When Keller Fay Group conducted research on consumer sentiment toward the financial sector back in the fall and winter of 2008, the data surprised no one. In September, just before the brunt of the economic crisis, positive word of mouth for the category outweighed negative buzz by a ratio of more than 3-to-1. By year's end, the positive buzz had plummeted by about 60 percent and negative or mixed feelings dominated more than half of all conversations.
The latest data from the market research firm, however, compiled last month, is far more unexpected: It suggests that financial companies likely contributed to the downward slide in favorable consumer sentiment by sharply reducing their ad spending during the crisis.
"We think the clear message ... is that silence isn't always golden, especially in times of turmoil," said Ed Keller, CEO of the Keller Fay Group.
Keller contends that if marketers in the sector "had kept up their spending levels it would have helped neutralize or offset the negative word of mouth and they would not have as deep a hole to climb back from."
As big players in the sector such as Bank of America and Fidelity have begun spending more aggressively on new campaigns, Keller added, there are signs that positive buzz for the industry is rebounding. "It's not back to where it was, but it should get there if we don't see a major new round of crisis,"
A Bank of America rep confirmed the company is spending more now than it had been in recent quarters, when most of the industry had cut back. But, he added, BofA has advertised throughout the crisis, starting with messages about how the company was lending to customers and helping to stabilize the economy.
"More recently, we've engaged consumers with demonstrations of products and solutions to help move them forward, and the sum of all that is we're beginning to see a turnaround in positive word of mouth," said the rep.
Keller Fay also tracked the auto sector through the subsequent bankruptcies and bailouts of General Motors and Chrysler, which occurred as the industry lopped more than $1.6 billion off its ad spending total during the first six months of this year, according to Nielsen.
During the second quarter, when the auto crisis was peaking, Chrysler's positive word of mouth slipped to 46 percent of all conversations from 53 percent in the first quarter, while GM slipped to 51 percent from 53 percent. Ford, on the other hand, which had not cut back as much on ad spending as its two big domestic rivals and which avoided a lot of negative press by not taking bailout money, saw a 5 percentage point surge in positive buzz to 60 percent.
As Keller notes, Chrysler and GM had little choice but to "go quiet with their advertising under unique conditions this year" (read: their Chapter 11 filings). Still, says Keller, "silence equals disarmament," especially given the fact that advertising-influenced word of mouth is 20 percent more likely to result in a strong recommendation to try or buy a product.
Neither GM nor Chrysler commented on Keller Fay's research. But a source at one of the companies offered that "we wouldn't have cut back nearly as much as we did if the decision had been ours to make. But our hands were kind of tied."
— Nielsen Business Media