Financial Services Firms Need A Healthier Advertising Ecosystem

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henrikrodeData-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Henrik Rode, partner at MediaGroup Performance.

Programmatic is a natural fit for financial services firms, but several large obstacles need to be overcome.

First, traditional financial media is too expensive, buying options are limited and the access to audiences is not great. On the other side, buyers are too conservative and don’t always measure results or look at ROI.

Let me expand on that. To begin with, premium financial publishers price their inventory according to financial industry earnings. The perceived brand value of these publishers is higher than those of other industries, so overall, prices are inflated, even among the non-premium publishers. As a result, innovation is slow to occur compared to other industries, as there just isn’t the same incentivizing pressure.

Case in point:

charthenrik

Source data: MonetizePros

When it comes to the client side, the picture is not much different. On the one hand, companies like banks, funds, brokers and asset managers in the financial industry are ahead of the game when it comes to technology internally. With the enormous amount of earnings and the technology required to facilitate them, this is to be expected.

On the other hand, due to compliance restraints and the importance of trust in the marketplace, these companies on average have adopted very conservative brand and advertising policies. This is slowing the adoption of modern advertising techniques and measurement of results, and subsequently, the use of programmatic advertising.

From a client perspective, that is unfortunate because programmatic could disrupt, drive prices down and bring advertising performance up, especially in the case of an overpriced publisher industry that doesn’t innovate much.

In my opinion, there are a number of obstacles to overcome before the financial industry can fully adopt programmatic:

Client education: The availability of niche targeted products will help adoption, but even so, the client side needs education on what programmatic is and isn’t. Industry participants need to focus on thought leadership in order to grow the category.

Availability of brand-suitable inventory: Many major financial brands refuse to advertise on the basis of blacklists for fear of subpar inventory that damages their brand. Site categorization for the purpose of whitelisting and private networks are key.

Better data availability: When it comes to niche products, such as Forex, binary options and commodity futures, or ultrapremium audiences for Asset Management companies, good-quality data just isn’t available or scalable, especially when combined with the whitelist requirement. Providers need to focus on super-targeted private data deals to service these types of clients.

Commonsense Pricing: If you are a bank that spends millions of dollars each month on advertising without clear DM-related goals, you are bound to become insensitive to media prices. But when these clients get a focus on measurement (see DM vs. brand below), $100 CPM prices can no longer be reasonable by any stretch of the imagination. Prices need to come down.

DM over brand objectives: Measuring results granularly and in real time means having DM objectives and often requires clients to think about baby step conversion moments. Market participants need to ask for these conversion metrics to optimize against and educate clients about the usefulness of them.

To some extent, the availability of niche providers for the industry will overcome these obstacles, but to do so, all industry participants need to be incentivized. And while some publishers are catching on, I say let’s disrupt this market and let publishers follow the demand.

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