According to Interactive Advertising Bureau and PricewaterhouseCoopers (IAB/PwC), only the "consumer related" and computing categories were greater contributors to total online ad spending in the U.S. in 2005 than the financial sector. Considering that the consumer-related category combines advertising powerhouses such as retail, automotive, leisure, entertainment and packaged goods, this shows clearly that the financial services industry is a very significant player in the world of online advertising.
The big picture
The U.S. financial services industry raised its total advertising spending by 10.1 percent in 2005, to more than $8 billion, from $7.3 billion in 2004. All major media -- television, print, radio, internet and outdoor -- saw a boost in spending by financial services companies, according to data from TNS Media Intelligence published in American Banker in May 2006.
Television, including broadcast, spot TV and cable, still accounts for the greatest absolute level of ad spending in this category, $4.1 billion in 2005, up 9.6 percent over 2004. Some of that advertising sent consumers to the web. After the Super Bowl, Fidelity Investments -- whose URL appeared in an ad during the game -- saw traffic to its site jump 28 percent, according Nielsen//NetRatings data reported by The Wall Street Journal.
However, some other offline media did see substantial gains in ad revenue from financial services firms. Outdoor advertising rose the most, increasing by 20.6 percent in 2005, to reach $220 million. Print advertising (national and local newspapers and magazines, including consumer and business trades) was the category's second-largest ad medium in both 2004 and 2005, attracting nearly $2.5 billion in spending from financial services firms in the latter year.
Spending on online ads totaled just $904 million in 2005, an increase of 5.8 percent over 2004, according to TNS/American Banker data. Obviously this is a very different picture to that painted by the IAB/PwC who put the total some $600 million higher but also reported a fall in 2005. The difference stems from the IAB's inclusion of spending on search advertising, which TNS does not track. Search is a very competitive category for financial services companies, with keywords commanding premiums in the mortgage and insurance segments.
The TNS data show financial services to be bullish on advertising in all media. The growing use of outdoor advertising shows a determination to reach local markets with more targeted messages.
Online impressions surge
In the first four months of 2006 financial services firms increased their online display ad spending rapidly. Data from Nielsen//NetRatings' AdRelevance, reported monthly, published by MediaPost in May 2006, show total display ad impressions in the US totaled 197 billion in April 2006, a 59 percent increase from the number in December 2005. Financial services ads accounted for 20 percent of all the impressions served in December 2005 and went on to account for 30 percent of all impressions in April 2006. The result: a whopping 139 percent increase in financial services firms' display ad impressions between December and April.
In 2004 and 2005, investment companies were the biggest online ad spenders within the financial services industry, both in absolute terms and in terms of the percentage of their budgets going to online ads. Online display ad spending by brokerage/investment firms rose by nearly 25 percent in 2005, to reach $457 million. These firms accounted for 40 percent of all online ad spending by financial services companies in 2005, according TNS. The preponderance of online-only trading companies, such as TD Ameritrade, ETrade, Scottrade and others, helps to account for the heavy online spending.
Credit card companies pulled nearly 37 percent of their ad budgets off the internet in 2005, with online ad spending dropping from $162 million in 2004 to just $102.6 million in 2005. As a result, online ad spending by credit card companies fell to less than 5 percent of their total ad spending in 2005, down from more than 8 percent in 2004.
By far, standard image/text link ads are the most popular form of display ad among financial services companies. Some 60 percent of all their online spending was devoted to this form in April 2006. More than 38 billion impressions were served as standard image/text link ads in April, a 2.5 percent increase over the previous month, according to Nielsen//NetRatings. Rich media is the form least-used by financial services companies, with just 271 million impressions delivered as rich media in April, a 30 percent fall from the month before. Sponsored links remained relatively steady, comprising 7.5 percent of all online ad impressions served in April compared to a 7.8 percent share of total online ads in March.
Lisa Phillips is a senior analyst at eMarketer. This article is drawn from her new report, Financial Services Online Marketing. Contact eMarketer directly here.