Countrywide Financial (CFC) is being acquired by Bank of America (NYSE:BAC) and when the deal closes the second largest Web advertiser will disappear. It’s highly unlikely that Bank of America will spend so lavishly on online advertising.
Most folks know that mortgage giant was on the ropes. Bankruptcy rumors and persistent worries about the company’s health never went away as Countrywide’s stock crumbled to single digits. But a funny thing happened as Countrywide’s business unraveled–it advertised more. A lot more. Countrywide ads abound on Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO) (especially Yahoo Finance) and Microsoft (NASDAQ:MSFT)–the three players battling for online dominance.
When I first highlighted concerns about Countrywide’s online advertising spend in August the company spent and estimated $34.77 million on online advertising, according to Nielsen/Netratings. For July, Countrywide was the fourth biggest online advertiser. Surprisingly, Countrywide ramped up its ad spending. As of November, Countrywide was the second largest online advertiser spending a whopping $57.6 million on online advertising, according to Nielsen/Netratings.
Here’s the comparison:
And November’s rankings:
Rest assured that gravy train won’t continue under Bank of America, which is averaging down big time on a previous Countrywide investment (company statement). The bank is good at acquiring companies. It cuts costs, trims fat and integrates operations quickly. You want advertising? Go to a Bank of America branch where folks will try to upsell you a mortgage. Better yet, Bank of America’s branches are free.
Perhaps keyword advertising’s ROI will be so good that Bank of America will keep spending on online advertising, but I doubt it. Countrywide was an idiot about advertising spending. How do I know? When my daughter is watching Nickelodeon she will inevitably see a Countrywide ad. Surely, the ROI on those ads can’t be too great–unless every five year old runs to their parents and urges them to refinance.
If advertising stupidity like that example is prevalent at Countrywide the online spend probably wasn’t tracked well either. Countrywide tried to grow its way out of a pickle (when the going gets rough, the tough advertise). But Bank of America will just clean up the mess and fight another day.
Simply put, Countrywide’s penchant for advertising will disappear. To Bank of America CEO Ken Lewis Countrywide’s willy nilly ad spending will just be more fat to cut.