Streaming services such as Pandora and Spotify are becoming popular advertising vehicles for community and regional banks.
While smaller banks still primarily rely on direct mail to promote new products and services, more and more are turning to digital channels to reach younger audiences who spend much of their lives online. Music streaming services are particularly appealing to banks because their audiences are sticky. Pandora's 75 million monthly users tune in from trains, cars, offices, gyms and homes, and the company says its listeners spend an average of 22 hours a month on the channel.
Pandora has about 300 banks and personal finance firms on its roster of advertisers, or about 20% more than it had a year ago. While larger banks have been actively advertising on streaming services for several years, Heidi Siena, Pandora’s vice president of sales for the financial services vertical, said she’s seen an uptick in interest over the last two years from institutions of all sizes.
Siena said her group receives inquiries from financial institutions daily, adding that she expects growth on the platform to continue. Spotify did not respond to an interview request.
Bankers say that streaming services are natural channels for promoting their digital capabilities, such as mobile bill payment or remote deposit.
First Financial Bancorp in Cincinnati has noticed higher click-through rates on its Pandora advertisements compared to other digital channels, said Mandy Neeley, the $8.9 billion-asset company's chief marketing and strategy officer. First Financial has used Pandora to promote its small-business podcast as well as specific products.
“The combination of being able to reach the right audience with the right message has been powerful,” Neeley said. “To us, seeing those click-through rates has been surprising.”
Banks can also target listeners in specific markets through Pandora advertisements because the streaming service collects ZIP codes and other data points, including gender and birth year, from its listeners.
That helps companies targeting specific markets avoid advertising to people on vacation in the area, for example. Neeley said the ability to advertise efficiently without wasting dollars reaching consumers outside of the bank’s footprint is important.
“Our brand is not a national brand, so how do we find channels and ways to connect with people in targeted and efficient ways,” Neeley said.
Banks also like the fact that they can track who is clicking through advertising campaigns on Spotify and Pandora, a feature that doesn't exist for traditional radio campaigns, said Veronica Sullivan, digital account executive at Pannos Marketing in Bedford, N.H.
Sullivan, who recently wrote about banks advertising on Spotify and Pandora for the American Bankers Association’s marketing website, said recent changes to Spotify’s advertising pricing structure made it easier and less expensive for small businesses, including community banks, to consider the platform.
Sullivan said advertising on Spotify starts at $250 and Pandora starts at $5,000. Pandora declined to confirm the dollar amount.
Pannos is working with one banking client and is in talks with a few others to create online radio advertising campaigns. Sullivan declined to name the banks.
“Banks are definitely receptive to it,” Sullivan said. “Maybe they’re not ready to make the change yet, but they are willing to consider it.”
Some banks are using Spotify or Pandora to diversify how they reach consumers. This is the case for Arvest Bank in Fayetteville, Ark., which has advertised on Pandora since 2016.
“We have a multilayered strategy that includes everything from direct mail and phone calls to Pandora and Hulu, and everything in between,” said Jason Kincy, Arvest’s director of marketing. “It’s about getting that diversity of channels to get to the right [audience] at the right time.”
Arvest has been allocating more resources to digital marketing in recent years, Kincy said. He estimates that four years ago the $16.8 billion-asset company spent less than 10% of its marketing budget on digital channels. Now the bank allocates 30% to 35% of its marketing budget to digital.
Pandora offers flexibility in terms of being able to target specific audiences and change the advertising content as needed, Kincy said. Arvest used Pandora to promote a new mobile banking app that launched last November.
Promoting mobile apps and digital banking on platforms such as Pandora and Spotify makes sense because listeners can download the mobile app or click on a link from their mobile devices, industry experts said.
"A radio ad in a small town in Arkansas is going to say, 'Come visit a nearby branch or call us,' " Kincy said. "On Pandora, it’s click to go to our website. We're trying to get a more digital response."
Spotify and Pandora can provide opportunities for banks to use personalized marketing techniques to deepen customer relationships and appeal to new clients, industry experts said.
Banks could use data from the online radio platforms to make personalized offers to customers, said Tiffani Montez, retail banking senior analyst at Aite Group.
Montez gave a hypothetical example of a bank customer listening to Coachella playlists before attending the music festival. A financial services company could send the listener exclusive rewards or promotions to be offered at Coachella to entice a customer to use their credit card at the festival.
"Is there a way to promote products and services based on what [customers] are listening to?” Montez said.