The Institution for Savings in Newburyport and its Vicinity is among the Bay State banks that have begun spending more time and money on marketing efforts.

Banks are spending more to promote products, services and their corporate brand, according to a study conducted by the American Bankers Association. Massachusetts banks are also shelling out more cash for marketing purposes and finding greater success.

The ABA 2004 Bank Marketing Survey found that total spending for marketing in 2003 reached $9 billion, a 4.6 percent increase from the $8.6 billion banks spent in 2002.

“Three years of solid, consistent budget growth indicates more than a trend,” said Brenda Marlin, associate director of the ABA Marketing Network, in a statement. “It demonstrates the desire of banks to remain aggressive with their marketing efforts.”

Patricia Thorpe, vice president of marketing at North Middlesex Savings Bank in Ayer, said the bank increased the marketing budget this year, primarily for direct mailing campaigns.

However, the bank decreased funding for television advertisements.

“It just wasn’t effective for us,” said Thorpe.

The bank has never done radio advertisements. Thorpe said most other ads are done in branch lobbies and in local newspapers.

Mark Welch, president of the Institution for Savings in Newburyport and its Vicinity, said in an effort to differentiate itself, the bank has increased spending on advertising.

“Our philosophy is we want to find a way to make people see how good we are,” Welch said.

The Institution for Savings recently has embarked on utilizing image ads and direct mailings are also in the marketing plans, Welch said.

Legacy Banks in Pittsfield, which received a certificate of excellence in the 2004 ABA advertising competition, also has increased its marketing budget “slightly.” The bank works with Lenox-based marketing agency Winstanley & Assoc.

Legacy Banks President and Chief Executive Officer J. Williar Dunlaevy said the bank has spent a fair amount on marketing all along, but with competition getting a bit fiercer in Berkshire County, the bank advertises with print and radio ads, as well as billboards.

Legacy Banks also has recently allocated more funds toward a direct mailing campaign.

“We hope it’ll be a much more efficient way to reach people,” said Dunlaevy.

‘Foundational Stuff’

Dan Duval, chief executive officer and creative director at Amesbury-based McDougall & Duval Advertising, said direct mailings can be effective in targeting consumers.

“Direct mail is a great way to sell products,” Duval said.

Duval said banks have increased their budgets in past years and are focusing on various types of advertising.

“Instead of creating a humorous ad,” Duval said. “They’re taking a step back and spending money on foundational stuff.”

McDougall & Duval Advertising works with both North Middlesex Savings and the Institution for Savings on marketing. The advertising agency also won an ABA Best of Show award for its advertising with North Middlesex Savings. Duval said the agency tries to focus its clients’ advertising on specific products, such as deposits accounts or loans, depending on the bank’s customer base.

“It’s not a limitless budget … we have to focus that budget,” Duval said.

According to the ABA study, 70 percent of banks introduced a new product or service in 2003. Checking and savings accounts comprised more than half of the new initiatives. Mortgage and real estate loans were the second-most-common new offering.

Welch said the Institution for Savings has begun offering investment services, as well as free bill paying.

North Middlesex Savings introduced Premium Now Accounts with higher interest rates for a set period of time, while Legacy introduced LifePath, services and products customized for people in various stages of their life, such as first-time homebuyers or retirees.

The study found that 85 percent of banks use market segmentation – a strategy for targeting specific consumer groups – to promote products and services.

Legacy has used direct mail to get the word out about its new product, but said the combination of direct mail, print ads and billboards has been crucial.

“You hope [direct mail] will lend support to what you’re doing,” said Dunlaevy.

Looking ahead to next year, Thorpe said North Middlesex Savings will focus on reaching out to its existing customer base and try to deepen its relationship with them through very targeted direct marking efforts, rather than doing broad-based outreach. For example, the bank has accounts with 86 percent of the households in Ayer; it will reach out to those households to offer and inform them about more bank products.

Besides spending more money on various advertising and marketing techniques, Duval said banks also seem to be employing marketing agencies or spending more on in-house marketing staffs.

“It seems as though there are more marketing personnel [at banks],” said Duval. “We’re finding that there seems to be a true interest in marketing and understanding marketing.”

Duval said he highly recommends banks employing an in-house marketing personnel, but added that outside agencies are also beneficial.

“You can tell easily when a bank has engaged a professional advertising firm,” Duval said.

Welch said he has noticed a difference since hiring McDougall & Duval because the agency understands what the Institution for Savings is seeking.

“In advertising, there has to be a connection between [the bank] and the agency,” Welch said. “They have to understand what you’re trying to portray.”

Banks also appear to be spending money on branding themselves.

Building an image is one aspect on which banks are focusing, Duval said.

“Image building is done through [mediums such as television and print, supported by public relations]. It has to be coordinated,” Duval said

Duval said because most banks offer many of the same products and services, each institution must determine a way to be different from the rest.

“They have to understand what is going to make them different,” Duval said. “Banks seem to be more focused on building brands and branding themselves.”

Welch said building a bank brand is an ongoing process. While the Institution for Savings has been in existence since 1820, he pointed out that competing with nine other banks for new customers who move into town is the challenge.

“When you get down to it … new people moving into town care about good services at a good price,” Welch said. “The overall branding campaign is ongoing reinforcement of who you are, how you are identified.”

Jennifer Jope may be reached at jjope@thewarrengroup.com.