|Agency: McCann Erickson||Author: Mike Longhurst|
Anglia Capital Shares
The Anglia Building Society was relaunched in July 1980, having temporarily carried the name Anglia, Hastings & Thanet since the merger of those two societies in mid-1978. The merger, Britain's biggest ever, produced a society which was in sixth place in terms of assets strength assets being the normal measure of the size of a building society and the guide to its overall share of market.
Because the market was fragmented, with over 200 societies, Anglia's sixth place represented only a 3.5% share of all building society assets, but in the aftermath of the merger the combined society was rarely able to attract and retain this share of new building society funds in any given month.
This was due to:
- Low awareness of the Anglia name in old Hastings & Thanet areas of London and the South.
- No unified branch fascias.
- No consumer perception of Anglia's true status and size.
As the most urgent priority, therefore, the Society was forced to devote the bulk of its advertising expenditure from July 1980 to January 1981 to broad-based theme and awareness support.
Awareness tracking established that this was having considerable success, but market conditions were hardening and the society faced a choice between the conflicting requirements of long-term awareness and image building and short-term marketing success.
Following the merger, Anglia found its share of total money coming into all building societies running satisfactorily at its notional market level of 3.5%. This is described as their gross receipts. But withdrawals from Anglia were above average and this led to a much lower share of net receipts at the end of each month. A good gross figure is cold comfort if it is not matched by a good net figure, because only money remaining invested can be used to fund new mortgages.
Like virtually all building societies, Anglia was offering two basic types of account:
- The ordinary Share Account which paid interest on money that could be withdrawn on demand.
- Bonds which offered guaranteed extra interest above the share rate for fixed periods of investment.
The years 1979 and 1980 were very much ones in which building societies were forced to use their bond products to compete against high interest rates generally and many did so very successfully, as the Abbey and Halifax entries for Advertising Effectiveness Awards in 1980 illustrated. Anglia, with its priority of relaunching the Society in 1980, had one of the most competitive bonds ranges but could afford relatively little to specifically support them with advertising.
Theme advertising, however, had not sufficiently stimulated gross receipts in July or September 1980 and did not do so again in January 1981. The only apparent financial benefit had been an indirect one of temporarily improving the net figure during the advertising period. This frail success was insufficient to stand up to great pressure from the Government's 'Granny bonds' late in 1980. Anglia therefore ended 1980 with 3.9% share of gross industry receipts but only 2.7% share of net receipts. With a bad start in 1981, and the promise of a difficult year for the industry, Anglia was forced to re-examine its marketing strategy.
This review took place in February and was to fundamentally change the fortunes of the Society in 1981 from March onwards.
Anglia decided that the position had been reached where attention had to be turned to short-term growth in order to pull the Society up to a level of performance in line with its share of assets and to provide more money for mortgages, which were in great demand. Press support behind Anglia's High Income Bonds in January had not been able to capitalise on the theme TV advertising and it was clear that the market for bonds was not growing.
With the basic Share Account offering a relatively uncompetitive rate the Society decided that it needed to find a new product which would spearhead a more direct and immediate advertising proposition. This would aim both to get a higher share of money coming in and to hold on to more of it.
The major marketing objective was therefore to reach and exceed the 3.5% market share of both net and gross receipts and to do so without paying an uneconomical rate of interest (ie without buying the funds).
Having reached this level, the Society's objective was to maintain or exceed it for as long as economically possible.
Specific investment targets were set, but were less relevant than the basic improvement of market share to achieve what Anglia believed they should rightfully be able to attain.
CAPITAL SHARES THE NEW PRODUCT
As has been described, the basic building society product is the Share Account, which in February 1981 paid 9.25% interest on readily available money. For several years, however, societies had been forced to combat high interest levels generally by offering bonds which guaranteed increasing interest for periods from one year to five or six years, but either did not allow withdrawals, or imposed severe penalties to claw back the extra interest.
Since neither of these offered a solution to the problem, Anglia chose to put its efforts behind an investment scheme of the type which came to be known generically as Extra Interest Accounts and which were already offered by five societies of comparable size to Anglia. Extra Interest Accounts offered more interest than the basic Share Account (normally 0.75% or 1% more) for lump sum investments and most allowed withdrawals at a month's notice with loss of interest during that time.
They were therefore potentially appealing to anyone who had been persuaded by the mass of bonds advertising that they would like to earn more than basic interest, but who couldn't confidently commit his money to a fixed term.
For the Society it was a product which offered the extra interest appeal of bonds without so much of the cost. Remember that the society lends the major part of its money for mortgages at the same base rate, whether it has raised it from Share Accounts or from much higher interest bonds.
Anglia's Capital Shares, therefore, offered basically the same package of extra interest and withdrawal terms as those already on the market, with slight advantages over some, which only the financially minded would appreciate.
The decision was taken to get the product onto the market as soon as possible and before the budget, which was expected to affect interest rates. Anglia, having decided to take the step, wanted as much of a lead over the 'big five' societies as possible before any response from them.
Despite the existence of five similar products which had been on the market for some time, it was felt that there was still a major education job to be done to convey the concept of the product.
Qualitative research late in 1980 had shown great consumer confusion resulting from the increasing complexity of bond products and the failure of advertising to convey them satisfactorily.
It was established that potential investors understood a basic trade-off between low interest/easy access to funds and high interest/long-term commitment, but were not convinced of the validity of any proposition offering higher interest and easy access.
The principal advertising objectives were therefore:
- To create awareness of the new product offer and to brand it clearly to Anglia.
- To ensure full understanding of and credibility for the product proposition.
- To stimulate interest in the product and promote memorability of its salient features.
The target had been established as ABC1 adults over 45, but it was acknowledged that, given the difficulty of establishing demographic profiles for financial products, wider communication of the product could not necessarily be regarded as wastage, the basic qualification being a lump sum of only £500.
A press budget already existed for product support in this period but the next major expenditure planned had been a further theme TV burst in April and May.
The agency recommended that, in view of the key nature of this launch and the need to pre-empt possible major reactions from the 'big five', the planned theme TV budget should be converted to product support.
Anglia had never previously supported a specific product on TV and this decision was taken in the knowledge that it meant a deviation from the Society's post-relaunch development programme. It was felt, however, that without the strongest possible support, Anglia Capital Shares could not hope to outperform the existing five competitors, or achieve prominence against the weight of competitive advertising still being put by larger societies behind bonds.
Bearing in mind the two previous years of heavy bond advertising by the industry in general and the consumers' firm belief in the higher interest/long-term commitment stereotype, it was evidently necessary to contradict firmly held impressions without arousing rejection.
The 20-second TV commercial therefore simply set up the idea that, until now, money had to be locked away to earn higher interest, by the metaphor of showing jailed money. The product differentiation was then established by showing that the money was able to escape when required. It was felt that the jail cell was an easily recognised symbol of security and equated well to the popular belief about extra interest investments. By then releasing the money, it was possible to weld the positive aspects of security and extra interest with the new benefit of accessibility.
Whilst the commercial set up the basic idea and carried minimal detail, the press approach exploited the awareness generated with the headline 'If you want high interest, you don't have to sentence your money to a long stretch'. After further competitive launches, this was subsequently sharpened for later bursts to stress the minimum qualification and interest rate to '£500 or more doesn't have to do a long stretch to earn 9.72%'.
Because of the confusion caused by a mass of product names in the market from 'High Return Option Shares' to 'Special Shares' and 'Paid up Shares' it was decided not to brand Capital Shares strongly by name. It was felt to be more important to attach particular product features to the Anglia name and to carry through the visual branding provided by the jail cell concept to point-of-sale.
The investor was therefore being asked to remember what the product did and where to get it, with enough visual continuity to be able to identify it at point-of-sale.
A one-week press burst introduced the product before the budget and the press reappeared later in March when new interest rates were coming into force. TV support commenced during the last week of March with Anglia's areas of greater branch strength being upweighted against their weaker areas in the North.
Clear success by mid-year led to the allocation of new funds for advertising and a repetition in both media in September and early October, though omitting two of Anglia's weaker TV areas.
Total expenditure was £917,000.
Since Anglia had no comparable product in 1980, and since comparative figures for relevant competitive products are virtually unobtainable, Anglia's success can best be measured in two ways:
- Absolute value of net and gross receipts from Capital Shares and effect on the Society's overall growth of investments.
- Significance of the product in helping the Society to attain overall market share objectives.
Capital Shares receipts
During the promotion period of March to October 1981, Capital Shares grossed a total of £97.5 million new funds into the Society. When transfers into Capital Shares from other Anglia accounts are added, total gross receipts rise to £197 million. Though obviously cannibalising existing investments, these transfers cannot be totally ignored.
The view can be taken that, with the subsequent weight of competitive launches, this money would have been transferred anyway and that the advertising had a valuable secondary role to play in holding this money for Anglia.
In terms of effects on Anglia's overall gross receipts, this can be clearly seen by comparison of the March to October 1981 promotion period for Capital Shares with the Society's performance in the previous eight months:
TABLE 1: GROSS RECEIPTS
|Period||Total Anglia||Capital Shares|
|July 1980February 1981||628.3||-|
It is clear that the £97.5 million extra raised by Capital Shares alone in this March to October period played a substantial part in Anglia's success by contributing half of its increase.
But that is not the whole story. Gross receipts are undoubtedly the best guide to advertising effects, but the money has to be retained to be of use to the society and the effects of the Capital Shares success can also be clearly seen in net results:
TABLE 2: NET RECEIPTS
|Period||Total Anglia||Capital Shares|
|July 1980February 1981||91.8||-|
Therefore Capital Shares represented 73% of all the new money raised by Anglia and remaining in the Society after withdrawals. (October figures have been included because of the natural delayed effect from TV in September, which was still supporting Capital Shares.)
Anglia's achievement is further underlined by the fact that Capital Shares had enabled them to significantly outperform the market. In a year in which the building societies as a whole retained 5% less money than in 1980, Anglia retained 46% more despite its early bad months.
TABLE 3: PERFORMANCE 1981 OVER 1980
Market share achievement
Anglia had enjoyed a static share of gross receipts for some time, running just above its notional 'market share' of 3.5% based on share of total building society assets.
In the previous year, the only peaks achieved were in May and November/December when new bonds were launched. These gave Anglia a competitive advantage but only limited support was provided for reasons already outlined and its overall increased share was not maintained.
From the launch of Capital Shares however gross receipts moved well above normal market share and remained there throughout the year. Gross figures were extremely satisfying and meant that for the first time, Anglia had been able to attract a higher share for a long period.
The Society's other objective, however, had been to retain more of this money so as to reach, and if possible exceed, its rightful share of net receipts.
The main points to note are:
- An adverse trend following the end of advertising in October 1980.
- Only limited recovery in February 1981 led by theme and product support behind the existing products.
- A high level of correlation between the main March/April 1981 and September/October advertising periods.
- Anglia's weaker position in November/December 1981 without advertising support and accentuated by a net outflow of funds from the industry as a whole in November, caused by Government action.
The market share achievement can best be summarised by the following figures:
TABLE 4: ANGLIA'S SHARE OF BUILDING SOCIETY NET RECEIPTS SINCE MERGER
These figures should be related to the 3.5% 'rightful' share which Anglia set out to attain following the relaunch of the Society in 1980.
Such figures as are obtainable for Anglia's performance against the industry in the relevant Extra Interest Accounts sector alone indicate a performance far in advance of market share in the first six months of the launch and then a falling back to a position still substantially ahead of share under new pressure from later and bigger launches:
TABLE 5: ANGLIA'S SHARE OF INDUSTRY BALANCES HELD IN EXTRA INTEREST ACCOUNTS
|First quarter 1981||2.11%|
We propose to consider cost-effectiveness in relation to, firstly, the product and secondly, the advertising expenditure.
In any financial market, it is possible to demonstrate success even without advertising support if the interest rate offered is high enough, much as one might demonstrate in other markets by slashing prices.
Tactical ventures of this sort, with products which are offered for a limited period, should not be confused with the launch of a long-term product which, by definition, is unlikely to have any major competitive differential. Tactical one-off ventures can solve an immediate cash problem, but what they save in advertising investment is vastly outweighed by the enormous cost in higher interest paid.
Suffice it to say, that it can be clearly demonstrated that Anglia Capital Shares did not buy their success dearly. Firstly, as already stated, terms were virtually identical to the five products already offered by other large societies and by July virtually all societies had identical, or in some cases, better products.
TABLE 6: TIMING OF LAUNCHES:
|Society||position||Name of account||of account|
|Britannia||10||Shares at Notice||January 1979|
|Bradford & Bingley||11||Extra Interest||January 1980|
|Provincial||8||Special Share||May 1980|
|Alliance||7||Extra Interest Share||June 1980|
|Anglia||6||Capital Share||March 1981|
|Cheltenham & Gloucester||14||Gold Account||May 1981|
|Burnley||12||Short Notice Share||June 1981|
|Halifax||1||Extra Interest||July 1981|
|Leeds||4||Extra Interest||July 1981|
|Woolwich||5||Higher Interest Share||July 1981|
|Yorkshire||17||Golden Key||July 1981|
|Northern Rock||16||High Interest||August 1981|
|Bristol & West||13||Premium Share||August 1981|
Furthermore, through the period from launch to the end of 1981 Anglia's average interest paid across all accounts remained almost exactly identical to the industry average:
This reconfirms that they were not offering more than anyone else to attract funds.
But, can we draw any conclusions about the actual cost-effectiveness of the advertising as opposed to that of the product?
Superficially the figures look excellent:
- 97.5 million of incremental money raised in the period by Capital Shares.
- 917,000 spent on advertising behind them.
- A ratio of 106:1 for the product.
- And up to another £99.5 million saved from going elsewhere from other Anglia accounts.
Since we are also interested in the success of Capital Shares in helping to achieve wider Anglia market share objectives, it is useful to note that the Society's vastly improved share of market in 1981 was achieved with a marginally lower share of voice according to MEAL:
|Market share (net)||Share of voice|
But how close can we get to estimating the kind of results which might have been achieved without advertising or without the change of strategy which led to such single-minded product support?
Since areas which received no TV in the second burst still had the benefit of press support and were also much weaker in branch numbers, we have no area comparisons to help us. We do, however, have evidence which leads us to believe that, except in the case of the bread-and-butter ordinary Share Accounts, even very strong product offers can have little spontaneous sales momentum without promotion.
In May 1980 Anglia had introduced the highest interest rate available in bonds then on the market, 2.5% extra for a six-year bond. With a tiny press launch it stimulated the small peak noticed earlier in gross receipts, but failed to push net receipts to market share level. This product then remained available through the rest of 1980, but unsupported, and was still available during Anglia's bad months of December and January. Though still a market leader, it demonstrated almost negligible spontaneous ability to sell itself. It could perhaps have been used to spearhead the success ultimately gained by Capital Shares, but because of its high rate, was viewed as too expensive for the Society. It was, however, an arguably more attractive offer to the consumer in its sector of the market than Capital Shares ever were in their sector.
As to the figures that would actually have been attained for Capital Shares without support, we will never be able to do more than guess. It seems inconceivable however that the product could have contributed even a substantial proportion of its
£97.5 million in that period. This view is encouraged by consideration of Leicester's Tempus account. Launched in 1978, but largely unsupported through 1980/81, total balances in this account stood at £108.5 million at the end of 1981 in comparison with Anglia's £209.8 million. The Leicester is a similar-sized society to Anglia.
Against Anglia's possible new receipts without promotion, must also be measured the amount which would certainly have been lost from the additional £99.5 million which investors transferred into Capital Shares from other Anglia accounts.
In some cases, people thinking of moving their money would have checked whether Anglia had a similar account, but evidence from branch managers suggests that in many more cases, they would not. This may have been particularly so later in 1981 when most competitors were promoting the same interest rate with far better withdrawal terms than Anglia.
As far as the creative approach is concerned, branch managers reported that, for the first time, people were coming in having seen advertising and able to clearly identify and understand the account in which they wanted to invest.
Perhaps one of the most telling facts is that, because of the success of Capital Shares advertising, the product continued to attract millions of pounds worth of investment months after virtually every other society had started to offer attractive instant withdrawal or no penalties features. In fact it was not until May 1982 that Anglia found it necessary to improve the terms of the product and at that time the Society were the only one of any size still offering the same original terms.
Anglia just had not felt the need to do more.
We believe that advertising effectiveness has been a fundamental part of the total Capital Shares marketing success. Indeed, there are many grounds for believing, with hindsight, that advertising effectiveness was a prerequisite for that marketing success.
It is really necessary to come to two sets of conclusions: on what the success achieved and on how it was achieved.
The 'what' has already been fully explained, but can be summarised here. The 'how' is an intellectual assessment from those involved, in the absence of hard data.
The success provided:
- The ability to succeed against five existing and equal products.
- A momentum for Capital Shares which not only capitalised on a three-month lead over the 'big five', but sustained the product through their mid-year counter-attack.
- The ability to sustain performance despite increasingly uncompetitive product terms.
- Exceptionally good cost-effectiveness.
- The achievement of an unprecedentedly high market share, well in excess of objectives.
We believe that success was due to four factors:
1. Extremely clear communication of the product benefit
In a market which had become terribly confusing with names, rates and withdrawal terms all conflicting, we believe that we achieved a very clear and concise piece of communication, which attracted the interest of the target group, provoked thought on their part and encouraged direct action.
2. The achievement of high share of voice at key stages to ensure impact
The following table shows that even with the need to keep the product visible for as long as possible, concentration at launch period and in September, in advance of the building societies' normal big month of October, achieved very high shares of voice for a 3.5% brand.
TABLE 7: SHARE OF VOICECapital Shares exclusively
3. Good creative synergy through all media
TV set up the idea and conveyed the importance of the launch. National press developed and expanded the message. Point-of-sale material provided a link which demanded little ability on the investor's part to remember specific details.
4. Successful groundwork in awareness-building from previous advertising
Anglia's four key regions showed substantial improvements in prompted awareness by May 1981. This undoubtedly increased the Society's ability to exploit the factors already listed.
|June 1980||May 1981||October 1981|
For interest, October 1981 figures have been added. These demonstrate that, whilst the strategy change which is the basic subject of this case history was extremely successful in business terms, it could not be expected to continue the process of awareness-building, due to:
- Specific media targeting to a minority group.
- Creative targeting to that group exclusively.
- Fall in share of voice over the third and fourth quarters.
Our feeling at the end of 1981 was that we had learned much about the role and effectiveness of advertising in this market.
In 1980 we had clearly been able to link advertising expenditure to awareness growth. In 1981 we successfully linked advertising to business growth and as a result, became far more knowledgeable about the interrelationship of the two.
Anglia Building Society demonstrates outstanding advertising effectiveness
In early 1981 Anglia Building Society and its agency McCann-Erickson faced a major advertising strategy choice: whether to continue the awareness and image-building approach which had been made necessary by its name change in 1980, or switch to direct support for investment schemes to try to improve its market share.
The eventual decision to switch to product support behind a new scheme, Anglia Capital Shares, was to radically alter the society's performance in the market and to make Anglia the most successful of the larger societies in 1981.
The background to Anglia's decision was a merger in 1978 which had left the society with the name Anglia, Hastings & Thanet. Simplifying the name to Anglia in mid-1980 was a desirable move, but it left an identity problem in the H&T homeland of the South and in northern and western areas into which the society had expanded under the AH&T name.
The immediate requirement was therefore to build awareness, which was far lower than Anglia's status as sixth largest society deserved, and to effectively relaunch the Society with a new corporate style, branch fascias, etc.
Whilst this was in progress, commanding virtually all of the available marketing and advertising funds, Anglia was only able to put limited support behind its actual saving and investment schemes. This meant that in a highly competitive market, it was falling below the 3.5% share of net receipts coming into the building societies to which its size and asset strength should have entitled it.
Awareness tracking indicated that the post-relaunch advertising was well on the way towards achieving long-term objectives, but the prospect of an increasingly difficult market in 1981 and an end-of-1980 figure for Anglia of only 2.7% share of net receipts, forced a reconsideration.
Once the decision was taken to switch to product support, the question became, which product? Anglia felt that its best prospects lay in slotting a new product between its Share Account, which offered instant withdrawals, and bonds which tied money up in return for higher interest.
The outcome was Anglia Capital Shares, offering extra interest above the share rate and requiring only one month's withdrawal notice and loss of interest. As competition developed, this type of account became known generically as an extra interest account.
Anglia positioned Capital Shares directly against the terms already offered by two similar sized societies and set out to beat all competition by strong advertising support. Anglia Capital Shares were launched in March 1981 with national TV and press support aimed principally at an up-market over-45 target.
The creative approach sought to explain the new scheme as clearly as possible and to differentiate it, in particular from building society bonds which locked money away for many years. This type of investment had been heavily promoted by societies for several years and any confusion with Capital Shares, which offered easy access, would have been very harmful. The approach used was to demonstrate the accessibility of the investment by showing that money locked away in a jail cell could escape when required.
Results over the eight-month promotion period were exceptional with Capital Shares grossing £97.5 million in new funds and also attracting a further £99.5 million in transfers from other Anglia accounts money which was then safe from attack by the rush of similar accounts offered by most of the big five societies in mid-1981.
In terms of total gross receipts, the March to October period showed a 31.5% increase for Anglia on the previous eight months and this was matched by a 31.2% increase in net receipts (net being the amount which is left after subtracting money taken out).
Capital Shares represented 73% of all of the net money raised by Anglia in the period and led directly to the achievement of a market share improvement from 2.7% in 1980 to 4.1% in 1981.
With a total advertising expenditure of £917,000 behind Capital Shares, this meant that Anglia raised £106 of new money for every £1 spent.
By looking at competition and examining precedents from within
Anglia's own previous marketing history, it was possible to conclude
that advertising played a very major role in achieving these figures.
It also played a very economical role, not only as a ratio to
money raised to swell mortgage funds, but also in relation to
share of advertising voice: over the whole of 1981 Anglia had
achieved a major increase in share of market despite an overall
decline in share of voice.