecting a bank’s earnings, this study shows investing in reaching more potential customers works. As FIs shift their budget allocations, they’ve been able to show that they’re making more impactful choices.

This kind of data can help marketing teams justify holding their budgets steady, at minimum, and demonstrate the impact of their work.