Fintech companies worldwide are venturing into advertising this year. In September, PayPal launched PayPal Everywhere, a product that allows users to earn rewards and use PayPal both in-store and online. While rewards and cashback are appealing to consumers, advertisers are drawn to the ability to target potential customers with personalized offers and deals. Earlier, in May, PayPal brought on Uber’s Mark Grether to build its advertising network. Grether is well-known in the advertising industry for helping grow Uber’s advertising business, which is expected to generate $1 billion in revenue this year.
PayPal isn’t the only fintech with advertising ambitions. In April, JPMorgan Chase introduced Chase Media Solutions, claiming it will “enable advertisers to connect directly with the financial institution’s 80 million customers.” Meanwhile, Revolut, the European fintech valued at $45 billion, has announced plans to enter the advertising market. Even X (formerly Twitter), traditionally reliant on advertising revenue, is exploring the idea of entering the payments space and competing with financial firms. So, why are advertising and financial services intersecting?
The reason is that the advertising industry is in desperate need of data and is running out of reliable sources to get it from. Advertisers need to understand consumer interests and demographics, but more importantly, they need transactional data—who buys what, when, and why. This data powers the machine learning models that are the backbone of digital marketing. Without it, online advertising cannot run effectively.
In recent years, it has become harder for advertisers to access actionable transaction data. Part of the problem stems from regulatory changes, like the General Data Protection Regulation (GDPR) in Europe, which limits how advertisers can collect, store, and use this data. More significantly, major tech platforms are reducing the amount of information they share with advertisers. Companies like Apple pride themselves on “privacy-conscious” policies that limit advertisers’ access to user data. Even Facebook, which depends on ads, is sharing less information with its ad partners. As advertising analyst and investor Eric Seufert put it, platforms like Apple, Facebook, and Google are becoming “walled gardens,” where data—and therefore advertising dollars—are confined to a single platform.
At the same time, financial services companies are sitting on a wealth of data that advertisers would love to access. Due to know-your-customer and anti-money laundering regulations, these companies know exactly who their customers are, where they live, how they earn, and sometimes even how much they have in savings.
