Macro factors put pressure on advertising costs, writes Maura Passione, Marketing Strategy, Analytics Manager
Bank marketers can expect pressure ahead as the elections and increased competition lift advertising costs and squeeze inventory.
And with an unusual level of economic change expected to impact consumer finances in 2024, marketers need to strategize well.
The holiday season brought its usual tightening, with research suggesting advertising costs have increased somewhere in the region of 20-32% for the final quarter of 2023. Looking ahead, the presence of electoral campaigns could raise advertising costs by somewhere between 25-40%. On top of that, competitors – from neobank spinoffs to entirely new launches – continue to drive into the market, meaning limited inventory is likely to be increasingly contested.
While more marketers are looking to personalize marketing efforts, a range of macro factors will impact pockets of desired consumers: some analysts are speaking of a “soft landing” rather than a recession ahead, yet throughout 2023 credit card and loan delinquencies surged. Consumption is expected to slow down but not crash in 2024, while oil prices are expected to rise and interest rates drop – although several FOMC participants have suggested that circumstances might warrant keeping policy rate at today’s levels for longer than they have anticipated.
Thinking about acquisitions, the likelihood of banks winning new business largely depends on how sensitive consumers are to the impacts of these factors. The good news, however, is that our research has shown that marketing spend efficiencies are easier to come by in lower rate environments.
As we move through 2024 we’re likely to see a number of events unfold that could disrupt traditional seasonality. During this time, banks must closely monitor change in pricing and inventory in the digital space where fluctuations are likely to be much more frequent than are observed across traditional outlets. Marketers must be looking to 2024 with an eye to squeeze every dollar, and underscore agility in the face of change.