Financial Institutions Are Excelling At Mobile Advertising

Online and mobile banking have become must-have offerings for financial institutions.

The Federal Reserve reported in a 2013 consumer survey that 28 percent of all mobile phone owners had used mobile banking in 2012, and that 10 percent of Americans said they planned to use the service in the upcoming year. During this time, the majority – 74 percent – of Americans said they had used online banking at least once over the last 12 months. 

Because of this consumer demand, financial institutions (FIs) have needed to move quickly to develop advanced tools both online and on smartphones. But, when it comes to reaching new customers through advertising on these platforms, how much is the industry investing, and is it investing wisely?

This was the driving question behind a new report, entitled “The U.S. Financial Services Industry 2013: Digital Ad Spending Forecast and Key Trends,” released by New York-based market research company eMarketer on July 2.

EMarketer found that in 2013, financial institutions spent $5.2 billion on digital advertising, up from $4.6 billion in 2012. Still, the biggest growth is yet to come. By 2017, eMarkerter indicated businesses will allocate $7.8 billion to this part of their marketing budget.

In this PYMNTS.com Data Point, we’ll analyze the study so you can see how FIs plan to capitalize on growing online and mobile use through digital ad spending both this year and into the future.

Mobile Ad Spending In 2013

The financial services industry currently spends the second most on digital advertising, and eMarketer said that these investments aren’t being wasted.

“The US financial services industry is ahead of the curve and moving quickly when it comes to mobile advertising sophistication,” the report noted.

EMarketer reported banks, credit card issuers, investment firms and other financial service providers will invest 62 percent of their digital ad dollars into direct response ads – such as online banner ads, coupons or other digital methods of creating interaction between brands and consumers – in 2013.

Remaining digital advertising budgets will center on brand-focused campaigns that bring consumer awareness to a company. Search and display and graphic content that appears online, will be the largest subcategory of marketing FIs engage in. Growth is also expected in local, mobile, native and video advertising.

Mobile Ad Spending In 2015 And Beyond

Between 2012 and 2017, FI spending on digital advertising is expected to experience a 9.9 percent compound annual growth rate. Yet despite a rise in spending, the industry will fall to third place in terms of total annual dollars allocated to digital ads. 

EMarketer said mobile marketing spending will become a $19.8 billion industry by 2015, with all major verticals – from arts and recreation to healthcare and social assistance – increasing their spending in this category.

Overall, the report showed FIs will continue to make big investments in online advertising. However, since only 3 percent of consumers switch banks annually, this advertising is likely to be best served by increasing brand awareness and creating engagement through direct response and brand-centered advertising.

For more insights into how FIs will spend on digital advertising in the coming years, download the full report here.