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How To Unlock the Benefits Of
Value-Based Bidding In Financial Services

Dmitry Popov, CRO & Co-Founder Tomi.ai
Dmitry Popov
CRO & Co-Founder Tomi.ai

 

One of the main problems in the financial sector is an extremely high customer acquisition cost. At the same time, the profitability of clients acquired online is significantly inferior to that of clients acquired from offline channels. 

This creates the danger of a downward spiral: 

  1. Low performance is adopted as a benchmark (a lower LTV is set as a benchmark for clients acquired from digital channels);
  2. Which causes the cost of acquisition to fall (a lower CAC limit is set for acquisition from digital channels);
  3. The quality of clients drops further, and there is no chance of finding high-value clients at an economically justifiable cost.

Consequences for financial companies

As a result, digital acquisition for many financial companies comes down to buying branded search and conversion of warm traffic, instead of creating new demand. The root of the problem is that it’s tough to leverage value-based bidding in banks, unlike in ecommerce. The issue is that valuable events, that are worth optimizing for, occur with a significant lag — there’s a very long cycle from a lead to a transaction that reveals the real economic value. 

This situation is not very common with online loans, but it is common with business accounts, cards, and investment accounts. But even in the case of credit issuance, the transaction cycle is measured in days, not minutes or hours, as in e-commerce. 

The second problem is that all banking products are priced differently, making it difficult to arrive at a single value metric. For example, for loans it is the amount of issue, but what metric to take for a debit card or a small business current account? Even if there are dollars there, they’re different dollars and have different economic value for the bank. And many large, advanced banks stop at optimizing for the cost per paying customer or cost per funded account. 

The use of target CPA strategies leads to a self-replicating problem: on the one hand, there is overbidding (some clients are purchased at a significantly inflated price). In contrast, the CAC for quality clients is restricted to the same level. Thus, profitable opportunities for growth remain untapped. 

 

The solution: Optimization for product LTV

The key to breaking the downward spiral is understanding product LTV, especially for products where it is realized over time: credit cards, debit cards, checking accounts, and investment products — as opposed to cash loans or mortgages where the cash amount disbursed is a straightforward indicator of the value of the client. 

In this webinar, we’ll talk about how to use this information and various metrics to improve digital marketing at your bank. We’ll take a deep dive into everything you need to know about switching to value-based bidding, improving the LTV-to-CAC ratio for new client acquisition, and managing the quality of customer acquisition, not just its volume.

Find out what you need to do to make this transition happen!

Speaker
Dmitry Popov, CRO & Co-Founder Tomi.ai
Dmitry Popov
CRO & Co-Founder Tomi.ai
ex-McKinsey,
ex-Fortune Global 500 executive,
startup investor and advisor,
Stanford GSB
Value-based bidding is a powerful tool successfully leveraged in other industries for years. We’ll share practical steps to make it available for marketers in financial services”
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