A TV advertising campaign can do wonders for a reverse mortgage business, but for many in the industry, the cost is out of reach. Those who do have successful campaigns warn that TV is not for those who are not 100% committed to the long haul, and that working with a spokesperson is the best bet in promoting the product to a wide audience of potential borrowers.
“We’ve played around with it,” says Josh Shein, CEO of 1st Maryland Mortgage Corp. in Timonium, Maryland. “We put money toward local spots and made a very basic spot. We debated as to whether we to do cable or main networks and we did a combination of both.” Shein’s campaign ran earlier this year and in late 2010 during the day and had moderate success, he says.
The response, however, was notable. Shein says the brand and name recognition brought by the TV campaign was a plus. “It really helped our ability to talk with consumers and helped salespeople,” he says. “It helped us build our brand pretty aggressively.” The campaign led to phone calls from all around 1st Maryland’s coverage area with comments on the ad. “That was a major benefit,” Shein says.
After a short time on TV, however, Shein and his team opted to put the ad on hold. “We didn’t kill it, but it’s something we put on hold after we finished the initial campaign because it wasn’t as successful as we’d hoped for the cost.”
And the cost is substantial. While it’s hard to put an exact price tag on TV advertising, the cost is the biggest consideration when launching a campaign, according to one Top-10 lender with a successful TV platform.
“The biggest issue is the barrier to entry,” says Teague McGrath, VP marketing for American Advisors Group, a Top-20 lender which has a range of commercials and works with former U.S. Senator Fred Thompson as its national spokesperson. “It costs a lot to do it effectively.”
“One of the first requirements you need is to be in a lot of states unless you do local only,” says McGrath. “You’ve got to be prepared for the long haul, and you have to be cogniscent of the requirements; no different from any other advertising.”
AAG also has the benefit of a strong and recognizable spokesperson for its brand, and the product in general. Fred Thompson appears in AAG’s TV ads, and McGrath says the response is undeniable. While the relationship with a celebrity spokesperson for the reverse mortgage product in general has been frowned upon by government agents as of late, McGrath says it lends credibility.
“We’ve tested ads with and without a spokesperson and the difference is stark. When you’re not a major bank and don’t have bricks and mortar, the way you show everyone you’re a seious lender is by using a spokesperson.”
Previously, AAG worked with celebrity spokesman and longtime actor Peter Graves, who passed away in the midst of an AAG campaign in which he appeared. AAG pulled the commercial featuring Graves and ran a similar commercial without him in it. “We had to pull it because it wasn’t as effective,” McGrath says. The response to a well-known spokesman is certain, he says. “There’s no doubt every third or fourth call mentions him. That’s as powerful as it gets for us.”
While brand image is an important benefit of TV advertising, overall product recognition is another outcome current campaigns are working toward. McGrath says he looks forward to the day when the TV message moves away from the likes of “call now for your free DVD,” and more in the direction of brand recognition and company selectivity. When the product is better understood, advertising has the potential to shift.
“I think there’s going to be a tipping point at some stage,” McGrath says, “When seniors become more comfortable [with the product].”
Written by Elizabeth Ecker