How Traditional Financial Institutions Are Using Interactive Advertising to Stay Competitive
Chris Gale is Co-Founder of Verasity, a disruptive Blockchain Video Sharing Platform designed to pivot the online video ecosystem by enabling a direct and transparent commercial relationship between viewers, content creators, and advertisers. Previously, Chris was founder and CEO of Ad Tech Company, Odyssey Mobile which successfully exit to Phunware in 2014 who later listed on the Nasdaq in 2018.
As the rise of financial technology continues, traditional financial institutions must adapt quickly or risk losing lucrative market share. With a mandate to deliver financial services using efficient infrastructure and smart technology, emerging fintech platforms have become fierce competition for industry incumbents. In facing this threat, many banks and commercial service providers have taken a collaborative approach to ongoing fintech initiatives. By doing so, many aim to leverage their long-standing reputation while staying ahead of a changing industry.
Although this tactic is useful for some, others risk becoming obsolete in the face of advancing technology. For these companies, developing and implementing effective growth strategies is essential to avoid being left behind. Through the implementation of a robust marketing plan, traditional financial institutions can build on their strengths while generating vital consumer awareness.
The Growth of Digital Advertising
Catching the attention of would-be customers has become more complicated in the digital age. In today’s marketing ecosystem, digital advertising is a crucial component of any successful ad campaign, and companies have taken note. According to eMarketer, worldwide digital ad spending will rise by 17.6%, reaching $333.25 billion in 2019. As a result, digital ads will account for almost half of the global advertising market for the first time.
Within this digital advertising ecosystem, there are many delivery mechanisms that marketers can employ. However, one of the most promising applications is interactive or video-based ads. According to IAB, 74% of U.S. consumers over the age of 13 watch streaming or online video at least weekly and 41% watch daily.
These figures suggest interactive advertising achieves engagement levels far higher than most other options such as sponsored or native ads. To understand what these findings mean for traditional financial institutions, here’s a look at the rise of fintech, the power of interactive ads, and emerging integration opportunities.
The Rise of Fintech
Fintech has become a robust industry in recent years. This driver of disruption has left many financial institutions vulnerable to declining profits in the face of accelerating innovation. According to a report from PwC, 88% of incumbents believe this loss of revenue is already underway. Also, the report suggests 24% of the same financial entities perceive an ongoing business-at-risk trend.
Source: PwC Global Fintech Report
As traditional market players become increasingly aware of fintech’s disruptive potential, this perceived risk is amplified. For example, in 2017, 82% of North American report participants saw fintech as an immediate business risk, up from 69% in 2016. Further stoking these fears, insights from DeNovo indicate that 30% of consumers plan to increase their usage of non-traditional financial service providers while only 39% plan to continue using only traditional service provides.
In response to these trends, 77% of traditional financial institutions report increasing internal efforts to innovate and 56% have made countering fintech disruption a core strategy. Through these efforts, incumbents hope to respond better to rapidly evolving market conditions. However, to further bolster these efforts, these long-standing institutions must integrate effective advertising into their plans. And based on the need for consumer engagement, interactive advertising might be the best approach.
Source: PwC Global Fintech Report
The Power of Interactive Ads
For traditional banks, digital advertising will become an essential component of countering fintech disruption. In this competitive environment, these institutions will need to employ highly effective marketing strategies to compete with fintech platforms. According to IAB's 2019 Video Advertising Spend Report, digital video ad spend is climbing. Marketers report digital budgets have gone up 25% year over year and a substantial 75% in the Media & Entertainment category.
Source: 2019 IAB Video Advertising Spend Report
According to a report from Magna, 78% of digital video viewers are willing to watch advertising in exchange for free content. The same report found that online video viewers pay closer attention to both content and ads when watching educational videos. Across all of the interactive advertising subsets, engagement is higher, and brand recognition vastly improved.
Source: The Interactive Effect - A Key to Surviving in the Attention Economy of a Mobile-First World
With advertisers set to increase their spending on Original Digital Video (ODV) by 31% in 2019, the trend towards interactive advertising appears poised to continue. With a focus on quality, marketers for traditional financial institutions can capture the attention of elusive consumers.
Attention-Based Ad Metrics and Blockchain
When measuring audience attention, marketers have come to rely on industry-standard metrics. However, many have also begun to experiment with blockchain technology integrations to encourage further user engagement.
Attention-Based Ad Metrics
Although viewability has been a traditional attention-based ad metric, a 33Across report found that 95% of all respondents were ready to move beyond this measure of quality and engagement. The same report also found that 77% of marketers assess the quality of audience attention based on the number of seconds the ad was in-view.
Source: Where Will the Quest for Audience Attention Lead in 2019?
In exploring potential metrics further, the Financial Times has also put forth an entirely new model known as "cost-per-hour.” Regardless of the metric used, measuring audience attention is an essential component of measuring ad success. Consistently applying these metrics to interactive advertising will provide traditional financial service providers with the insights they need to stay innovative.
Attention-Rewarded Video
Some companies have started rewarding audiences for their engagement and attention by leveraging blockchain technology. These platforms encourage audience viewership through a set rewards program, usually employing some form of cryptocurrency. For example, the Verasity video player enables tokenized rewards (VRA) as well as loyalty schemes within a video player wallet.
The unique technology is already available to more than 2 million video publishers with 550 million users and 110 billion monthly views.
Bridging the Gap
As the rise of fintech continues, it will be increasingly crucial for traditional financial institutions to protect their bottom line. To achieve this, incumbent marketing teams must ensure the ongoing development and implementation of highly effective advertising campaigns. Interactive ads provide a particularly useful medium for catching the attention of audiences across the web.
By combining these highly effective ads with blockchain technology, audience engagement and attention can be further enhanced. With the revenue trajectory of traditional financial institutions uncertain, ongoing efforts to reach audiences are crucial. By engaging with audiences in a meaningful capacity, these incumbent institutions can better hedge against constant fintech competition.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.