Since that day, which marked the largest bank failure since Washington Mutual shuttered in 2008, the ripple effects have been intense. 

One of the recent stamps on the timeline: First Republic Bank received a $30b lifeline from major U.S. banks, including JPMorgan Chase & Co. and Bank of America Corp. 

Finance advertisers can’t look away, which begs the question: How will they spend for the rest of the year?

But before we look into our data-powered crystal ball, let’s take a step back and examine their strategies leading up to that fateful day in early March.

Finance Advertisers Don’t Fear the Recession

In 2022, 1.7k advertisers for financial institutions and services (accountants, banks, financial advisors, insurance providers, realtors, etc.) spent $5.3b, representing an 8% increase from 2021.

Nearly a third (31%) of that investment came in Q1 when budgets jumped by 17% YoY. Spending in Q2, Q3, and Q4 increased by 3%, 10%, and 1% YoY, respectively. 

The modest overall increase came despite an overwhelming feeling of financial anxiety. According to a 2022 study, 65% of respondents cited money as a significant source of stress—and for a good reason. 

The year was full of headlines about a recession, overpriced eggs, and rising interest rates that put house hunting on hold for many. 

In particular, advertisers for banks and credit unions shrugged off the financial woes.

In 2022, over 850 banks and credit unions spent over $1b to promote their names and banking services, representing a 33% YoY increase from 2021.  

These companies, including those providing the lifeline to SVB, contributed 20% of the ad investment from finance advertisers. 

Big banks, bigger ad budgets

Through February 2023, advertisers for five banks—Bank of America, Capital One (Capital One Spark Business, etc.), Chime, Discover Bank, The Royal Bank of Scotland, and Citizens Bank—were responsible for 67% ($113mm) of the total investment from banks and credit unions. 

Advertisers for Capital One were the only member of the quintet to reduce spending so far in 2023; the other four members increased theirs by at least 16% YoY. 

That said, the two biggest jumps came from advertisers at Chime (up by 200%) and Citizens Bank.

What’s at the heart of Chime’s increase in ad spending? 

It’s not what but who. Vineet Mehra.   

Mehra, who was previously the chief growth and customer experience officer at Good Egg, said, 

“This is not a turnaround. This is not a reset of everything. It’s about connecting the ingredients. My focus is taking something from great to even greater.”

For Mehra and marketing leaders at other “neobanks,” banks with no physical branches like Varo, Current, and Aspiration, big budgets are necessary to keep pace with traditional banks and gain market share in the growing digital banking world. 

According to Insider Intelligence, the number of neobank account holders will grow by more than 46% between 2022 and 2026. 

Through February 2023, Mehra moved almost all (97%) of the company’s budget to video ads across social, online video, OTT, and TV. 

Meanwhile, Citizens Bank advertisers spent over 95% of their budget on broadcast networks like ABC, CBS, and Fox. 

The polarizing allocation signals a battle between advertisers working for companies at opposite ends of their evolutions. 

Chime, launched by Chris Britt and Ryan King in 2012, has its sights set on those making up digital-first generations with no qualms about bringing their finances online. 

According to a survey by PYMNTS and Treasury Prime, 57% of millennials and bridge millennials (those born between 1980 and 1989) are drawn to digital banks. 

Another study, which estimated 77.6% of millennials would use digital banking by 2022, makes an even stronger case for a future without neighborhood banks.

These everything-online generations warrant sizable investments in advertising ecosystems popular among younger crowds—think OTT and social media. As of February 2021, 84% of those aged 18-29 said they used at least one social media platform.

Meanwhile, around 75% of respondents aged 18 to 34 said they subscribed to Netflix, which recently introduced an ad-supported tier.

Meanwhile, Citizens Bank, which is approaching its 200th trip around the sun, is hanging its hat on ad ecosystems that historically skew toward older folks. 

That approach likely changes as baby boomers embrace online banking, and legacy financial institutions, including Citizens Bank, reposition themselves accordingly. 

For example, Citizens Bank recently announced the launch of Zelle® within their banking app to give eligible small business customers a way to send and receive money more easily.

Trouble Brewing 

A bank run, decline in startup funding, and rising interest rates didn’t flip the financial sector on its head until March, but advertisers clutched their dollars far before that. 

Through February 2023, more than 660 advertisers for banks and credit unions invested $169.3mm, representing a 22% drop from the more than $215mm they spent in the first two months of 2022. Spending in January and February decreased by 22% and 21% YoY, respectively. 

Many advertisers have abandoned their strategies completely. 

More than 540 banks (including commercial), credit unions, and banking services that bought ads in January and February 2022 haven’t done so this year.  

Even the big spenders are pulling back. 

The nearly 380 bank and credit union advertisers who spent through February 2022—and account for 98% of the investment this year—collectively decreased spending by 18% YoY. 

So, what does the future hold for financial service and institution advertisers? 

A whole lot of caution, which almost certainly means fewer ad dollars. 

For more insights, sign up for MediaRadar’s blog here.

But during the pandemic, older generations turned to social media than they did ever before. 

For some, it was a primary way to communicate with family and get updates about the virus. For others, newly in retirement or close to it, it might just have been something to do without time in the office or activities outside the home. 

Retirement services are aware of how much time older generations spend on the internet. With increased social media usage this past year, retirement services have invested more in programmatic advertising. 

Baby Boomers Use Social Media for Learning

According to Pew Research, 45% of individuals ages 65 and older use at least one social media site and 73% of 50- to 64-year-olds use social media. Of all the social media platforms, Facebook has the highest number of users in these age ranges.

The numbers clearly indicate that older individuals are on the platforms. When you look deeper, older generations interact with social media differently than younger generations. 

“Rather than taking selfies or giving out information regarded as personal, these older users enjoy filling up their timelines sharing articles, photos, and videos relating to their interests, and do so quite frequently,” explains Jake Tully, head of the creative department at Trucking Unlimited. “With this in mind, we try to cultivate an online presence with news stories that may bring the opinionated people out of the shadows.”

Older generations treat social media as a place of sharing ideas, hobbies and learning (with bonus pictures of grandbabies). This makes it a great place for learning about something that matters greatly for their current stage of life—retirement. 

How are retirement services trying to build brand awareness, educate and attract customers with programmatic advertising?

MediaRadar Insights

Financial services—and retirement services specifically—have been buying much more than last year.

Across formats, retirement services spending was up 37% year-over-year between January and August. But programmatic placements specifically were up even more. In the same time period, buying was up 63%.

Month-over-month growth within the programmatic space is slowly starting to decrease, but in August spend is still up 68% year-over-year ($20.4 million in 2021 vs $12.1 million in 2020). 

The largest yearly growth was in January at 119%. But the largest difference in spend was in June 2021 where retirement services spent $23.4 million in programmatic advertising vs $11.9 million in 2020.

Between May and June 2021, we saw the largest jump in spend, an increase of 38% month over month.

In digital spend, programmatic advertising made up 54% total digital spending in 2021 (Jan – Aug).

When we look at specific companies, we found that:

• 54% of digital spend from Charles Schwab is programmatic.
• 47% of digital spend from Fisher Investments is programmatic.
• 31% of digital spend from TD Ameritrade is programmatic. 
• 31% of digital spend from Fidelity Investments placed is programmatic.

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy. 

Some of these retirements were by choice—driven by increased investments and a refocus on what matters in life. Others were involuntary—people in struggling industries were laid off and didn’t return to work. 

While there is a “Great Resignation” happening across all working age groups, Baby Boomers are leaping into early retirement—ready or not. And financial planners have found themselves in demand. 

How are we seeing financial services bring customers in?

The pandemic rushed many into their golden years 

According to a survey from MetLife, more than 1 in 10 Baby Boomers pointed to the pandemic as the driving factor of their early retirement.

This could be because the pandemic caused individuals to find fulfillment outside work more. It could be driven by job loss. Or increased stress at work. Or a combination of factors. 

Speaking about one of her clients, who was only 51 years old, financial planner Gretchen Behnke explained, “I believe it was the pandemic that made her feel the uncertainty of life and that she didn’t want to spend any more time in a job that was very stressful, took a toll on her health, and drained her energy.”

Since 2001, the percentage of retired people ages 65-74 had been steadily declining, but this trend abruptly reversed in 2020. 65.6% of people in this age group now consider themselves retired, a rate not seen since 2011.

But the difficult thing is that many Baby Boomers who went into “early retirement” during the pandemic don’t have enough resources to remove themselves from the workforce completely. 

Research by the Insured Retirement Institute (IRI) found that 45% of Boomers have no retirement savings. At the same time, the average person of this age only has only $152,000 saved. This is not enough to last the remainder of their lives, even with social security or pensions.

“They might call themselves retired, but basically they are unemployed and in a precarious state,” explained Teresa Ghilarducci, a professor of economics and policy analysis at the New School for Social Research in New York City.

As people have weighed their options and prepared for their next season of life, they’ve sought the counsel of financial planners. 

MediaRadar Insights

With Baby Boomers needing financial services, we’ve seen a sustained increase in advertising from the financial services industry.

Between January and August this year, retirement services advertising increased 37% compared to the same period in 2020. Advertisers increased their ad spend from $489 million in 2020 to $671 million across digital, TV and print advertising.

This increase was primarily driven by TV advertising, which increased 54% year-over-year from $279mm to $431mm. Meanwhile, digital increased 33% and print fell 1%.

The increase in TV and digital isn’t surprising when considering demographics. The Boomer generation watches the most traditional TV compared to other age groups and the large majority use the internet.

Top advertising firms in retirement services include: Voya Financial, Principal Financial, Fidelity Retirement and Schwab Retirement.

Across all financial services, advertising spending increased 31%, from $2.7 billion to $3.5 billion this year. Other sectors which have seen growth are investment firms, debt management services and risk management services.

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy. 

Venture capital investors invested $44.4 billion in young fintech companies last year, when just over a decade earlier, they invested just $1.1 billion annually in the space. 

And this is only the beginning. Investor Mark Goldberg told the New York Times that he expected to see $1 trillion of market value poured into new financial companies over the next twenty years. And this investment will likely come from traditional financial institutions.  

It’s time for incumbent institutions to integrate new technology into their systems. But how?

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Financial Services Need to Become More Savvy

Between crypto swinging back and forth based on the commentary of one eccentric tech mogul, retail investors blowing up meme stocks and fintech companies taking over regulated banks, the finance industry has enough going on to keep one’s head spinning. 

Generally, bank execs are showing curiosity mixed with a touch of fear towards upcoming financial platforms. Banks offer stability to businesses, but they often don’t offer the same level of ease, innovation and customer experience that fintech startups specialize in. 

Even though banks could purchase these start-ups to give their business customers more convenient experiences, there haven’t been any major M&As over the last couple years. 

Proper valuation of fintech startups proves challenging. 

And with their massive resources, banks can build similar tools that successful fintech companies offer. JPMorgan entered the fintech competition by releasing a point of sale challenger to Square and Paypal last year. It may be late in the game, but JPMorgan’s scale advantage will likely drive more profitability than its competitors. 

It’s unclear how big the “disruption” to the financial services industry will be, but it’s clear that fintech funding is pouring in. Banks will have to overcome regulatory challenges and reimagine legacy systems to meet customer expectations. 

With start-ups off to the races and the old guard institutions marketing their reliability, we’ve seen advertising spending add up this past year.   

MediaRadar Insights

Within the B2B Financial Services space, 39% of advertisers returned in the month of April YoY (2020 vs 2021). 

There were 1.7k advertisers who spent $53.1mm in the month of April, which is a 57% increase in spend YoY and 21% increase in the number of advertisers. In 2020, 1.4k companies spent $33.9mm.

Print spend fell 3% YoY from $11.3mm to $11mm. 

Meanwhile, digital spending increased 86% from $22.6mm to $42mm. This acceleration of digital advertising doesn’t come as a surprise. Overall B2B digital spend increased during the pandemic and hasn’t slowed down. 

Of the top 100 spending brands in April 2021, 80% of them returned from April 2020. 

Top returning spenders include: 

• Voya Financial
• Interactive Brokers
• Invesco-Exchange Traded Funds
• Deloitte

For more details on top spending financial brands in the B2B space, feel free to reach out to us. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.