Financial Services Market: Everything, All the Time

With a potential market of 242 million adults in the United States, financial services is a powerful force in advertising. But even with budgets in the billions, the competition for consumer dollars is such that companies still need to prove that the marketing strategies they’ve chosen are bringing in customers. 

And while emerging digital channels have disrupted some tried-and-true tactics, many marketers are integrating them into a new “channelless” strategy that presents the brand consistently, wherever and whenever consumers choose to interact with it — sometimes on multiple devices and channels simultaneously.

Why? Because capturing a lead isn’t enough to sell a complicated financial product. Marketers must pitch their services via television, social video, and direct mail; educate consumers about their options on smartphones, tablets, and desktops; slowly win their trust over time with careful branding; and (maybe someday) convert them.

A likely scenario is for a consumer to conduct a ­Google search for a particular product, check a few boxes online, download a guide, and finally decide to buy through an agent. But in actuality, any of those steps might represent a make-or-break micromoment, and the marketer must ensure that the brand is there when the consumer is ready.

“A channelless strategy is about being the same all over,” says Samantha Chow, Aite Group senior analyst and the author of a 2017 report on marketing spend in the life insurance industry. “It’s about presenting the same image and same values, but also saying ‘Start here, go here, talk to an agent, apply online.’ It’s about blending everything together and providing options for everyone.”

“The audience is in control and wants to engage with marketers on a device and at a moment that is most convenient for each individual,” says Peter Koeppel, founder and president of Koeppel Direct, a direct response media agency based in Dallas. “Digital, social, and mobile allow this interaction to occur seamlessly.”

A number of long-standing financial services brands— including E*Trade — are finding
success using online and social video to further their branding and performance efforts.

Trends in Spend

Life insurance companies alone were expected to dedicate $4.2 billion to marketing and advertising in 2017, up 12 percent from 2016. The Aite Group report projects increases to continue steadily through 2020, when annual spend is expected to reach $5.6 billion.

Spend on television and radio is expected to grow from $1.03 billion in 2017 to $1.14 billion this year. Some 22 percent of insurers planned to add DRTV to their marketing mix in 2017 and 2018, the report says, defining DRTV as any ad with a call to action that includes an 800 number or web URL. One-third (33 percent) of the companies had used DRTV previously.

In spite of consumers’ migration to streaming services, DRTV remains attractive to financial services marketers, thanks in part to its longer formats and measurability. “DRTV is where a lot of the money is actually going,” Chow says. “Marketers are still seeing a ton of success in direct mail and DRTV.”

“Direct response and financial services go together like peanut butter and jelly,” says Jessica Hawthorne-Castro, CEO of Hawthorne, a performance marketing agency headquartered in Los Angeles and Fairfield, Iowa. “The affordability of DR media allows marketers to use longer forms and high frequency to drive initial responses and leads. The reach you can achieve in TV — even with increased use of DVRs and non-advertiser platforms such as Netflix — dwarfs the reach online channels can offer.”

Other traditional channels continue to offer valuable ways to make an impression. “The mailbox is still a powerful place to be,” Hawthorne-Castro says. “Shared mail and solo mail still work, and our financial services clients use those tactics. We also see pure-play e-commerce businesses sending shared and solo mail — a 19th-century tactic supporting 21st-century e-commerce.” 

“Brand-response DRTV, radio, and direct mail are channels that serve financial services well,” says Fern Lee, CEO of THOR Associates, a New York-based brand response agency. “They also create the halo to websites and landing pages that educate, inform, and entertain potential customers, eventually increasing sales.” 

LendingTree has a new batch of 30- and 60-second DRTV spots on air promoting
its digital and mobile tools, including ads that feature the company’s CEO, Doug Lebda.

Moving to Digital

Online, marketing budgets are projected to reach $563 million in 2018, Aite Group says, up from $490 million in 2017. Social media budgets will jump 26.6 percent from $301 million to $381 million at the same time, and mobile marketing will grow from $151 million to $179 million. Print is expected to decline 1.6 percent, from $678 million in 2017 to $667 million in 2018.

By 2020, Chow says, there will be “much more of a shift” toward digital among financial services marketers. “It’s slow-going because companies are struggling to prove ROI,” she adds. “Just because you click on it doesn’t mean you buy it.” 

Some are paving the way for that shift by touting digital capabilities even as they boost DRTV spend. LendingTree, for example, highlights its mobile app and “When Banks Compete, You Win” tagline in 30-second spots, while a brand-new batch of 60-second spots featuring CEO Doug Lebda promotes its new online tools. The loan clearinghouse took its $126 million account to R2C Group in January 2018 to help “make TV a larger piece of LendingTree’s overall marketing mix,” LendingTree CMO Brad Wilson said in a statement.

Progressive’s ubiquitous “Flo” is another excellent example. “What makes it stand out is that Progressive reaches the mass market with DRTV,” says Lee, a member of the Response Advisory Board. “Expanding upon this, Progressive has introduced Flo as a chat tool on Facebook Messenger. Flo is an example of a quintessential brand ambassador.”

In Education We Trust

The most important currency in financial services is trust. People are spending or investing their hard-earned cash and need to believe that they are doing so wisely. “In the early stages of the sales funnel, it’s vital to establish goodwill and trust,” says Koeppel, also a member of the Response Advisory Board. “One of the most effective ways to do this is to provide relevant information that answers common questions and educates, without overtly selling.”

The biggest players in financial services — companies such as Geico, Progressive, and Allstate — saturate the airwaves with as much as $25 million per week to drive prospects to the phone and web by emphasizing value and fast service: “15 Minutes Could Save You 15 Percent.” But beyond “necessity” products like car insurance, financial services marketers must be prepared for the long haul. 

“It’s a combination of building brand awareness and image, as well as being there at the moment an event is triggered,” Chow says. Selecting a product is “a thought process; it takes time. It’s almost more important nowadays to talk about the product than sell it.” 

That means following up with not only an intuitive landing page (like New York Life’s new, click-to-fill “The _____ Plan” portal), but also blog posts, e-books, and social video, plus options to chat and call. “[Digital] channels allow for a more engaging content play,” Hawthorne-Castro says. “The marketer that can deliver useful content in digital, social, and mobile will win the customer’s business, because that marketer has made the research process less painful.”

Digital channels also offer an opportunity to connect with audiences on a more personal level by segmenting them by demographics, psychographics, level of interest, and other factors. Segmentation of converted and unconverted prospects alike can deliver insights, allowing marketers to use predictive lead scoring to help retarget ads to those most likely to convert.

“If you set up your campaigns and tracking properly, you can get insights into how your overall media mix influences your business on many levels,” says Steve D’Amico, vice president and group account director for Hawthorne. “For prospecting, digital, social, and mobile offer very precise targeting beyond the mass-media age/gender mix.”

Social video, he adds, is emerging as an effective way to win customers. Options on Facebook, Instagram, and other platforms often reiterate DRTV messaging, but offer lower costs and greater precision in targeting. “For higher lifetime value products like insurance, digital video is something we recommend,” D’Amico says. 

Building the Brand

For financial services, a consistent, channelless “long game” that features lots of content is just another way to describe branding in a fragmented media landscape. “The consumer is bombarded with information,” Lee says. “Cross-channel campaigns bring more exposure, yet more chatter. Marketers need to build the brand arc with specific, timed touchpoints for efficiency and success.”

She continues, “Financial services brand campaigns have to engage the consumer so that they remember why this product or service will help them. The campaign needs to be emotional, and the story memorable. Just as important, the individual has to be able to connect it back to the correct financial services company.”

Once known for sober ads starring its namesake, Charles Schwab recently launched a brand campaign that fails to mention investment strategy whatsoever.

Released online, short films feature individuals facing a life change — like Mardelle Peck, who took up motorcycle racing at age 65 — in support of the ­brokerage’s “Own Your Tomorrow” positioning. 

Similarly, Capital One recently debuted its #DefineYourDream social video campaign on Facebook and Instagram, spotlighting the inspiring ways customers are using their cash-back rewards. And E*Trade’s new campaign has cut through the clutter, Koeppel says, by parlaying envy into action: “The dumbest guy in high school just got a boat. Don’t get mad, get E*Trade.” 

Financial Services Nielsen RankingsMore Measurement 

With a channelless strategy, however, it’s difficult to determine where an individual’s purchase path begins, or how it ends in a sale. DRTV, direct mail, print, and e-mail offer relatively straightforward attribution, but digital channels pose challenges for marketers seeking to optimize budgets. 

“Measuring ROI in digital is a huge challenge,” Chow says. “You can measure click-through rates [or] time spent on the site, but unless they fill out a lead form, you don’t know how much of that converts. You can reach more people, but you never know if you’re reaching them at the right time with the right product.”

While financial services are shifting more marketing dollars online, the understanding of campaign measurement has some catching up to do. “We had one client who found responsiveness for digital video doubled using multitouch attribution vs. a last-touch model,” D’Amico says. “Last touch gave a false negative. Data misread and misused can be a dangerous thing.” 

The agency measures online attribution and 800-number activity while performing halo measurements to determine whether a tactic produced a lift in key performance indicators (KPIs) elsewhere in the mix. “In addition, our data science team will spend a good amount of time running multiple regressions,” Hawthorne-Castro says. 

“As an industry, we’ve gotten better at connecting the dots between broadcast or offline media and online media,” Koeppel says. “This skill is essential, since it is incumbent upon marketers to engage consumers with multiple touchpoints using various media and techniques.”

Looking Ahead

Marketers’ move toward digital channels will continue to accelerate in the years ahead, according to eMarketer. Total digital spend will rise 21.5 percent from 2017 figures to reach $113.2 billion by 2020, while TV will creep up 4.7 percent to $78.0 billion. At the same time, U.S. households relying solely on digital delivery of televised entertainment will grow to 28.4 percent. 

While baby boomers hold the most wealth of any generation in history, cord-cutting millennials are now adults aged 22 to 37, and the oldest members of Generation Z are moving out of their parents’ homes for the first time. Neither demographic has benefited from the education in financial instruments their parents had. “Younger generations don’t understand financial services because no one has been talking to them,” Chow says. 

Marketers are just starting to seize upon this opportunity. Targeting millennials, TD Ameritrade’s latest campaign features earnest green-room consultations with a bearded, bespectacled spokesman, “casting-central attributes for any ‘hipster,’” Koeppel says. “There is a new generation of successful professionals who are buying cars and homes, raising families, and needing life insurance. While millennials may be less materialistic than the generations that came before them, they still want security and stability.”

Continuous improvement in data analytics will allow financial services to further personalize marketing efforts using A/B and multivariate testing, segmentation, and artificial intelligence (AI) tools such as chatbots. And with the rapid mainstreaming of personal assistants such as Amazon’s Alexa, marketing efforts will expand to accept voice-activated inquiries. 

The task of being in front of the consumer where and when they need the information, in other words, is only going to get more intricate for financial services marketers.

“People aren’t walking around going, ‘I need life insurance [and] I’m going to do it right now,’” Chow says. “Something happens, and you realize you need life insurance, so being in your face at the right time on the right day is the key.”