Essential Guide Online Marketing Finance

The Essential Guide to Online Marketing for Financial Services

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The Essential Guide to: Email Marketing

Contents Part 1. Introduction to Financial Services Online

Part 2. Research among Financial decision-makers I. Customer Experiences to date a. Banking b. Investments

II. What the Future Holds III. Conclusion

Part 3. Case Studies I. Westpac II. Conscious Investor III. NRMA

Part 4. Getting Started I. Adding Online to the Financial Marketing Mix II. Key Opportunities

About the f2 Network

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The Essential Guide to Online Marketing for Financial Services

Part 1. Introduction to Financial Services Online Trafficking Money Australia is one of the most 'wired' countries in the world, with approximately 53%^ of the population using the Internet every month. As one of the first industries to recognise the value of the Internet for optimising customer profitability, financial services is one of the high-interest, frequently visited areas online. Growing online even faster than the uptake of the Internet itself, over 5 million people currently visit finance-related websites each month.^ To put it into perspective, 7 out of 10 people who use the Internet on a monthly basis, seek information that is finance related.

Banking on Profit Since the first days of Internet banking, Financial Service providers have focused on customer profitability management, seeking to replace existing communication processes and high-cost service channels with lower-cost, web-based channels. Despite appearances to the contrary, the financial services category has evolved from focusing on banking customers to attracting new customers and promoting new services. Looking back two years ago, the online category (then attracting 2.2 million users monthly) was dominated by the top 6 banks, financial information sites and a few independent trading sites.

credit cards, mortgages and cash trusts to name a few. Conversely, the number of independent (non-bank) trading sites has declined. Financial services is a broad area. In presenting the survey finings, we have touched upon the services most interesting in terms of consumer usage and their propensity to change this behaviour in the future. Not all financial services which were covered in the survey9 are presented in this brief synopsis of the key results. The focus is on those learnings that can be leveraged by financial services providers today, to best meet the needs of customers, both now and in the immediate future.

Survey Methodology The research was conducted as an opt-in survey across the f2 Network in July 2001. Over 5000 people participated, from a demographically representative sample of Australian Internet users. Note that as the research was conducted on the f2 Network sites, the results represent the opinions of people who are f2 users and are therefore not presented as being representative of all Australians.

^ Red Sheriff, August 02

In 2002, usage of Financial sites among Australians has more than doubled, an array of regional banks, credit unions and building societies have a respectable online patronage and an audience has been built behind providers of non-banking services such as insurance,

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The Essential Guide to Online Marketing for Financial Services

Part 2. Research among Financial services decision-makers I. Customer Experiences to date

People, who felt their banks had informed them well about what online services were available, had a much higher satisfaction rating with Internet banking. ANZ and Westpac appeared to have been the most effective at this task, having the lowest number of people claim they were unaware of the bank’s online services.

From the customer's perspective, their usage to date in dealing with financial institutions online has come of age. It is an everyday activity and the survey responses reveal a surprisingly positive experience. It seems people have ‘cut their teeth’ on Internet banking and share trading and the positive online experience is leading them beyond this to other areas of their finances. Security fears are a contributing factor for why people aren't actually transacting with financial institutions online, but the majority of people don't have any concerns over security. Only 37% expressed concerns with security but, surprisingly, the more money people have, the less likely they are to be concerned. For example, the research showed less than a third of people earning over $100,000 per year were concerned, but around half of those earning under $35,000 had security concerns.

Banking

On a scale of 1 to 5 (where 1 is strongly disagree) how would you rate the following statements?

Internet banking isn't something that is only used on the odd occasion. 62% of our users said that on more than half of the occasions they dealt with their bank, they chose to use the Internet as the primary channel. While almost 1/3 said the Internet was their primary channel on 90% of occasions.

Internet banking is not just something that people think is useful; it's something that is considered indispensable. In fact, 53% of respondents claim "they don't know how they managed without it." Satisfaction with how banks are performing in this area is also extremely high. Only 15% of people didn't think Internet banking was a great service. Of the last 10 times you interacted with your bank, how many were via the Internet?

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The Essential Guide to Online Marketing for Financial Services

Investments

II. What the Future Holds

Regular banking isn't the only financial service that people have been turning to the Internet for. Shares, insurance, mortgages, managed funds and superannuation are all areas where people are actively using the Internet to help them research, purchase and manage their financial relationships.

If the current experience of online financial services is so positive, what does the future hold for financial service providers? Where will the category's online growth come from based on customer intentions?

On a scale of 1 to 5 ( where 1 strongly agree disagree) how useful do you find the internet for investing?

Respondants have acknowledge that the most valuable contribution the Internet has made to their financial situation is by helping them research potential investment decisions. Using it to trade/buy and manage their investments was also of value, but the fact that people can seek further information, compare products and become better informed before they make purchasing decisions is seen as its most important role.

On a scale of 1 to 5 (where 1 is strongly disagree) how would you rate these statements with regard to investing?

Overall, the research indicates the future is very positive for financial service providers. Like many categories, further growth will be driven by both people's experience with the Internet, which comes from the time they spend online, and their increasing demand for a broader and deeper range of financial products. Over and over again, research conducted on our Network proves the longer people have been online, the more positive their perceptions of online financial services and the greater their propensity to research, transact and manage their finances online. For example: • 59% of people who have been using the Internet for at least 4 years claim "I don't know how I managed without Internet banking", while only 35% of recent adopters felt this way. • Half as many experienced users were concerned about security than recent adopters In fact three to four years of experience online mostly doubles people's usage and tendency to be positive about and consume online financial services.

On a scale of 1 to 5 (where 1 is strongly disagree) how would you rate these statements with regard to investing?

Three-quarters said they use the Internet for researching potential investment decisions. Around 60% said it was useful for managing or purchasing investments.

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The Essential Guide to Online Marketing for Financial Services

However, the majority of our users experiences with online financial services to date, has been largely around replacing existing products and processes such as bank transfers, phone trading and bill payment etc...with online processes and services. For financial companies, this means ultimately reducing the costs associated with operating branches, call centres and transaction handling. Yet the research indicates the future opportunities for financial services online is about creating new revenue streams from a range of products and independent from a persons primary bank. The research has shown that increasingly, consumers are using the Internet to research and purchase financial services. They are turning online to seek richer information and make convenient comparisons before drawing up their ‘financial shopping list’.

Insurance The Internet plays a key role in decision-making related to Insurance products. Users are more likely to research and apply for Insurance products online, then manage or pay for an existing policy, making it an excellent acquisition tool.

*

In the next 12 months which of the following activities relating to insurance do you think you will do on the internet? * Look up details of existing policy, change details etc.

Investments The investment category is a clear growth area and usage of the Internet to research Investments will increase 11% in the next 12 months to almost reach market saturation at 83%. It is managed funds that will experience a huge surge in demand, increasing +35%. Almost 60% of survey respondents indicated they would invest in managed funds over the next 12 months.

• Two-thirds of users will do some form of online insurance-related activity in the next year. Primarily, they will use the Internet to research products (followed by providers) and make a decision on what policy to go with. • While only a quarter will use the Internet to manage their existing insurance policies.

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In the next 12 months how much do you think you are likely to put into managed funds?

The Essential Guide to Online Marketing for Financial Services

There are two clear segments driving demand. The 'traditional' older, high-worth investors and an emerging group of younger, new entrants who enter the market at the lower-value levels $10K-$20K. This segment is researching Managed Fund investments online in different environments to the more traditional group. They are looking for environments that offer more hand holding as opposed to sophisticated, share trading sites. The research shows, while the majority of users intend to purchase or trade investments online, less movement is expected in this activity area which will remain stable at around 60% of users.

Which of the following types of investments do you think you are likely to trade/purchase online?

After Shares and Managed Funds, Residential Property and Personal Superannuation are the next two investment areas researched online by users.

In terms of purchasing or trading of Investments online, the most popular products remain Shares and Managed Funds. The segments that do intend to increase their online purchasing and trading are those users who are already seeking out business and finance content and using financial sites such as TradingRoom, Personal Investor and Shares on our Network. These users are high-income earners who tend to experience fewer fluctuations in spending power during market turns.

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Which of the following types of investments do you think you are likely to seek information about online?

The Essential Guide to Online Marketing for Financial Services

Residential Property

III. Conclusion

Approximately 34% of users will research residential property online in the next 12 months. Not surprisingly, a similar number will be searching for a new home loan or switching home loan providers in the next 12 months. These figures differs slightly by bank.

Overall, the research demonstrates that customers have had very positive experiences researching, managing and purchasing most financial services online. They use it often and are highly influenced by it to make financial decisions. The move users have made to adopt the Internet for transactions have been nothing short of stunning. Testimony to this is the fact that the major remaining growth opportunity for Internet banking lie with recent Internet adopters, where around 1/3 are unaware of the banks online services.

Demand for residential property and mortgages

Our research shows, those most likely to be seeking a mortgage in the next 12 months are younger, experienced Internet users with high household incomes. They are visiting the property site, domain.com.au on our Network, as well as business and finance sites, such as BRW.com.au and Moneymanager.com.au, which provide broader information on asset management.

Further growth will be driven by both people's increasing experience with the Internet, which comes from the time they spend online, and meeting their information needs comprehensively and at the right time in their decisionmaking process. Some of the key opportunities or actions that financial service providers might consider implementing based on the findings of the research are outline in Part 4 of this document.

Superannuation One-quarter of users will research personal superannuation online in the next year. The segments most interested in researching personal superannuation online are high-income earning males and 'employment seekers', looking to change jobs and employers.

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The Essential Guide to Online Marketing for Financial Services

Part 3. Case Studies

Further, f2 integrated a 'Home Loan Centre' within the site, using content from Westpac's own site.

I. Westpac

Through a longer-term approach to planning online advertising, Westpac was able to secure key advertising positions for an extended time period.

Objectives Today 30%-40% of all prospective mortgage customers use the Internet to research their home loan choices. Westpac's aim was to increase considerations among people with a need to finance their property purchase. Realising that researching online today meant transactions for tomorrow, Westpac aimed to not only acquire new home loan customers, but to become the best at doing it online.

Strategy Realising that people didn't purchase home loans, they purchase property, Westpac forged an Alliance with f2's trusted property site - domain.com.au. Forging a strategic Alliance ensured Westpac is now in an ideal environment, attracting vast attention from prospective home loan customers. This allowed Westpac the first mover advantage, exposing their brand and acquisition tools to a highly targeted audience in the midst of the property purchase process.

Results Westpac was able to target a high proportion of f2's AB customers at a point in their lives when they were reconsidering their financial situation. With content integration driving 75% of the traffic, conversions have resulted in high-value applications averaging twice the bank's average mortgage and just recently drew down a $1.2m loan. Through the strategic Alliance, f2 and Westpac have worked together to optimise the partnership, ensuring Westpac is now in a leading position versus their competition. Through a long-term approach and dedicated optimisation, Westpac has online knowledge & experience well ahead of their competitors. They are well positioned in today's mortgage marketplace and to grow their online channel as customer demand increases.

The key advantage of the Alliance Program with f2 for Westpac has been from deeper integration into the content of the site allowing them to target consumers at the most optimal moment in the purchase decision process. For example, Westpac mortgage calculators appear at the base of every property details page within a search so users can calculate their monthly payments and allowable borrowing levels based on the property they are interested in.

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The Essential Guide to Online Marketing for Financial Services

II. Conscious Investor Objectives As a provider of web-based investment software to individual and professional investors, Conscious Investor needed to reach a large financial audience, comfortable and experienced with the using the Internet. Conscious Investor's primary aim was to drive immediate sales of their investment software through the use of their website. A secondary objective of the campaign was to reduce the cost of sales through online automation of the sales process. Conscious Investor's target audience includes individual investors and superannuation funds holders as well as investment professionals such as accountants, fund managers and financial planners. As the investment software is accessed online, their target had to not only be financially savvy, but also have trust and experience using the Internet.

With limited prior online advertising experience, Conscious Investor briefed the f2 Network to develop the advertising creative for the campaign. This not only simplified the development process but also meant that creative alterations, which helped to improve the results, could be dealt with quickly and efficiently.

Results Conscious Investor was able to promote its products to an active and affluent audience seeking financial and investment information. As a result, high quality leads were generated to be followed-up by their sales team, with 10% of people signing up for a product demonstration and 20% subscribing to their monthly newsletter. Over the course of the campaign, sales increased dramatically, with 1 in every 146 people visiting the Conscious Investor website converting to a customer.

Strategy A two-month campaign was developed for Conscious Investor which ensured a good mix between broad reach and highly targeted environments. This was achieved through advertising on the homepage and within the daily eNewsletters of the f2 Network's leading finance site, afr.com. In addition, the campaign included the f2 Network 'black strip', which reaches around 1.5 million experienced, high-worth f2 users monthly. Afr.com users are high-value customers who are concerned with issues such as wealth management and visit the site regularly to seek information to assist them make financial and investment decisions. Advertising on the f2 Network black strip enabled Conscious Investor to achieve volume and exposure across the entire f2 Network.

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The Essential Guide to Online Marketing for Financial Services

III. NRMA

Results

Objectives

NRMA saw results instantly. In week 1, there was a 109% increase in online premium estimate transactions. As a result of the exposure, 8.5% of the people visiting drive.com.au ended up at the NRMA website for an insurance premium quote. Further, almost 30% of all car insurance premium estimates are provided online, up from 12% prior to the campaign.

As the first company to offer insurance premiums online, NRMA promoted their online premium estimates on the drive.com.au site. The objective was to increase usage of the Internet as a premium estimate channel and reduce the pressure on their call centres.

Strategy The strategy was developed together with Sydney advertising agency, Saatchi & Saatchi. Shunning a demographic approach, Saatchi & Saatchi recommended NRMA address the car purchase process, in an attempt to move car insurance premium estimates higher up the decision tree. NRMA set out to 'own' the leading motoring site, drive.com.au, which attracts people searching for a car to purchase and approached the f2 Network for a solution that went beyond the banner. As NRMA wanted to avoid a heavily branded campaign, drive.com.au developed customised ad placements to include the unbranded NRMA formats. Drive.com.au also included a text link in the left hand navigation, which simply read, "Get an insurance estimate". Given the subtle branding and relevance of the offer, people were genuinely interested and responded accordingly. Drive.com.au and NRMA later expanded this to include a new 'Insurance Centre' which converted 84% of visitors to the NRMA website.

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The Essential Guide to Online Marketing for Financial Services

Part 4. Getting Started I. Adding Online to the Financial Services Marketing Mix Online advertising and e-marketing can be used effectively to meet a variety of marketing objectives from brand awareness to loyalty and retention. As with any other media, the key to being successful online comes from overall campaign integration, where a mixture of traditional and digital media is used. Planning online upfront as part of the marketing mix is imperative, as opposed to developing a separate campaign, with additional, inconsistent creative. Online advertising can become a costly exercise if it is treated as an after-thought and developed separately to the overall campaign. Given the role the Internet plays among financial audiences, there are unique opportunities available to financial service providers to better leverage the Internet in marketing campaigns and sales processes.

II. Key Opportunities Some of the key opportunities or actions that financial service providers should consider are listed below. • Target Experienced Internet Users. For financial services, the value of targeting experienced Internet users first should not be overlooked. In most instances, experienced Internet users were more likely to research, purchase, manage and develop strategies online.

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• Consider Decision-making environments. To increase penetration of services linked to major purchase decisions, such as home or cars, get in early. Products such as insurance, superannuation, personal loans and mortgages should be considered at the same moment people are making decisions about which house or car to buy. It is at this point where users enter the market for a new financial service and tend to re-evaluate their financial situation. • Investments lead the way for customer acquisition. Without a doubt, the biggest opportunity for utilising of the Internet as a channel is in the area of Investments, where it has a big role to play in customer acquisition. • Affluent Audience for Business and Finance content. The context in which the advertising is placed is critical. Not surprisingly, Business and Finance site users have the most interest in researching and purchasing Investments online. This allows for simpler, more powerful targeting strategies for Investment providers. They also happen to attract a spend- empowered audience. • Integrate Online into the Sales Process. In order to leverage the expected growth in Managed Funds and other Investment products, providers should be well positioned within these sites and channels online. They should utilise a mixture of online advertising, information dissemination and prospectus distribution to showcase products and generate leads for out-bound telephone or direct sales teams.

The Essential Guide to Online Marketing for Financial Services

• Use the Internet upfront in your go-tomarket strategy and plans. Get in at the beginning of the purchase decision-making process, before the sales cycle starts. This is when people are using the Internet most and when you can generate the most leads. • Know your customers and, if possible, your competitor's Internet marketing behaviour. User behaviour will differ from brand to brand and is often driven by the traditional marketing mix your competitor employs. If your competitor never or rarely advertises online, chances are they will not have highly experienced Internet users among their customer base. This is a potential advantage for you. • Finally, be selective about your partners. Work with agencies and publishers with experience and who will work hard for you to get results. In the experience of our Network, every advertiser is different and while there are many general learnings about online marketing relevant across industries and brands, there is usually a period of discovery and optimisation required.

About the f2 Network Fairfax's f2 Network is Australia's leading publisher of online news, finance and classifieds. One in every four adult Australians use one or more of the f2 Network's websites, eNewsletters and direct email services every month^#. The quality content from Fairfax newspapers and magazines combined with trusted online brands, such as smh.com.au, theage.com.au, afr.com, brw.com.au, drive.com.au, domain.com.au and mycareer.com.au attracts an audience base second to none in the AB demographic and Active Internet User psychographic. f2 offers highly targeted Internet sites and email services for Financial providers to reach affluent consumers while they are actively researching and purchasing financial products and services. Among the f2 Network's advertising clients are some of Australia's best known companies such as Qantas, Westpac, NRMA, Commonwealth Bank, Microsoft, IBM, Intel, Optus, Telstra, Budget, Ford, Audi, Central Equity and many more. For advertisers, the f2 Network is an essential media partner. We can prove advertising through our sites and email services deliver results and make commercial sense. For a more customised advertising solution, please contact one of our experienced f2 Media team members (02 8596 4444) or for more information visit: www.f2.com.au/adcentre

^ Red Sheriff, August 02 # Roy Morgan, June 02

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The Essential Guide to Online Marketing for Financial Services