Interview with Denis Lagutenko, founder of ADSbase, on the role of affiliate marketing in the growth of the fintech industry
The year 2020 was marked by the explosive growth of the fintech industry and fintech applications. Mandatory restrictive measures around the world have locked people in their homes without access to banks, shopping malls and other public places. This has forced private companies and retailers to seek out new contactless payment solutions, benefiting many players in the fintech industry.
Since the advent of the Internet, financial technologies have continued to grow, which implies a very high level of competition. The digital space is full of different fintech services already offering their products to customers online, so many startups in the field need to conduct effective marketing campaigns to gain market share. This is evidenced by the most experienced internet marketing entrepreneurs, including Denis Lagutenko, 35, founder of the digital agency AdsProfit and the integrated communications agency ADSbase and prominent Instagram blogger. According to Lagutenko, fintech and e-commerce are exactly the most scalable verticals and the most promising in terms of marketing potential.
The need for large-scale creative campaigns has led to the increase in marketing, creative and public relations departments as well as increased advertising budgets. More importantly, a complete digitization of legacy offline businesses required redefining target audiences with a noticeable shift in long-term marketing strategies. And, in the case of fintech, the main secret to attracting loyal customers was to move all familiar operations to mobile apps.
Currently, most mobile installations in the United States are for trading applications, such as Acorns, Gatsby, and Robinhood (NASDAQ :). Data from the analytics portal Adjust reveals that fintech app sessions have seen an impressive 85% increase over the past year. Moreover, they almost doubled from 2020 to July 1, 2021 as well. Fintech apps have excellent retention rates with the highest percentage of repeat users: 18% start another session on the seventh day and 12% – on the twelfth day. Lagutenko notes that fintech customers, in general, are more loyal than any other customer segment, as they are generally reluctant to constantly seek better and more innovative choices. If a user totally agrees with their fintech app, they like it regularly.
How Affiliate Marketing Works for FinTech
Overall, fintech companies aim to generate maximum income in the form of new customers at a lower price. With so many channels for promoting fintech products, Affiliate Marketing departments act as intermediaries between brands and customers and ensure this cost-effective approach, whereby fintech companies only pay for customers acquired with a minimum of marketing efforts. As a leader of several digital companies that have managed numerous affiliate projects, Denis distinguishes two major aspects of a successful promotion: a complete understanding of the vertical and the identification of the target audience, which is closely related to the product use.
The fintech niche involves a few sub-verticals, such as banking, trading, crypto, etc. The ways of attracting loyal customers are different for each of the sub-verticals because, for example, banking applications are completely separate from trading or payment services. . Users of digital banking apps, for example, are less likely to open them more than once a day, as is the case with social media and messaging. But it’s a safe bet that users of trading apps will check their wallets and trade quite often.
So, Denis points out that fintech companies that determine the right target audience receive users with a high lifetime value (LTV) who will constantly interact with their products and pay for them.
At the stage of building the user base whose LTV will eventually start to amortize all investments, the return on the product can fluctuate significantly. But tracking the effective cost per installation (eCPI) will help suggest when each new user will realize a profit and give a good understanding of what companies should invest in and their aversion to risk. It works for all industries, but when it comes to fintech apps, its built-in monetization models and loyal customer base allow them to launch much bolder experiences.
Yet customer experience is also important and necessary to take into account when making decisions on how to stay competitive. If the users do not wish to return to the financial application, the problem lies at the introductory stage and subsequently causes the lack of motivation to launch the given application again. In this regard, fintech projects need to pay attention to content sufficiency and determine whether current offers and campaigns are working well for new customers.
The outlook for affiliate marketing in the fintech industry
You would think that affiliate marketing is the most relevant and, therefore, the most often used by fintech startups, however, this is definitely not the case. Denis explains that intense competition for public attention has influenced both newcomers and established companies, for example, US banking giant Ally Financial (NYSE 🙂 Inc., which spends substantial funds on run a 45-day affiliate marketing campaign. Among Ally’s offerings there are various financial products ranging from auto loans to online banking, but the company is certainly following the digital rules by constantly expanding the customer base of people who may be interested in investing and trading services. shares of Ally.
A popular crypto investment platform StormGain and Libertex forex broker for online trading are two other top long-lived brands that work with affiliate marketing networks.
The same goes for the largest European fintech Revolut. Being the largest digital bank in the EU, with an estimated total company value of 5 billion euros, it also creates affiliate marketing programs from time to time, bringing together a large number of specialists with a decent sized online presence who are willing to promote its benefits.
Lagutenko talks about social media influencers, for whom affiliate marketing has become a major source of income. Typically, they serve as providers connecting users to the app and are rewarded once a potential customer signs up and performs a certain act there. Unlike other verticals, where influencers typically receive a percentage of profits, fintech companies prefer to use fixed rates. Citing the recent Business Insider survey of how much online brokers pay to fintech thought leaders, Denis reveals that the base cost per acquisition ranges between $ 5 (Acorns) and $ 100 for every deposit made of at least $ 1,000 (M1 Finance). According to various sources, commissions could even reach $ 1000.
And nonetheless, fintech companies can, of course, benefit a lot more from affiliate marketing expertise and communication channels: top financial websites, influencers, etc. Combined with each other, these industries create a kind of synergy, whereby fintechs can significantly save on boosting their promotion and merchants have more opportunities to reach a whole new level of income.
Fintech and affiliate marketing will continue to grow: spending on an app store on the former is expected to increase 92%, while in the US alone spending on the latter is expected to reach $ 8.2 billion dollars in 2022.
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