The Future of Social Media for Marketing Financial Services

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The Future of Social Media for Marketing Financial Services Published on November 2011

Report Summary Social media channels are changing the way in which consumers gather information, research products, and make purchasing decisions. The reach of social media and its power to engage consumers makes marketing through this channel highly effective. The reluctance of FS providers to use social media is often attributed to issues of ROI and regulation but these are hurdles which can be addressed.Boost consumer engagement and increase the impact of marketing by learning how best to use social media for marketing new products and services.Build brand equity by understanding how social media can raise brand awareness and the perceived quality of a brand.Address the issue of return on investment through analysis of this measurement and its application to social media.Use social media effectively while adhering to regulation with best practice guidelines for FS providers.Globally, there is considerable demand from consumers for the marketing of suitable products through social media. Almost 40% of consumers state that they would be interested in the ability to receive information about suitable products through this channel.The overexposure of consumers to marketing messages makes it impossible to pay attention to all of these. Inbound marketing, which encourages consumers to find out about a company or product themselves, engages consumers because it has consumer consent. Social media in turn amplifies the impact of inbound marketing.Two of the main objections to social media within the FS industry are related to ROI and regulation. However, these hurdles can be overcome by looking at ways in which to alter the definition of ROI within a social media context and by following best practice guidelines on the regulation of this type of marketing.How can social media be used to increase the impact of marketing new products and services'How can FS providers overcome regulatory issues in order to use social media channels for marketing'What is the return on investment of social media for FS providers'How can social media channels be used to build brand equity'What is the consumer demand for the use of social media in FS'

Table of Content

OVERVIEW 'Catalyst 'Summary 'Methodology INTRODUCTION 'The power and reach of social media cannot be ignored - The online community is powerful - The use of social media is extensive - Social media has an effect on purchasing decisions - The influence of younger consumers is spreading to older generations - Social media tells FS providers about consumer intentions 'Inbound marketing is replacing traditional outbound marketing methods - Outbound marketing is increasingly easy for consumers to block out - Advertising budgets are tight in harsh economic conditions - Inbound marketing encourages consumers to proactively find out more about a brand - Inbound marketing can be significantly cheaper than outbound activity - Consumers are empowered through inbound marketing

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- The components of inbound marketing drive consumers towards a brand 'Social media presents FS providers with another channel for marketing - Social media can complement other channels - Sales from social media occur not through direct selling but through engagement and customer advocacy - Sales may be increased by social media, driving increased footfall in-branch STRATEGIC CONTEXT 'Consumer use of social media is high - Consumers of all age groups use social media sites - Social media is used by consumers of all levels of income - The use of social media rises slightly among the most affluent consumers - The influence of traditional media is waning 'Many consumers would like to see suitable products marketed to them through social media - Marketing messages must be appropriately targeted - Consumers want FS providers to embrace new technologies 'There are a range of benefits of marketing through social media - Social media offers an additional channel for marketing - Social media can be used to define a brand identity - Social media by its nature measures the impact of a marketing campaign - Social media can increase the impact of traditional advertising - Social media can aid the management of an online brand identity 'Measuring return on investment in social media has been a barrier for many FS providers - Providers may have to alter their definition of ROI - The initial investment in social media does not have to be costly - The risk of not investing may be a more important factor to consider - National Australia Bank has proven that social media marketing can produce tangible returns 'The regulation of social media is a concern for many FS providers - The US regulatory body has taken the lead with social media regulation - In the UK the Financial Services Authority has been less forthcoming with guidance on this issue - The Australian regulator has yet to issue any formal guidance - The Canadian regulator has issued draft guidance on the use of social media - FS providers will need to follow best practice examples until clearer guidance is issued STRATEGY IN FOCUS 'Guidelines to ensure effective marketing through social media for FS providers - Use social media to highlight how a provider is different - FS providers must ensure that they set the correct tone with a social media campaign - The development of new internal platforms can increase the effectiveness of marketing through social media - Integrate social media with other channels - Engage with consumers on a hot topic or pressing issue - Build up a community around an FS provider's brand - Social media marketing should be innovative and engaging 'FS providers can overcome the issue of ROI - Using a "call to action" aids the measurement of a marketing campaign - Measuring the emotional impact of social media - Simply measuring followers is not sufficient to measure engagement - Traceable links or codes will help to measure sales from social media - Measuring engagement other than through sales 'FS providers should follow best practice guidelines for handling regulation restrictions - Marketing through social media needs to adhere to many of the same principles as marketing through other channels

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- Ensure that a company has a clear social media policy and implements training - For complex products use social media to drive consumers to a standard website - Clarify the ownership of social media accounts - Social media information must be kept up-to-date - Ensure standalone compliance of marketing or communications 'Building brand equity and maintaining an online image - Building brand equity will help a provider to stand out in a highly commoditized market place - Social media can be used to raise brand awareness - Social media should be used to counter negative publicity and maintain a positive brand image APPENDIX 'Additional data 'Methodology 'Secondary sources 'Further reading 'Ask the analyst 'Disclaimer TABLES 'Table: Consumer frequency of use of social media sites (%), by country 'Table: Consumer frequency of use of social media sites (%), by age band 'Table: Consumer frequency of use of social media sites (%), by income band 'Table: Consumer frequency of use of social media sites (%), by liquid assets 'Table: Consumer demand for the ability to receive information about suitable products through social media (%), by country 'Table: Consumer agreement that financial services should embrace new technologies such as mobile applications or social media (%), by country FIGURES 'Figure: Inbound marketing works in the opposite direction to that of outbound marketing 'Figure: The components of inbound marketing channel the consumer towards an FS provider 'Figure: Globally, the majority of consumers use social media once a week or more frequently 'Figure: The youngest consumers are the most frequent users of social media; however, consumers of all ages engage with this channel 'Figure: Affluence does not have a major impact on consumer use of social media 'Figure: Consumers with high levels of liquid assets are some of the most frequent users of social media sites 'Figure: There is significant consumer demand for the ability to receive suitable product information through social media channels 'Figure: Social media has a number of potential benefits for the marketing and brand image of FS providers 'Figure: There are arguments both for and against the concept of ROI in social media 'Figure: First Direct's Innovation Lab is a platform designed specifically for the needs of the company 'Figure: AXA PPP Healthcare uses its blog to engage consumers on topic of interests as well as to inform them of new services 'Figure: Saffron Building Society uses social media to promote a sense of community surrounding its brand 'Figure: American Express uses a "call to action" on its Facebook landing page, which will increase its insight into the ROI of its social media promotion 'Figure: Lloyds TSB has its own YouTube channel where marketing and guidance are brought together 'Figure: FS providers should follow a number of best practice guidelines in order to market through social media within regulatory boundaries 'Figure: Brand equity is the value that derives from the attributes of a brand other than the products or services that it produces 'Figure: The Chase Community Giving program uses social media to build brand equity for Chase without marketing any banking products or services

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'Figure: Comparethemarket.com has used social media effectively to build brand equity

Companies mentioned ASB Bank Limited, AXA, CMS Energy Corporation, Devoteam SA, General Mills, Inc., Hutchison 3G UK Limited, National Australia Bank Group Limited

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