Mortgages & housing

Get more out of your advertising

November 2007

Mortgage lenders and intermediaries understand how stressful and confusing the whole process can be for borrowers. They take steps to make things easy; they train staff to be understanding and helpful.

But the Newspaper Marketing Agency has found that the industry's customer care insight and values are often not reflected in its newspaper advertising. Our research shows that advertising which understands the borrower's frame of mind can give a brand a real connection with consumers.

The NMA, an independent agency set up by the national newspaper industry, has just published findings from a major piece of research into financial services - specifically mortgages, insurance, personal loans, credit cards and retailers' financial services. The study involved more than 6,000 consumers in qualitative and quantitative research.

The results paint a depressing picture of a marketplace where consumers are feeling stressed, overloaded and bombarded with information, and where newspaper advertising, rather than helping and reassuring them, is often making their confusion worse.

The consumer view

Being in the mortgage market is not an enjoyable experience for most borrowers. There's a real thrill at the end of the road, when they pick up the keys, but getting there is a real struggle. They agree that the experience is a minefield (59 per cent), they feel stressed (57 per cent) and half think that the process is made “purposely complicated”.

It's a high-stakes race against time. Borrowers are dealing with financial terms that they may understand poorly or not at all, and several complete strangers - estate agents, lawyers, surveyors, the seller - are involved in a vital decision about their personal and family future.

Part of the stress comes from a general distrust of financial companies. People have heard about mis-selling and endowments that didn't pay off (the research was completed before the run on Northern Rock).

In addition, consumers are increasingly accustomed to being rewarded for loyalty. Even the smallest purchase in a supermarket can add points to a loyalty card. But, as they see it, they can spend large amounts of money year after year on financial products without any recognition of loyalty. Quite the reverse - they resent the fact that new customers can get a better deal than they are on.

That encourages switching - nearly two thirds of those recently in the financial services market think that they have to change provider regularly to avoid getting a poorer deal.

Making a decision

All these stresses and negative feelings feed into the process of deciding on a mortgage. There is no single route to the buying decision. What people do varies according to their personality and level of experience, how much time they have and how confident they feel.

The most confident are always keeping an eye on the market. They are monitoring the deals available and do a lot of research when it's time to buy. In quantitative research this group accounted for 17 per cent of mortgage borrowers, rising to 45 per cent for regular newspaper readers in the market.

Most people are not like that. They are prepared to do some research, but only when they have to. Some of them will do the minimum possible; others will do as much as they feel they can comfortably do. For these borrowers, mortgage brands play a role in reassuring them that it's OK to go ahead, even if they haven't done a comprehensive study of the whole market.

That's especially true of those who feel less capable. They can be daunted by the sheer volume of information that's coming their way, and are reassured by a brand they see as reputable and approachable.

Given the sums involved, it's hardly surprising that 93 per cent of regular newspaper readers in the market cite the cheapest rate/offer as an important factor. But just as many say good customer service is important and even more - 95 per cent - cite a deal with no hidden fees. Other important factors are that the lender has a good reputation (92 per cent) and is approachable/friendly (88 per cent).

The role of the newspaper

For regular newspaper readers, the paper is an important resource when they are narrowing the options - 40 per cent look for information in their newspaper. That's the same proportion as those who contact their existing provider and more than those who use comparison websites (37 per cent), go to an IFA (36 per cent) or visit a lender's branch (35 per cent).

Would-be mortgage borrowers are scouring their paper looking for information and advice on their next mortgage. But the ads are so poorly constructed that they are just a blur of numbers. People see those numbers - 20 per cent say they use newspaper ads to compare numbers/rates. But the numbers are just a commodity. Readers are not picking up the brand messages: only 9 per cent say they notice the ads.

The daily newspaper is a trusted source of information and advice, especially the money pages. They see them as trustworthy, comprehensive, up-to-date and helpful, with useful features including best-buy tables. The newspaper helps them feel informed and confident.

They value the newspaper because they can scan and digest the information at their own pace - 74 per cent agreed with this statement. The paper aids understanding and helps in the short-listing process (55 per cent).

Working with the internet

The daily newspaper appears to work in tandem with the internet in helping the reader towards a buying decision. Readers who have internet access see the net as an invaluable research tool - fast, efficient and trustworthy. They talk about the newspaper as helping them to short-list companies or establishing the criteria they need to think about.

The two media work in tandem; the newspaper tells the reader, 'this is what there is' and the reader then uses the internet to evaluate the deal in the market.

Most newspaper readers (96 per cent) who are in the market for a financial product take some form of action after noticing a newspaper ad. Most go to a website, either the brand site or a comparison site. Readers say they prefer this to phoning, which can result in a conversation with a pushy salesperson.

Newspapers are effective at driving web traffic. In an ad campaign for the Toyota Yaris last year, tracked by Sophus3 on behalf of the NMA, newspaper advertising drove a 44 per cent rise in unique visitors to the Toyota Yaris homepage. Just under half of that increase was accounted for by the increasingly important online editions of newspapers.

Mortgage advertising is failing to connect

Clearly there is an opportunity for mortgage lenders to use newspapers to build their brands in the minds of borrowers. But that opportunity is being missed. Borrowers have a poor opinion of mortgage advertising in newspapers, as the chart shows (see diagram 2).

The fundamental problem is that the price-focused ads for mortgages are not connecting with what's in the mind of the borrower. The ads are dry, factual and full of percentages, small print and warnings. The borrower's mind is on their home, security, lifestyle and plans for the future.

As one mortgage borrower said in our qualitative research: “It's supposed to be about money but it's not. It's feelings. It's your lifestyle, your expectations.”

People don't like the small print, they don't find the information helpful and the cold, technical tone of the ads jars with the emotionally rich tone of the paper. Perhaps most surprising is that the mortgage brand is not always prominent enough to be instantly recognised.

Getting newspaper advertising right

The way that mortgage brands are advertised may reflect an old myth in the advertising industry that newspapers are all about buy-now, get-a-bargain advertising, and don't work so well for building brands.

That myth has been well and truly disposed of in recent years, as NMA research has demonstrated how newspaper advertising works to build brands.

Newspapers are a truly emotional medium. Readers are involved in what they are reading, and the paper can trigger a whole range of emotions as they go through the paper. Advertising works best by engaging with readers, not by packing lots of facts and figures into a small space and expecting them to sort it out.

In 2005, the NMA teamed up with advertisers and agencies to construct multi-media ad campaigns that included brand advertising in newspapers. All were successful in building emotional identification or brand involvement. The process was refined for six campaigns, tested on 6,000 consumers in 2006, which can be described as best practice for using newspaper advertising.

Comparing the results of these campaigns with 21 current mortgage ads shows how far current mortgage advertising is trailing behind the field (see diagram 3).

Rather than the price-focused ads that dominate mortgage advertising, the NMA research gives a number of pointers on how mortgage lenders can get better value for money out of newspaper advertising while still communicating the information.

Creat

• e visual impact: Newspaper readers scan through the pages, sifting the editorial and the ads for the things that interest them. An ad that stands out can grab their attention. Colour helps standout, as does a strong, confident use of space.
• Keep it simple: Mortgage seekers, beset by confusion and uncertainty, welcome ads that are clear and simple, focusing on the end benefit of the product rather than the nuts and bolts.
• Avoid overload: Advertisers shouldn't try to pack all the brand messages into one ad. That just creates confusion. A series of ads, delivering messages one at a time, can be created cost-effectively in newspapers.
• Link clearly to TV: A key finding from all the research done by the NMA is that the most effective ad campaigns are those where the newspaper ads are linked to the TV advertising.

The link to a TV campaign is especially valuable for any brand. One reason is that newspapers complement TV. People process the ads in a different way, and there is heavy newspaper reading during TV viewing. In addition, national newspaper readership is more southern and metropolitan and more upmarket than commercial TV.

However, advertisers have to ensure that the link to the TV campaign is made clear. In our research, we found that advertisers' newspaper ads were not always using images that readers connected with the TV in a way that consumers recognised immediately.

ING shows the way

One campaign that performed well in the tests of mortgage ads was the series from ING. The ads shown occupied four of the five top places in the rankings. The chart shows that the top performer, the “headache tablet” is competing with the average of the effectiveness tests, the “best practice” ads and is well ahead of the mortgages norm. Ratings for the other three ads are similar (see diagram 4).

The ING series of ads focuses on the key benefits that the brand is offering, putting them one by one in front of the consumer. The most important figure, the rate, is incorporated in the designs. The “headache tablet” engages with the way the consumer feels, and the use of colour ensures that the brand is immediately identifiable.

In general, the most successful ads are large, colourful ads with a clear link to the TV campaign. Eight of the top 10 were colour ads.

Connect and engage

National newspaper ads can inform and connect with consumers, and motivate them to take action. But they cannot do their job unless advertisers acknowledge what everyone in the branch and the call centre already knows - that many consumers are sceptical, confused and/or stressed.

To confront those customers with advertising that seems cold and unfriendly and fails to connect with them is suggesting that that's how the company will behave towards them.

Advertising that engages with borrowers can build trust and reassurance. It can deliver the key facts simply and clearly, and encourage contact via phone or internet. It can be a really effective investment for a mortgage brand.

Maureen Duffy is CEO at the Newspaper Marketing Agency