The Real Reasons Why Financial Services’ Mobile Ad Spending Increased 314%

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ClickZ reported that Financial Mobile Ad Spend Up 314% in 2011. According to the article:

“According to Millennial Media, from 2010 to 2011, mobile ad spending in the finance vertical grew by 314% worldwide. The study suggested finance brands are putting more dollars into mobile because people who engage with financial content and ads via mobile devices tend to be young (between the ages of 18 and 34) and affluent, with 48% having an income of $75,000 or better. Of these users, 55% are male. They also are brand-loyal, saying they’re willing to pay more for a product they trust and stick to brands they like. When it comes to selecting a financial services company, [Millennial Media GM Marcuc] Startzel said, “These are purchase decisions we make in these early years, stick with the rest of our lives and only change rarely. We know this intuitively – and the data shows that, as well.”

My take: The logic and explanations for the increase in mobile ad spending doesn’t hold water. There are five points made in the article that just don’t hold up:

1. The age argument. If, as the MM GM states, “we make these decisions in early years” and “stick with the rest of our lives and only change rarely,” then advertising to someone in their early 30s is wasted, because the financial service provider decisions would have been made long ago.”

2. The “stick with” argument. Point #1 is moot because it’s simply not true that these decisions are made early and never change.  Ten percent of US consumers switched their primary bank last year. A quarter of them were Gen Xers (roughly 32-46 years old) and one in five were Boomers (roughly 47-66 years old). The “stick with” argument also doesn’t hold up because consumers have evolving financial product needs.

3. The “pay more for a product they trust” argument. Consumers within the demographic described — 18-34 years old,  making more than $75k — may very well pay more for products they trust. But necessarily for financial services products. In fact, the evidence from the study cited above would suggest the opposite of what the Millennial Media GM claims: That the increase in financial mobile ads is due to the fact that financial services products are generally utilitarian, high consideration products which lead consumers to research and find the lowest cost product for their needs.

4. The “55% are male” argument. Hello! Women make all the financial services decisions today! I bet that men shop for financial services products about as often as they shop for…well, let’s not go there.

5. The “data shows that” argument. There is no data that shows that.

Bottom line: The increase in mobile advertising from 2010 to 2011 isn’t because of the demographics of mobile financial content viewers. It’s a result of some combination of three factors:

  1. Financial services firms are looking to reduce ad costs in other channels and shifting dollars to the mobile channel;
  2. Financial services firms are experiencing good and/or better than expected results from their mobile advertising efforts, and therefore put more money into it. My recent post on The Importance Of Mobile Advertising To Banks demonstrates why the real reasons have little to do with the arguments given above. The best reason comes from a study from professors at INSEAD and the University of Pittsburgh who found that: “Low-fidelity mobile advertising campaigns are effective when they are for products that trigger further thought and consideration, which includes campaigns for high (versus low) involvement products, and for products that are seen as more utilitarian (versus more hedonic).”
  3. It’s easier to achieve 314% growth when you start off spending $10k than when you spend $10m.

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