Nothing ‘nil’ about NIL | ABA Banking Journal

Author: Karen Epper Hoffman

Retaining customer loyalty in their teenage or even adolescent years has long been considered a wise marketing strategy. And financial institutions increasingly reached out to favor the youth market.

In recent years, legal developments have allowed banks to also use young college and high school athletes for their marketing, in an effort to connect with younger potential players and demonstrate their connection to their community and region. However, in five years from the decision of the Supreme Court in NCAA vs. Alston has opened the door wide to amateur college and high school teams and individual athletes profiting from the use of their “name, image and likeness” or NIL in marketing, this space has matured into an estimated $2.5 billion segment. And banks, big and small, made bets.

Example: Northern Land Savings Bank in Canton, New York — less than 20 miles from the Canadian border — is a small public bank sandwiched between four colleges within 10 miles, two of which have Division I hockey programs. “We’ve always advertised with those schools, but it’s been more traditional advertising like banners in arenas or our logo on ice rink boards,” says Morgan Elliott, head of marketing for North Country Savings Bank. “With NIL, everything really changed. With our ability to pay players, we could get direct access to the team and brand ourselves around an already very popular product in our area.”

North Country Savings Bank brought college players “into the bank (and) created a series of videos where they were faked ‘working’ for the bank in full uniform,” in the vein of those classic ESPN ‘This is Sports center“commercials,” Elliott explains. “We realized that not only could we directly reach the audience of these popular players, but also create a whole new audience of people who remember us for making them laugh with comedic content.”

“Within a year, our surrounding communities began to associate us as a bank that supports local sports,” he adds. “It was important that we didn’t just take a picture of them and put up a graphic that said they were endorsing our products. We knew that wasn’t going to move the needle the way we envisioned. It had to be interactive and memorable.”

Even before the 2021 changes, which began allowing college and high school athletes and their teams to receive compensation from corporate sponsors, changes were already underway as early as 2019 with California’s Fair Pay to Play Act, which has been copied by nearly every other state, protecting the right of student-athletes to enter into contracts to use the rights to their name, image and likeness in exchange for compensation, according to Max L. Forer, a partner with Portland, by the law firm Miller Nash LLP from Oregon. The NCAA eventually responded to this tidal change by enacting its own interim NIL policy in 2021.

Indeed, American banks have long been the main marketing partner for professional sports teams and athletes. In 2021, some estimates tied as much as 58% of all sports and athlete sponsorship deals in North America to financial institutions, disbursing more than $770 million that time on marketing campaigns related to athletes. In addition to campaigns with local or regional teams or athletes, banks have grabbed the naming rights to several major event centers, including Bank of America Stadium, Chase Field, Citizens Bank Park, Comerica Park, KeyBank Center, Wells Fargo Center, TD Garden, PNC Park and so on.

But with the genie out of the bottle, the college and high school NIL usage market is expected to explode faster, growing to an estimated $917 million in the first year and more than $1 billion in 2023, according to a presentation by consultant Allyson Twiggs Dyer at the ABA Bank Marketing Conference 2023.

‘second change’

These significant changes have shaken up the sports marketing industry in all segments. For the players, there is an opportunity to cash in on their athletic prowess and local fame, before ever reaching the professional ranks. For banks, the value of this approach is to demonstrate their commitment to local or regional sports stars or programs — to build support from bank customers and potential customers — and to potentially promote the next Michael Jordan or Serena Williams ago achieve professional and global importance.

“The changes have been revolutionary, but we are still at the very beginning,” according to Forer. “We’re only in the second inning.” A little more than three years ago, he says, there was hardly any market here. But now NIL marketing is “evolving rapidly, due to the extreme popularity of college and high school sports.”

However, NILAN marketing to college or high school athletes is a double-edged sword. Sure, you might land a marketing relationship with a future sports star — but those deals are still in the minority, even among high-profile college players. Also, student-athletes can be tired or overwhelmed, unreliable or unstable, and can be prone to being sidelined by a major injury or scandal.

Therefore, there is a risk in promoting them or associating the bank’s name or reputation with them. Despite this, banks are quick to sign these deals because they are cheaper and have higher upside potential if pay off, and they enable entry into a more localized market. Bank of Hawaii has signed up eight student-athletes within just a few months of the NCAA’s landmark change in 2021. FAB&T of Jacksonville, Arkansas, was another public bank that jumped quickly into NIL marketing, looking for college and high school athletes as well as a local team to work with. Marion, Illinois-based Banterra Bank also jumped on board in 2024 for NIL marketing deals with regional college athletes.

“We’re seeing a trend here with banks … sponsoring schools and athletes,” Forer says, adding that state laws regarding student sponsorships were already changing earlier this decade. “Because we’re in the early days, there’s an opportunity for some banks to be leaders here.”

Forer believes that the banks are mostly playing it safe, with NONE of the marketing business “dripping” while they wait for this market to mature. In many cases, the athletes in question may be minors (under the age of 18), requiring the involvement of a parent or guardian, and more potential legal issues. And there is a swamp that is a wider field of student athletes.

Banks may be considering potential partnership deals with thousands of athletes, as opposed to hundreds in the world of professional sports marketing. And these relationships can also represent a minefield of deeply rooted personal connections. What happens if your bank uses one state team or popular athlete in your marketing, who happens to be the arch rival of another major regional college team?

“There can be so many creative ways to get involved in NIL marketing, but you have to be willing to think outside the box,” says Forer, adding that the easiest way to access this market is “direct engagement with the school.”

Karen Epper Hoffman is a freelance writer. Except on ABA Banking Journal, her work appeared in American Banker, Bloomberg BusinessWeek, the Wall Street Journal Europe and other outlets.

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