SCI 101 Kennedy King College Sedimentary Rocks Essay This assignment requires you to get outdoors and explore your world! How much time have you taken to e

SCI 101 Kennedy King College Sedimentary Rocks Essay This assignment requires you to get outdoors and explore your world! How much time have you taken to examine the rocks and minerals near your dorm, apartment, or house? For this exercise, I want you to do just that – go outside and spend 30 minutes to an hour looking for rocks. Pick the rocks up and examine them. What minerals to you see? What rocks can be found within a few hundred feet of where you live – in your driveway, in your yard, along the road? After completing this exercise and making your identifications, write and submit a short essay (2 to 3 full paragraphs consisting of 4 to 5 sentences each) describing the most common types of rocks (sedimentary, metamorphic, or igneous) found near where you live. Do a little internet research to learn something about the local geology and geologic history of your area. Why is it that this type of rock is the most common in your area? At the end of your essay, include a list of all the rocks and minerals you identified while you were outside.If you live in Indiana, the following two links will help you answer the geologic history question:Bedrock Geology of IndianaSurficial Geology of IndianaIf you do not live in Indiana, you should be able to find comparable data in an online search. Government agencies in most states and countries publish similar geologic data online. SUNIL GUPTA
JOSEPH DAVIES-GAVIN
BBVA Compass: Marketing Resource Allocation
In December 2010, Frank Sottosanti, chief marketing officer of BBVA Compass, was discussing the
allocation of the bank’s marketing budget with Sheiludis Moyett, director of brand and corporate
advertising, and Chris Armstrong, advertising manager, along with Sharon Bernstein, director of
insights, and Robert Galietti, group account director, both from the bank’s media agency Media
Contacts, the interactive arm of Havas, a global advertising and communications services group.
BBVA Compass was the fifteenth-largest bank in the U.S., with a predominant presence in the
Sunbelt region stretching from California to Florida. It was part of the BBVA Group from Spain, a
financial service provider with $755 billion in assets and operations in more than 30 countries. “The
current economy and the recent financial crisis have put a lot of stress on every bank,” said
Sottosanti, after welcoming everyone. “We are fortunate to have BBVA as a profitable and stable
parent company. However, in each of our markets, we compete with large U.S. banks such as Bank of
America (BoA) and JPMorgan Chase, so we need to ensure that our marketing dollars are being used
effectively. The goal of this meeting is to review our current performance and allocate our next year’s
marketing budget across various offline and online channels.”
U.S. Banking Industry1
In 2010, the U.S. banking market remained fragmented, with more than 15,000 banks and credit
unions vying for $10 trillion in deposits. The financial crisis had fueled growth in consumer savings
rates as consumers reined in spending and banks fought fiercely for deposits to meet funding needs
and increase wallet share. In 2009, the 10 largest banks accounted for 46.4% of total deposits, with the
largest bank being BoA, followed by JPMorgan Chase, Citigroup, and Wells Fargo.
Revenues in retail banking were expected to remain weak due to limited growth in loans.
Regulatory changes put a further strain on margins by restricting overdraft fees and debit card
charges. The overdraft regulation alone was estimated to reduce fee revenues in the banking industry
by $6 billion to $15 billion.
________________________________________________________________________________________________________________
Professor Sunil Gupta and doctoral student Joseph Davies-Gavin prepared this case. Data in the case have been disguised to protect the
confidentiality of the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements,
sources of primary data, or illustrations of effective or ineffective management.
Copyright © 2011, 2012 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be
digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.
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511-096
BBVA Compass: Marketing Resource Allocation
Company Background
In 2010, Banco Bilbao Vizcaya Argentaria, S.A. (BBVA), was the second-largest bank in Spain, with
48 million customers and 104,000 employees in over 30 countries.2 It had a large international
presence and generated 49% of its income in the Americas, split across Central America, South
America, and the U.S. It operated the fifth-largest financial services company in Puerto Rico, the
largest bank in Mexico, and handled over 45% of money transfers between the U.S. and Mexico. 3
BBVA had entered the U.S. market in 2004 through the acquisition of Valley Bank, with banking
services targeted at Mexican immigrants. Through a series of acquisitions, including Compass Bank
in 2007 and the FDIC-assisted acquisition of Guaranty Bank in 2009, BBVA’s U.S. operation under the
trade name of BBVA Compass established itself as the fifteenth-largest commercial U.S. bank by
deposit market share and a significant regional player in the Sunbelt region of the U.S. (see Exhibit 1
for branches and deposits).4 With over 700 branches and $49 billion in deposits across seven states,
BBVA Compass was small compared to BoA, which had over 5,900 branches and $916 billion in
assets.5
Sottosanti explained the bank’s goal and its position in the banking market:
Our goal is to become one of the top-10 banks in the U.S. We plan to stay within our current
geographical footprint in the Sunbelt area where we see significant population growth. We are
positioned as a regional bank between large banks like BoA and Wells Fargo, and local credit
unions. We can offer personal banking like a credit union while maintaining economies of
scale. In essence, we are small enough to offer customized solutions while big enough to offer
breakthrough innovations.
BBVA Compass had three primary lines of business units: retail banking for individual consumers
and small to medium-sized businesses with less than $5 million in revenue; corporate and
commercial banking for businesses with more than $5 million in revenue; and wealth management
for individuals with more than $1 million in investable assets. For retail consumers, the bank offered
deposit (e.g., checking and savings), lending (e.g., loans, mortgages, credit cards), and third-party
insurance products.
BBVA Compass Customers
Target
In its early days, the bank had focused on Mexican immigrants, but the target demographics
became more mainstream with the acquisitions of Compass Bank and Guaranty Bank. Armstrong
described the customer target:
We aim for consumers identified as “strivers” who are both aggressive and anxious when it
comes to their money. These consumers want a partner who thinks about them and their needs
as individuals. While checking accounts are a mass-market product, our ideal targets are
consumers 25 to 54 years old, with annual household income of more than $75,000, and
financial needs that extend to other products like loans and investments.
2
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BBVA Compass: Marketing Resource Allocation
511-096
Customer Acquisition
According to a study conducted in September 2010, the top-three criteria U.S. consumers used to
choose their bank were free checking services, convenient branch locations, and easy online banking
services (see Exhibit 2).6
BBVA Compass acquired customers through its branches, website, telephone, and direct mail.
“About 5% of our new checking accounts come from the online channel, 80% through our branches,
and the remaining through telephone and direct mail,” said Sottosanti. “In the banking industry, the
lifetime value of a new checking account over its five-year expected life is about $800. We aim to keep
our customer acquisition cost below $200 per new account. An acquisition cost between $100 and
$150 is good, and below $100 is great.”
To understand its customer acquisition efforts and the types of customers acquired through bank
branches versus those acquired online, the bank tracked new accounts opened from July 2007 to
September 2010. Armstrong highlighted the key results from this study:
There are significant differences in customers who open new accounts in our branches
compared to those who apply online. The average annual retention rate of our customers
acquired online is about 55% compared to a 65% retention rate for those acquired through
branches. Online customers have lower balances and end up paying higher fees. The net
annual income from online customers is therefore slightly higher than that from branch
customers. However, new regulations imposed by the government after the recent financial
crisis may change our fee income significantly.
Marketing Resource Allocation
Goals
Sottosanti explained how marketing had to achieve multiple objectives:
We have multiple goals, and our biggest challenge is to allocate our limited resources in
such a way that we can balance these different objectives. First and foremost, we need to build
awareness and trust in our brand. This is especially important in the current economic
environment when consumers have lost faith in the financial system. At the same time, we
need to support various lines of business such as checking, savings, mortgage, commercial
banking, etc. Marketing is also responsible for bringing in new customers and increasing the
total number of accounts at the bank. Finally, we want to improve satisfaction and retention of
our current customers and cross-sell to them.
The bank’s strategy of growing by acquiring other banks made the marketing task even more
challenging, since it required merging different cultures and practices, aligning various customer
databases, and supporting new geographical regions covered by acquired banks.
Budget Allocation Process
“Budget allocation is a combination of art and science,” noted Sottosanti. “We look at our overall
sales goals and corporate objectives, assess the growth potential of various channels and markets, and
review our past performance. For example, only 5% of our overall sales come from the Internet, but
we allocate more than 5% of our budget to this channel since we view it as a growth opportunity.”
3
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511-096
BBVA Compass: Marketing Resource Allocation
Moyett elaborated, “Our allocation also varies by market. We spend more resources in our biggest
and most important markets where we have a significant number of bank branches. Birmingham,
Dallas, and Houston continue to be our most important markets.”
Armstrong highlighted the trade-off between online and offline advertising: “We can accurately
track online activity and, therefore, have a good sense of return on investment (ROI) on our online
advertising. In contrast, it is difficult to measure the effectiveness of offline advertising. As a result,
offline channels can lose budget even though they are critical to our overall success.”
Marketing Budget
BBVA Compass’s marketing budget was significantly smaller than the budget of large national
banks such as BoA and JPMorgan Chase (see Table A). Banks typically spent about 25% to 30% of
their budget on measured media (i.e., media spending tracked by third parties) such as television,
print, and Internet ads, and the remaining budget on unmeasured media that included direct
marketing and promotions.
Table A
U.S. Marketing Spending by Major Banks ($ millions)
Year
BoA
Chase
Wells Fargo
Citi
2008
2009
2,111
1,588
1,852
1,341
525
572
971
560
BBVA
Compass
56
50
Industry
6,930
8,067
Source: Adapted from Advertising Age data center and company documents.
Note:
Industry includes banks and credit cards.
“Our marketing budget has decreased over the years,” said Moyett. “Our total budget in 2009 was
about $50 million, and in 2010 it is significantly lower. So we have to do more with less.” Armstrong
elaborated: “[The] major part of our budget goes for supporting branches, direct mail, and other
promotional activities. Our discretionary budget for advertising and creative development is a
relatively small part of our total budget.” Table B shows the 2010 advertising budget allocation by
media. About 50% of the offline advertising budget was spent on brand building, and the remaining
was used for various product lines (e.g., savings and mortgage) and for regional initiatives.
Table B
BBVA Compass’s Advertising Budget by Media, 2010
Newspaper
Budget (%)
4%
Magazine
1%
Outdoor
7%
Online
21%
TV
53%
Radio
Total
14%
100%
Source: Company documents.
Offline Marketing
Brand Building
The major goal of offline advertising was to build brand awareness and improve consideration
among potential bank customers (see Exhibits 3a and 3b). Moyett explained: “In 2007 and 2008, aided
awareness for the Compass Bank brand was over 80%. In 2009, to maximize the global awareness of
4
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BBVA Compass: Marketing Resource Allocation
511-096
the BBVA brand, we adopted the trade name BBVA Compass. Awareness for this new name dropped
to 48% in 2009. Our goal in 2010 is to raise our brand awareness to 53%, and we are very close to
achieving this goal.”
The marketing group used brand-tracking studies to monitor brand health metrics, including
awareness, consideration, and brand positioning.
Sponsorships
In September 2010, BBVA Group signed a multiyear sponsorship deal with the National
Basketball Association (NBA) that would make it the official bank for the NBA, WNBA, and the NBA
Development League in the U.S., Spain, and Puerto Rico. 7 In a press release, it stated, “This
partnership enhances BBVA’s overall commitment to sports—which includes its existing title
sponsorship of La Liga BBVA, Spain’s top professional soccer league—and fully identifies the bank
with the values of passion, teamwork, and fair play inherent in both sports.”8
In November 2010, BBVA Compass and ESPN Regional Television, Inc. (ERT), a subsidiary of
ESPN, announced a multiyear marketing agreement to become the title sponsor of the former
PapaJohns.com Bowl, a major college football event. The 2010 BBVA Compass Bowl, scheduled to
take place in historic Legion Field in Birmingham, Alabama, on January 8, 2011, would feature bowleligible teams from the Southeastern Conference (SEC) and the Big East Conference. The agreement
with ESPN also included associate sponsorship of the Texas Bowl in Houston, the Bell Helicopter
Armed Forces Bowl in Fort Worth, and the New Mexico Bowl in Albuquerque.
“The agreement with ESPN will allow us a channel where we can connect with our customers’
passion,” said Manolo Sanchez, president and CEO of BBVA Compass.9 Sottosanti added, “These
bowl games help supplement the NBA sponsorship, particularly in markets that do not have NBA
team affiliations.”
Online Marketing
The goals of online marketing were to build online brand awareness and acquire new customers
for various lines of the business (see Exhibit 4a for online brand campaigns). In 2010, almost half of
the online budget was allocated for acquiring new checking account customers.
BBVA Compass used both search and display advertising, generally accompanied by a
promotional offer to encourage customers to open a new checking account. Offers included an iPod
Nano or iPod Touch, 5% cash back, or $100 or $150 in cash (see Exhibit 4b for examples). “We put
certain conditions on the promotional offers, such as online bill payment or direct deposit,” explained
Armstrong. “Due to these conditions, not all newly acquired customers qualify. On average, the
effective cost of these promotions is about $100 for each new online checking customer.”
When consumers searched for a checking account on Google or encountered a display ad on AOL,
they could click on the ad, which took them to the bank’s landing page where they could complete an
application for a new checking account. Sottosanti explained the typical process for how the bank
acquired a new customer for an online checking account:
About 10% of online visitors who click on our paid search or display ads start an
application; the others are probably curious about our offers but may find our branch locations
inconvenient for them. Less than 50% of the people who start an application actually complete
it. Those who abandon the application may simply be browsing to see what is required to open
5
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511-096
BBVA Compass: Marketing Resource Allocation
an account, or they may be unwilling to provide the necessary information. Once a consumer
completes an application, it has to be approved by the bank to ensure that he or she meets a
minimum credit score and therefore is able to pay any potential overdrafts and account service
charges. About 80% of online applications are approved, compared to a 95% to 100% approval
rate for applications that come from our branches. Once the bank approves an account, the
consumer needs to fund this account by depositing money within a certain time period to
avoid it being cancelled. Only about two-thirds of the online accounts approved actually fund
[the account] within the required time frame.
BBVA Compass Bank’s media-buying agency, Media Contacts, was responsible for online budget
allocation across search and display advertising as well as for monitoring the results of these
campaigns. Bernstein explained the process for allocating and optimizing the online budget:
Our primary goal for the checking account is to get as many new customers as we can with
our budget. We allocate roughly equal amounts to paid search and display ads since they serve
different purposes and reach different audiences. We evaluate the performance of these
campaigns based on a variety of factors, such as cost per application, the volume of
applications, and the efficiency or speed of conversion.
Paid Search
Paid search advertising involved buying keywords on the three main search engines: Google,
Yahoo!, and Bing. Bernstein described the process:
Google has the largest share of search queries, so not surprisingly we spend the largest
portion of our paid search budget on Google. We buy generic keywords such as consumer
checking, checking account, and free checking account, as well as branded keywords such as BBVA
Compass and BBVA brand. Our bid management tool helps us manage the buys for these
keywords based on competitive prices, search volume, and share of voice for each keyword.
We track how many clicks we get on the different engines, click-through rates, cost per click,
and cost per application.
Media Contacts sent weekly performance reports with analysis and recommendations for
campaign optimization to Armstrong and Moyett (see Exhibit 5 for the performance of paid search
marketing and Exhibit 6 for the performance of sample paid search campaigns).
Display
Display advertising entailed buying advertising space on websites that the bank’s prospects were
likely to visit. Bernstein explained the process of planning the display campaign:
For BBVA Compass, we look for high-reach placements within relevant content areas in the
targeted geography. We typically work with advertising networks, as they can provide reach
across multiple publishers and domains, sophisticated targeting, and efficient pricing.
Currently, there are hundreds of ad networks, each with a different strength and optimization
approach. We also work directly with publishers and portals, like AOL and Yahoo!, as Media
Contacts also purchases local content placements.
We provide a budget to the partners along with our goals and the profile of target
customers. The networks use their algorithms and, in some cases, their proprietary data to
identify sites where our ads are displayed. With networks, we typically do not know the exact
6
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