04 May 2012, Sarah Nowakowska, Structured Products
The launch of BNP Paribas' first market-linked certificate of deposit (CD) in the US required a strong marketing campaign, and its role in helping the bank make a successful entry into the highly competitive CD market makes the bank the winner of this year's award for the best campaign.
Starting with an initial issuance of $7.519 million at the beginning of 2011, BNP ended the year with additional CD offerings, underlyings and maturities and recorded a total of more than $410 million in issuance over the course of 2011. The innovative ways in which the bank's marketing campaign sought to raise product awareness and its strong emphasis on education not only helped double the number of clients during the year, but also saw monthly issuance quadruple during the same period, reaching a peak of $82 million in October.
"The goal was to brand ourselves in a totally new business with a relatively new audience in a cost-effective way," says Paula Keve, the bank's New York-based head of strategic marketing for global equities and commodity derivatives in the Americas. "We needed to think about what was going to differentiate us from the competition. This can be a tough question to answer in the world of equity derivatives, where the difference between one bank's offering and the next can be quite subtle."
Taking a niche approach, the first stage of BNP's marketing campaign for its market-linked CDs involved a highly targeted but broad-based direct mail initiative, which focused on around 300 individuals at retail and private banks, as well as broker dealers. Included in the mailshot was an introductory letter from the French bank, along with an annual report from its US-based subsidiary Bank of the West. Also included was a free mousepad featuring contact details and a key message centred around the BNP Paribas offering.
"We were looking for something that can live on people's desks as a constant reminder," says Keve. "The key thing at the start of 2011 was cost pressures, which had a big impact on the marketing team as expensive advertising campaigns were out of the question. We had to take a targeted and low-cost approach to achieving our marketing objectives."
The second stage of the campaign was heavily focused on education, to ensure both distributors and investors understood the products. To that end, the bank created a web portal that provides information on structured products, and specifically on its market-linked CD offerings. Also included were regular webinars that addressed the macro-economic environment and covered future issuances. Obtaining third-party endorsement was another key aspect of the marketing campaign - inviting Standard & Poor's to participate in webinar discussions around the launch of market-linked CDs linked to the S&P Dynamic Roll Index, for instance. That particular educational and awareness campaign, which began in August, helped generate more than $65 million in issuance in 2011.
"The focus was on building the brand and working up the momentum as we looked at ways to reach more people," says Keve. "We started producing a range of collaterals, developed a two-page brochure and a monthly offering guide that would help clients understand the products."
One Kentucky-based CD trader was particularly impressed with the quality of the marketing material. "BNP Paribas produces a monthly offering guide, which is a 10-page document that we can receive in print," he says. "It's of high quality and is impressive to brokers as most issuers provide a summary of their offerings only via email."
A director at a New York-based clearing house was also full of praise. "BNP Paribas did a good job in using the wholesaler model and being proactive in differentiating the economics of its structures, such as publishing past performance figures and how coupon rates compare with those of competitors," he says.
The budget for the marketing campaign was roughly $200,000, which included seven industry sponsorships, two seminars focusing on market-linked CDs and attendance at a range of industry events.
The success of the marketing campaign could not have been achieved without a good product in the first place, says Serge Troyanovsky, head of North America retail distribution at BNP Paribas in New York. From August 2011 until February 2012, the bank's five- and six-year market-linked CDs based on US equity baskets have, on average, achieved a 5.1% coupon for investors, according to figures from the bank.
"We focused on developing a range of material that is client-friendly and easy to understand for everyone down the chain. What we would like to do this year is really expand the collection of material and brochures," says Troyanovsky. "We'll continue to focus on bringing innovation to the market and, of course, the key for us is the marketing campaign built around it."