Banking heavyweight Chase has been blanketing the airwaves with a commercial that must be effective for them, because it’s something they’ve used over and over for months. A shopper uses his phone right there in the store to get his credit balance, so he can decide how much to spend for a new TV. My question is whether this kind of advertising is a winning strategy over the long haul, or whether it is a campaign designed for short-term benefits with dire long-term consequences.
The commercial begins with a woman telling her husband, “You’re right, we need a new TV” as the man goes slack-jawed in amazement. Cue the Queen background for “I want it all and I want it now” as the man looks over dozens of televisions. Here, watch it for yourself—it’s very effective.
I noticed that the voiceover is very careful to say “Text Chase for your credit balance and decide what to spend in seconds.” It doesn’t say to “credit limit,” and I don’t know whether their service provides the credit limit. But I think this commercial is clearly trying to turn big purchases into impulse items. If we can just shoehorn it into our credit card balance, then we can buy it.
I clearly understand why this text messaging service is so effective a come-on. It’s a little embarrassing to have to call someone to ask your credit balance—you’re kind of admitting you have no idea what you can spend in front of another human being. In fact, I suspect that most people avoid the phone call and just take a shot at the register and hope the card clears, which has to be stressful.
This way, you can text your balance with your phone, taking the human being out of the equation. You can really let your hair down and be that wild spender you want to be. No one needs to know.
Given the credit-crazed society that America has become, where our collective net savings rate is zero, I can see how this commercial can be an effective way for Chase to market its credit card. I am sure that there’s a segment of the population that wants the Chase credit card for this feature, which allows them to indulge their impulses a bit more easily. And my suspicion is that this segment is insanely profitable for banks.
While you might think that targeting a segment of people that are spending impulsively on credit cards might result in the banks losing their shirts on unpaid loans, I can’t believe they are irrational. Banks have consistently targeted these borrowers over a very long period of time, probably because the interest and late fees paid by most more than make up for the defaults of a few. So, I could see how the impulsive spender could be highly profitable.
I just wonder whether being this wanton about courting this segment is a good idea for the Chase brand image.
This commercial, to me, shows a major bank walking right up to the line of public acceptability. What line? The one where a huge institution is persuading people to borrow money that they really can’t afford to repay. They don’t quite tell people to spend right up to their credit limit, but they come oh-so-close.
My question is, “Doesn’t this at some point affect their brand image?”
While everyone accepts that tobacco companies are trying to get you to smoke their cigarettes, those companies deny to the death that any of their marketing is designed to get more people to smoke, or get teenagers to start smoking, or get people to smoke more. Now, it’s kind of hard to think about how you can design your advertising so that it attracts smokers of other brands but doesn’t entice nonsmokers, but that is their story and they are sticking with it. They cling to this story because they can’t be seen promoting something that is bad for society, even if it is antithetical to their profit motive.
Alcoholic beverage companies face the same fine line to walk. They can’t be seen as promoting more drinking, although it is acceptable for them to promote drinking their brand as opposed to their competitors’.
Now, obviously, banks can’t be directly compared to tobacco and alcoholic beverage companies—their offerings are not bad for your health. But credit cards, when used to excess, can be just as damaging to a bank’s customers as alcohol or tobacco. Stress, divorce, and bankruptcy—make your own list—can all be laid at the feet of credit card borrowing for some “at-risk” customers.
And, one would imagine, that banks would prefer to be held in higher public esteem than tobacco companies and alcoholic beverage companies, which are often lumped into the “sin” industry (along with some other businesses that bankers might not want to be associated with). But I think that credit card marketing is endangering financial services companies in the court of public opinion.
At a certain point, the media starts the drumbeat of a story. You know the one I mean. They like to talk about “predatory lending” and “exorbitant fees.” Then you get the slew of people helping you get control of your finances, not unlike the folks who might help with another kind of addiction. And we start treating credit as something you can be addicted to, something that could be bad for you, something that might need to be regulated more closely.
You can already rent documentaries that talk about how awful the credit industry is, with names like “Maxed Out” and “In Debt We Trust.” At what point do the banks start coming under fire for high fees and for inducing customers to harm themselves? And can a big bank like Chase afford to make itself such a big target with this kind of ad? Wouldn’t they be better off showing an ad where someone uses the same service to decide not to buy the TV? It might get just as many people to switch to their card, because these folks are scared to death about the debt load they are carrying.
If excessive use of your product is bad for your customers, I think you need to at least appear as though you care. Otherwise you end up even more heavily regulated and your brand becomes mistrusted, which doesn’t help you sell life insurance or business checking accounts or any of the other products that you need to maintain your profitability. You become just another huckster.
Banks have a chance to really help their customers get out from under the debt load and become investors and savers. It would be a real differentiator for some smart bank to try to truly help their customers. For the others, I wonder whether their day of public reckoning is coming.
