Financial Institution Interest in Content Platforms

The rapid evolution and increasing competition in content production across varied formats - be it videos, written articles, newsletters, educational materials, or audio - has not gone unnoticed. Brands and companies across industries, including financial institutions, are plunging headfirst into this tide and are making strategic moves to acquire media companies. Here, we explore why purchasing content-based firms is often a quicker, more proficient, and financially savvy route for FIs to reach their goals.

Content today is utilized not just on owned and operated platforms but also extends its tentacles across various social media channels. The manifold utility of content as a tool for customer acquisition, retention, and brand-building is being recognized by FIs who are employing sizable teams of content strategists, editors, and writers to leverage different ways to reach target audiences across mediums.

In the year 2021, a massive $20 billion was spent by brands on Branded Content, coming second only to display advertising, per eMarketer’s data. Brands that adopted proprietary content development reported a significantly higher Customer recall stemming from development of proprietary content was reported to be much higher (85%) as opposed to display advertising (65%), while also driving a 14% elevated likelihood of customers returning to a brand for additional content, according to Nielsen’s research. Multiple reports indicate that brands typically allocate between 10-20% of their overall budget on branded content - implying that a conglomerate like JP Morgan might potentially expend between $300-$600 million annually.

To make the investment case, let’s do some basic math. Suppose you’re a Financial Institution with a target of adding 100,000 new customers per year at a $500 Cost of Acquisition (CoA). This would necessitate a yearly expenditure of $50 million. However, this CoA does not incorporate the expenses of retaining the customer, engaging them with valuable information about your product, or building your brand image. Let’s factor in an additional $250 per customer for these aspects, amounting to $25 million per year. The total comes to approximately $75 million per year to attract, retain, and endear yourself to 100,000 customers.

Given these figures, the question arises: why not simply acquire an existing platform that reaches 25 million Active Monthly Users? After all, you’d only need a conversion rate of .4% if those users to achieve your goal. There are also considerable ancillary advantages to consider in this scenario: improved Search Engine Optimization (SEO), a dedicated platform to elaborate your products and brand story, material to educate customers, tools to foster habitual usage, and more. Examples of FIs making savvy purchases of content brands include Binance’s acquisition of CoinMarketCap, IG Group’s procurement of TastyWorks, JP Morgan’s securement of The Infatuation, and American Express’s procurement of Resy. As we outline below, these transactions go beyond the market cap of the individual media businesses, providing strategic advantages as well.

Binance acquired CoinMarketCap, a crucial hub for crypto market data that comprises an important data stack and information that is widely distributed within the wider web ecosystem, in turn providing Binance with valuable insights into crypto consumer behavior. The reported price was a prudent $400 million, and at the time of acquisition, CoinMarketCap boasted significant traffic of around 35 million monthly users, which has since skyrocketed to a staggering 60 million monthly users as of today, validating Binance’s calculated investment.

The IG Group's investment in TastyWorks, a highly influential platform in options trading and an opportunity for IG to leapfrong into the options trading market, came with a sensible price tag of $1 billion. At the time of the deal, TastyWorks drew in approximately 7 million users per month. This figure has surged to nearly 12 million monthly users today, underlining the shrewdness of IG's purchase.  

JP Morgan made a sound investment when it acquired The Infatuation for an estimated $200 million. This trendy restaurant review site had a monthly user base of about 5 million at the time of purchase. Today, the platform engages around 8 million monthly users and has enabled JP Morgan to engage leading restaurants with other JPM products that could include credit card processing or small business banking. 

Finally, American Express's splash on Resy, a dining reservations platform well-liked among high-net-worth restaurant-goers, came with a reasonable price tag of around $150 million. At the time of the deal, Resy was attracting roughly 2 million users each month. Now, it engages close to 3 million monthly users and has access to transaction data from thousands of restaurants, reinforcing American Express's foresighted investment strategy while also providing valuable restaurant data and integration into restaurant IT systems that allow the company to offer additional AmEx products like credit card processing and more.

These reasonably priced acquisitions showcase the strategic investment approaches of FIs. Far from just expanding their operations, these institutions gain sticky content platforms to gain deeper customer insights, bolster brand engagement, and enhance the overall customer experience.

As content and the ability and means to deliver it continues to evolve, we expect to see continued interest in these providers and strategic and financial M&A activity across a number of industries, including FIs.