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Big Finance wants a piece of your retail media budgets

a shopping bag made of isometric blocks with a pixellated cursor pulling a block out of it.

Illustration by Robyn Phelps / Getty / The Current

Fintech and financial services firms are the newest players to join the crowded retail media space. Armed with droves of transactional data filled with valuable consumer insights, they are going up against e-commerce giants like Amazon and Walmart, which helped boost retail media ad revenue in the U.S. alone to a whopping $43.7 billion in 2023.

Ads leveraging consumers’ financial transactions could intensify the opportunity, and the competition, within the red-hot retail media space. At the same time, some are concerned that the space is getting too crowded, even as privacy concerns must be addressed. Still, Big Finance wants a piece of the action.

PayPal and Chase — the consumer and commercial banking arm of JPMorgan Chase — are the latest to launch their new media platforms this year, following the likes of Swedish buy-now-pay-later unicorn Klarna and British neobank Revolut.

In the case of Revolut, a recent report found that the global neobank is so confident about its media strategy that they’re internally aiming to generate over $370 million by 2026 from advertising.

Revolut’s Head of Growth Antoine Le Nel told the Financial Times that going into media would enable insights into an audience that could be monetized, using the bank’s data about its customers’ interests and transactions like digital payments, cross-border remittances, as well as crypto trading.

“The entry of fintech firms into the retail media network [RMN] space presents a promising opportunity for marketers and advertisers to enhance their strategies through access to detailed financial data,” Bhoopendra Yadav, media analyst at Omnicom Media Group (OMG), tells The Current.

“With insights into users’ transaction histories and financial behaviors, advertisers can create highly targeted campaigns that align with consumers’ financial situations and preferences,” he adds.

Yadav explained that financial data can provide a deeper understanding of consumer purchasing power and financial priorities as compared to e-commerce data, offering details like income level and occupation that can enable more precise audience segmentation.

What’s more, financial data may also allow marketers access to predictive analytics that can help forecast future consumer behaviors and trends, aiding in proactive campaign planning as well as optimizations.

Banking on ads

Financial firms’ in-built data advantages were likely the motivation behind the launch of Chase Media Solutions in April this year, which promised to offer marketers access to data from the financial institution’s 80 million customers.

The move follows the integration of marketing platform Figg, which JPMorgan acquired back in 2022 to expand its commerce business. Rich Muhlstock, president of Chase Media Solutions, said in a press release that the bank’s foray into retail media feels like a “natural step” for the business.

“Our deep understanding of consumer spending across categories has driven us to reimagine what retail media networks can offer,” said Muhlstock.

Meanwhile, PayPal launched a new ad platform in May that will be driven by data from over 400 million active accounts worldwide. This will work alongside its advanced-offers platform, which PayPal claims uses artificial intelligence to analyze nearly half a trillion dollars of transaction data to generate consumer insights and offer shoppers more personalized deals.

Buy now, advertise now

In November 2023, Klarna launched Ads Manager in the U.K. and Sweden after a successful run in the U.S. Ads Manager is a self-service advertising platform for retailers to engage with its over 150 million customers worldwide.

According to Emarketer, the number of U.S. buy-now-pay-later users reached over 88 million in 2023 and is expected to rise to 104 million by 2026. Additionally, Emarketer believes Klarna is “uniquely positioned” to reach consumers at the point of purchase through in-app and in-feed ads, sponsored search placements and shoppable video content.

Furthermore, Klarna may have an edge over marketplace RMNs like Amazon, as retailer ads on Klarna can drive traffic and engagement directly back to the retailer “with no intermediation between brand and consumers,” according to the company.

Is retail media getting too crowded?

While some may celebrate the growing number of RMN options due to the wider range of consumer data as well as data insights, challenges still abound for the sector. A study across the U.S., U.K., France and Germany found that besides high costs (30%), brands and advertisers surveyed face difficulty managing multiple RMNs (27%), see a lack of industry standardization on things like tracking and metrics (27%), as well as measurement and attribution difficulties (22%).

To top it all off, financial data may be a breach in privacy laws.

“The use of sensitive financial data for advertising purposes could lead to consumer trust issues if not handled transparently and securely,” says OMG’s Yadav.

“The financial industry is heavily regulated, and compliance with data protection laws such as General Data Protection Regulation and California Consumer Privacy Act adds complexity to the use of fintech data in marketing.”

And not all consumer data is alike, says Julian Chow, head of digital marketing at Archetype. For consumers, there’s likely to be greater sensitivity around data drawn from financial services compared to e-commerce data, Chow adds.

Besides privacy concerns, with advertisers already finding it difficult to manage multiple networks, does fintech’s entry signal a trend of non-endemic firms joining the crowded retail media space and creating a paradox of choice?

“In theory, any company that has a high amount of engagement data can be an RMN,” says Chow, “but the other thing that they need to have, in addition to high usage, is the ability to meaningfully segment and segregate data into buckets that make sense for advertisers.”