WTF is a financial media network?

This article is a WTF explainer, in which we break down media and marketing’s most confusing terms. More from the series →

Over the past few months, the ad industry has seen more and more interest in retail media networks (RMNs). But given their solid, but limited access to consumer data, financial institutions’ ears pricked up as they started to see a way for them to carve themselves a hefty piece of the ad spending pie.

Enter: financial media networks.

But what are they, why are they important and why would marketers even care?

What are financial media networks?

Financial media networks, or FMNs, are financial institutions that have built out their own ad networks using their rich data sets (or their first-party data).

Recent examples include the likes of Chase Bank which launched its own ad business, Chase Media Solutions, in April. This was followed by European bank Revolut, which announced in the same month that it had set its sights on a similar path. And even buy now, pay later (BNPL) offering Klarna has been building its own foundations for this type of ad business over the past couple of years.

So why exactly have these businesses decided to dip their toe into the ad world?

“There’s a ton of regulatory pressure right now in the U.S. and in the U.K. and other countries, along with competitive threats with things like BNPL eating into credit card market share,” said Grace Broadbent, senior analyst of payments at eMarketer. In other words, it’s a combination of competitive and regulatory factors that are pushing them to diversify their revenue streams, especially now, before the landscape gets worse.

OK, but what makes FMNs different to retail media networks?

For starters, the clue is in the name. FMNs are typically financial institutions (such as Chase, Revolut, PayPal) that are building out their own ad networks, while retail media networks (RMNs) are retailers (think Walmart or Target) either doing the same, or which already have their own ad networks set up.

The key difference though is in the amount of data these companies are privy to. 

Retailers only know what people are buying at their particular store. So for example, Walmart will only know what customers are buying from Walmart, not other retailers. Whereas FMNs have a much broader, richer set of first-party data. If we take Chase bank, for example, they see cash flowing in and out of around 80 million customers’ accounts. Meaning, they have a full picture of their customers’ spending habits and interests across all retailers and industries, not to mention their salaries coming into their accounts.

That makes sense, but why are they important?

RMNs are exploding, and FMNs are an offshoot of that. 

According to eMarketer forecasts, retail media spending is set to achieve $140 billion worldwide this year, growing 21.8% year-over-year. And by 2027, RMNs is expected to tie with social media ad spending, as the second biggest ad spending channel, per eMarketer.

So from an FMN’s perspective, what FMN wouldn’t want a piece of that? Any FMN can “monetize their first-party data to diversify revenue streams in two ways,” said Ellyn Savage, vp of media at Mindgruve. “[One:] Ad dollars and [two], [FMNs like Chase] customers are making more purchases on their credit cards off of these targeted ads.”

Why would marketers find FMNs interesting?

While the third-party cookie has been delayed again, the fact remains that it’s a when, not an if, it happens. 

“It leaves advertisers anxiously seeking new ways to identify prospective in-market audiences (outside of third-party data), and retail media networks [are starting to] offer this opportunity,” said Katrina Stroh, vice president of independent media agency Media+. “It’s no surprise to see new categories — such as financial institutions [or FMNs], jump in and find ways to monetize their customer data as a new advertising revenue source.”

Which is why marketers are already looking for alternative ways to use first-party data in privacy compliant ways to get ahead. As April Weeks, chief investment and media officer at Basis Technologies put it, tapping into first-party data in a privacy-safe method is the way of the future. 

“Marketers have always sought strategies to improve the integrity of targeting, and this is another tool in the targeting toolbox,” she said. “It’s the right message, right time and right consumer approach within a walled garden.”

And given their breadth of data, FMNs can offer more opportunities than most of the existing RMNs. 

“RMNs either don’t cater to our luxury/high-end retailers or they only allow access to brands actively selling on their retailer marketplaces,” said Stroh. However, given that FMNs aren’t a retailer themselves, they will open new opportunities to brands and retailers that are solely focused on selling on their own branded websites / storefronts, she added.

Sure, but are there any downsides?

Given this is about monetizing a whole new rich set of data that wasn’t readily available to advertisers before, privacy is a huge question. 

While FMNs might be perfectly positioned to do this, given the level of scrutiny they are already under, they will have to ensure they’re being transparent with customers, so everyone understands exactly what is happening with their data, to help maintain a level of trust.

“If as a brand [in this case the FMNs], you’re transparent about what you’re doing, you give people choice and control in the matter, and you let the consumers decide – that’s where you find the line when it’s okay,” said Jonathan Joseph, head of solutions at data permissioning company Ketch.

The question is whether these FMNs will be providing their customers with an “opt-in” option for their data to be used in this way, or whether they’ll have to “opt out” — if that’s even an option at all. 

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