Inside financial media networks and whether they can disrupt industry stalwarts

Retail remains the fastest-growing segment of media— even as its growth rate slows a bit. Renewed momentum could come from a wave of financial players building networks that fill data gaps and bridge the walls between retail networks. Chase, Klarna and PayPal are among the financial players looking to get a piece of the growing retail media action. GroupM projects retail media will grow 17.5% in 2024, while Madison and Wall expects it will hit $50 billion this year, although with a growth rate that will slow from 22% in the first quarter to 18% for the full year. Ad Age Small Agency Conference & Awards Join us July 23 & 24 in Boston Learn more here Chase Media Solutions launched in April for the bank’s 80 million users, billing it as the only bank-led media network of its kind. Other financial players are fast on Chase’s heels including PayPal, which launched in May with a proposition for targeting its 400 million users with ads and offers. Klarna joined PubMmatic in launching a media network for its 150 million global users in May as well. The problem is that the greatest potential for financial media networks may be using their wealth of transaction data for targeting consumers and measuring outcomes outside of the properties finance players own. But doing so increases their risk of violating privacy regulations, which could be about to get tougher, and comes amid some disappointment in how well retail media has worked outside of retailer properties. Regulatory news: House grills Unilever and GroupM execs Potential for rapid growth Donna Sharp, the managing director of MediaLink, who correctly predicted the wave of financial media networks in a presentation at CES in January, believes many more are coming. “All these businesses have robust consumer data, robust owned and operated interfaces with their customers and are looking to differentiate their revenues to grow,” Sharp said. “They have to, at minimum, be investigating the opportunity in the advertising space. Over the last year or so we have had a lot of early-stage commercialization work in the space.” Financial services players are coming into the space late, but with the advantage of being able to draw on the experience of retail media networks and an ability to acquire talent and technology thanks to considerably stronger margins than many retailers have, Sharp said. That allowed Chase to stand up a business almost overnight, she said. Of course, those higher margins also mean a higher bar for financial services players to justify the investment, whereas the margins on an ad business are almost always relatively attractive to retailers. Financial service players offer considerably more breadth than retailer networks because they see people’s transactions from more than one retailer and across many categories. What they add in depth, however, they may lack in product detail. Banks and credit card issuers can see where people spend money, but not generally the specific items they spend money on. That may help a packaged-goods marketer or quick-service restaurant chain target and track ad response among customers, but not see exactly what they bought. Check out the latest Ad Age events and award programs Given the proliferation of retail media networks, there’s a considerable question of how much traction a financial-services player can get by selling advertising on its own digital or direct-mail properties. A bank or credit-card issuer might only draw people to visit their sites once a month at most, maybe less for people using auto-pay, whereas a retailer is likely to attract visits weekly or more often. A successful retail media network needs both owned and operated inventory at scale and a proprietary customer signal that can be applied offsite at scale, said Seth Dallaire, chief revenue officer of Walmart. Financial services players have the latter, but not much of the former, he said. “Many of these credit card networks don’t have the critical mass of traffic,” he said. “They have a great data signal.” That provides an opportunity, he said, “but probably smaller than retail media.” “Does the world need another media company? The answer is probably no,” Sharp said. “But the industry is hungry for better data, better quality experience of targeting and knowing the result of your media. And one could argue that no one is better positioned than a large financial service provider.” Also read: Walmart Creator’s growing role in social commerce Mixed results for off-site The opportunity may be smaller for banks than retailers with good reason, given that offsite application of retail media data that’s already available is having mixed results for marketers compared to buying retailer-owned and operated properties such as their websites, mobile apps and other direct communications, according to multiple agency and marketing executives. That’s been the experience for packaged-goods marketers that work with e-commerce marketing platform MikMak as well, said Rachel Tipograph, its CEO. “As more and more brands start to think about retail media offsite, they’re getting more sophisticated and putting it into their media mix models, I think folks are experiencing mixed results,” she said during a Cannes Lions session with Walmart last month. “They have this expectation that it’s going to perform like lower funnel media [on retailer sites] and it doesn’t. They’re questioning whether it’s better to just give $1 to The Trade Desk rather than The Trade Desk against a retailer-specific audience.” That’s a question that does come up frequently, said Dallaire, and the answer is complicated. It’s undoubtedly more expensive to add retail audience-based targeting and attribution to a buy, but there may be a transactional component to the buy that helps justify the added cost. At least some of the perceived relative advantage for spending on the so-called lower funnel on retailer-owned sites may be that retailers get more credit than they deserve there, said Sameer Amin, global director of data-driven marketing at Reckitt. “When we buy owned-and-operated [retail media], we know we’re paying for people who are going to buy our products anyway,” Amin said, so the research team has worked with marketing mix modeling to analyze retail media spending and find a true return-on-investment number based on incremental sales. When that happens, advertising on retailer sites is far smaller than what’s often cited by retailers, he said. Amin does see potential value from financial media network data that could span multiple retailers in helping get better spending-based visibility into audiences across retailers and measure incremental sales from ads. But that data still isn’t going to answer the “why” question of what drives those sales, which he said is a growing focus for Reckitt. Data marketplace tradeoffs While financial services data could help fill gaps in retail media data, it doesn’t fill them fully, said Alexander Potts, senior VP of programmatic at Tombras. “We’re huge proponents of singular entities that have the most data vs. trying to co-mingle data sets from smaller entities, like retail media networks,” Potts said. While financial provider data could provide added scope, lack of visibility into an item or SKU-level data is a drawback that just means a need to co-mingle financial data with other data. For the same reason, Tombras looked at, but decided against, leaning on TransUnion data, which similarly offers a broad range of transaction coverage across categories but lacked item-level granularity. Ultimately, Tombras went with Attain, which gathers purchase data across retailers and categories from an opt-in panel of more than 7 million consumers. “They have a massive sample size, but with it immense granularity,” Potts said. More from Ad Age: When agencies become media sellers Klarna, which built its business on providing shoppers with installment payment plans, while generating merchant fees and other consumer fees such as for late payments, joined the financial media network fray in May with what it sees as bridging the retail and financial worlds. Klarna has a wealth of transaction data for 150 million consumers globally, including 34 million in the U.S., across goods and services categories, including Uber, Airbnb, Ticketmaster, online subscriptions and other service payments, said Chief Marketing Officer David Sandstrom. Klarna has billed itself as a retail media network, he said, “to fit into a category that people in the industry seem to understand,” Sandstrom said. Plus, it has the consent to follow consumers’ spending across its 550,000 retailers and many verticals and get SKU-level data. “The value of any media network is what you know about consumers,” Sandstrom said, and Klarna’s extends across more categories even than Amazon, plus drawing in sales from such emerging competitors as Temu and Shein. Also read: Klarna cuts agency expenses by 25% using AI “To me, the really big strength of Klarna is that we can paint a picture of the consumer,” he said. “It’s a mix of knowing here’s someone who buys this on Foot Locker, travels here with Airbnb and moves around with Uber.” Even so, Klarna covers a segment of the market where people want or need to make installment payments as opposed to using credit cards or paying cash via debit cards. The rise of financial media networks might seem like it’s threatening transaction data brokers. That’s not the way Matt Spiegel, executive VP of growth strategy for TransUnion’s TruAudience sees it. “They’re not a competitive threat,” Spiegel said. “We view them as good potential partners.” That’s because while Klarna may know a customer from one email, Walmart might know the same person by another and Nike by a third. “Being able to connect those dots is a challenge,” he said. “That’s the role that TransUnion plays.” While measuring outcomes is crucial to the value of any of the data sets, each of them is limited to their share of a consumer’s wallet, with transactions that happen through rival retailers or financial players invisible to them. Privacy concerns The problem for financial media networks is that what may be their greatest potential value—the ability to leverage people’s transaction data across a wide range of media buys—is also their greatest potential risk for privacy violations. As long as financial services providers limit their use of data to campaigns within their owned and operated properties, as Chase is doing now, they should have few issues around consent, said one data industry executive who spoke on the condition of anonymity. Should financial services players look to leverage transaction data for targeting consumers outside their owned properties, it’s unclear whether they currently have express consent for that, the executive said, and they increase their potential exposure to data breaches. Complicating issues further are pending Consumer Financial Protection Bureau regulations that create more stringent consent rules for the use of transaction data and other financial information. Whether the regulations, or the CFPB, would survive a change from a Biden to Trump administration is unclear, but the Supreme Court did reject a challenge that would have ended the bureau. While TransUnion, for example, both handles credit ratings and reporting for financial institutions and a data business used by marketers and agencies for reconciling disparate data sets, the credit data is not used for the data marketing side, said Michael Schoen, executive VP of marketing solutions for TransUnion. Schoen said TransUnion is looking to help customers navigate CFPB and other privacy restrictions as the drive to leverage financial media networks grows.

Inside financial media networks and whether they can disrupt industry stalwarts

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