Digital Marketing Redux   //   April 19, 2024

Banks are dipping their toes into the retail media waters

Add financial institutions to the list of companies piling into the retail media business. 

Earlier this month, JPMorgan Chase said its new business called Chase Media Solutions would start to sell ads on its app and website to retailers, enticing customers with personalized deals based on their card transaction history. 

Chase isn’t alone. Rideshare app Uber, hotel chain Marriott and fintech startup Klarna have in recent years surfed the wave of retail media. 

Billed as the only bank-led media platform of its kind, selling ad space is a way for Chase to leverage the bank’s massive reach — the Wall Street giant has 80 million customers. Plus, the bank’s push into advertising lets the firm maximize its wealth of first-party data. With one of the world’s largest banks now in the advertising game, it’s likely other financial institutions will follow suit sooner rather than later, according to analysts. 

“This was inevitable because financial companies have access to some of the best first-party data,” according to Andrew Lipsman, an independent media analyst at Media, Ads + Commerce. “It’s like dominos. The first one had to fall. And now that Chase has announced this, you’ll see other banks and financial companies start to fall, as well.”

Chase did not respond to multiple requests for comment. 

Chase’s targeted ads will be delivered in the form of cash-back offers through its app’s Chase Offers section, which has been powered by Cardlytics, an advertising technology company based in Atlanta. Cardlytics did not respond to queries from Modern Retail about how Chase Media Solutions would impact its business related to Chase Offers. The company’s new ad unit was built out of its 2022 acquisition of Figg, a card-linked marketing platform. 

Chase customers will have to activate the deals on the bank’s app or website and then they’ll receive cash back after the purchase is made, in-store or online. Chase will only charge retailers when a customer completes a purchase, which lets the bank’s advertisers directly track sales that result from the partnership. 

Brands including Air Canada, Solo Stove, Blue Bottle and Whataburger participated in a 30-day pilot program testing out Chase’s new program. They reported seeing increased incremental sales and customer growth, the bank said in its initial announcement.  

The rise of retail media is driven in part by changes Apple made to its iOS 14 operating system in 2021, which curbed the abilities of apps to track user behavior, according to Eric Seufert, an analyst at Mobile Dev Memo. As a result, many social media companies that relied heavily on third-party tracking to deliver targeted ads experienced a revenue hit immediately after the change  Facebook parent Meta estimated that the change cost it $10 billion in 2022. As apps like Facebook tried to figure out how to adapt to the post-iOS 14 landscape, brands were more receptive to testing out new marketing channels. 

Retailers sitting on troves of valuable first-party data like Amazon, Walmart and Target stepped up to meet the demand Apple’s policy change created, building out the first wave of retail media. Chase’s push into advertising is a sign that a second wave of retail media may be arriving. 

In addition, as Google phases out support for third-party cookies demand for retail media networks like what Chase is offering will likely increase. 

“First-party data is just becoming more and more valuable given the impending demise of the third-party cookie,” eMarketer analyst Sarah Marzano said. “Any company that has access to that first-party data is really going to be thinking of how to leverage it, and advertisers are going to be really thinking through the appeal of that type of data to contend with how their investments will change.”

It’s no surprise then that companies are betting that retail media will become a lucrative side hustle, especially as traditional television advertising fades. Retail media will account for one-fifth of U.S. ad spend in 2024, according to a forecast by market intelligence firm Advertiser Perceptions. Walmart’s global ad business grew by 28% in 2023 to $3.4 billion, while Amazon reported advertising sales growth of 27% year-over-over in its most recent earnings.

As Seufert put it, “Everything is an ad network now.” 

Still, Chase and other financial companies may encounter some road bumps along the way. 

For one, bank apps are typically not a consumer’s go-to shopping destination. “If I think about what someone is opening up their Chase app to do, I can think of a lot of use cases before browsing cash-back offers,” said Marzano.

It looks inevitable that more retail media networks will emerge beyond traditional retailers, including financial companies like Chase, but the industry could also be headed toward a saturation point. More than half of advertisers say they’re willing to work with a maximum of four retail media partners, according to eMarketer

“There’s a limit to how many of these the market can support,” said Seufert, “and we might be approaching that.”