BIA/Kelsey Vertical Reports: Turbulence Ahead in Financial Services
BIA/Kelsey has released its 2015 Insights into Local Advertising report for the Financial Vertical. The report provides BIA/Kelsey’s estimates of marketing and advertising spend in each of the major segments of the Financial Services industry.
One important takeaway is that financial services are undergoing rapid transformation due to automation, innovation in financial technology and changing consumer preferences that favor smaller more service-oriented banks.
“The financial services market is poised for significant growth over the next five years, but is also set to endure a period of intense innovation as financial technology companies attract capital and impact consumer behavior,” Dr. Mark Fratrik, Senior Vice President and Chief Economist of BIA/Kelsey said of the prospects for the financial category.
Local financial advertising will account for $7.5 billion in spending during 2015, or approximately 5.4 percent of all local advertising. 13 billion in local advertising in 2015. We project the segment will continue to grow at a 1.7-percent compound annual rate through 2019, when it will account for $9.07 billion in local spending.
The Financial category includes:
2. Commercial Banking
3. Savings Institutions
4. Credit Unions
5. Securities Brokerages
6. Portfolio Management
Commercial banking accounts for the largest share of local financial advertising, as both global banks and local banks attempt to establish brand identity – which is critical to consumer confidence when selecting a new bank. They rely predominantly on traditional media when advertising, particularly direct mail, which is used to address customers within three miles of a local branch.
Each subcategory of the Financial Vertical is under unique pressure to change. The fall-out from the 2008 banking crisis has resulted in many new competitors, often deploying technology to establish customer engagement before investing heavily in local physical branches. Accountants, for example, have seen an 18.9 percent contraction in households using their services since 2008. Online tools and banking firms, which are gathering capital from a wider audience than ever before, can make successful loans with the same or even less information than a traditional bank does, creating many new points of entry for the financial services customer.
BIA/Kelsey estimates, based on respondents’ answers to its BIA/Kelsey’s Local Commerce MonitorTM (LCM) survey, that digital channels accounted for approximately 29 percent of financial services advertising in 2015, which we believe is slightly higher than the industry average of 23.3 percent. We project that while Direct Mail will remain strong, virtually all of the growth in local advertising spend over the next five years will be directed to digital, which will grow at a 15-percent compound annual rate through 2019. Digital revenue will increase from $1.99 billion this year to $3.41 billion in 2019.
The report also examines technical and demographic aspects of the local Financial advertising vertical, including the rapid pace of investment in “Financial Technology” startups, which have attracted 300 percent more venture funding over the past year, the introduction of virtual payment, such as Apple Pay, and alternative currencies like BitCoin that could be deployed to lower transaction fees, and the response of credit card and other transactional services companies. Financial advertising is poised for significant disruption by 2020.
The report “Insights in Local Advertising – Financial Vertical,” examines traditional and digital spending trends, examines traditional and digital/online advertising for the financial industry and offers the following analysis:
- Profiles the financial ad spending by media for 2015 and 2019 to reveal growth and declines.
- Outlines spending within the industry’s subcategories: Accounting Firms, Commercial Banks, Savings Institutions, Credit Unions, Securities Brokerage Firms, Portfolio Management Firms.
- Examines media’s impact on how consumers search for, purchase and maintain relationships with financial institutions, as well as how consumer behavior affects marketing and media spend.
- Examines the ad spend in the top 10 U.S. markets.
- Addresses technological innovation and regulation impacting the Financial sector.
- Provides a Media Ad View Local Advertising Dashboard that profiles the nationwide spending for the six financial subcategories discussed in the report.
- Delivers comprehensive take-aways for both media companies and platform solution providers that offer actionable advice on where businesses should focus their efforts within the financial vertical.
- The data featured in the report is drawn from BIA/Kelsey’s Annual U.S. Local Media Forecast, Local Commerce Monitor™ (LCM) survey of SMB advertising and marketing spending activities and Media Ad View Plus Reports that track ad spending across media categories, ad categories and verticals.
Figures and tables featured in the report include:
Total Financial Local Advertising: 2014 – 2019
2015 Distribution of Financial Advertising Spending by Media
2019 Financial Advertising Spending by Local Media
Distribution of Online Spending by Type in 2015
2015 Per Capita Financial Advertising Spending in the Top Ten Markets
Who should read this report?
Marketers and Sales Leaders in Media and Financial Services Companies
Marketing Platform Developers
Media Leaders seeking a strategic approach to Financial firms and marketers
Media Sales Professionals
Analysts, Investors and Journalists
BIA/Kelsey clients can login to download the report, and others can purchase it here.