US ad spend on financial media networks (FMNs) will more than double in 2025 and again in 2026. But with just $710 million projected in US ad spend in 2025, per June 2024 EMARKETER forecast, FMN ad spend will be 96 times smaller than retail media network (RMN) ad spend.
FMNs will account for 0.2% of US digital ad spend in part because of how nascent they are. But the channel will also run into sticking points as finserv companies attempt to capitalize on the advertising opportunity. Here are three major challenges to FMN growth.
Much of RMNs’ early success came from advertisers’ interest in buying search ads close to the point of purchase on retailer websites. But FMNs don’t have owned channels where users spend a lot of time shopping. And the apps and websites financial institutions have are ones consumers tend to navigate with the mindset of managing and saving money, rather than spending.
Financial institutions are finding ways to circumvent these issues by becoming or working with shopping platforms where they can sell ads.
PayPal is the most recent player to integrate its FMN with shopping. The network, which launched last month, plans to integrate its ads with the 30 million merchants who use its payment system. PayPal will be using first-party data to run off-site ads, which will make up 20.1% of all RMN ad spend next year, per March 2024 EMARKETER forecast.
Financial institutions can also attempt to bring shoppers into their own apps, as Klarna did in 2021 when it started offering shopping and payment management in one place. But this approach is challenging, because US consumers are not used to shopping from finserv apps.
Trust is a necessary factor for any institution, but financial institutions have a particular responsibility to protect their consumers. If consumers can’t trust financial institutions with their data, they probably won’t trust them with their money. While consumers are used to being targeted with ads based on their search and shopping habits, ad targeting revolving mortgage data or product-level data from debit cards may creep out consumers.
In addition, the Consumer Financial Protection Bureau proposed a law guaranteeing consumers’ rights over their own data, which would mandate the ability to opt out of sharing data with advertisers.
PayPal’s ad network already allows consumers to opt out of sharing data with advertisers. As FMNs become more common, consumers may grow used to yet another use of their data for retargeting. Conversely, banks and credit card companies may position themselves as data-secure, drawing consumers who don’t want these intrusions.
One reason RMN ad spend has grown so fast is because retailer websites are already set up for advertising. Travel media networks have the same advantage. But financial institutions don’t often run ads on their owned channels. They may serve cash-back deals and promotions, but they don’t usually have the infrastructure or reputation for serving more traditional search and display ads.
That said, FMNs may leverage rewards offers for advertising. “If you look at someone like Chase, their financial media network is built on top of an existing rewards program, and that's Chase Offers,” said our analyst Maria Elm, speaking on an episode of our "Behind the Numbers" podcast. Elm predicted that other companies like Citi and Capital One may develop similar programs. “I think that just serves as a really natural springboard for building a financial media network on top of.”
This was originally featured in the Retail Media Weekly newsletter. For more marketing insights, statistics, and trends, subscribe here.