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ISAs: Tax Free Saving for the Masses
 

ISAs: Tax Free Saving for the Masses

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Recommended Approach to Display Advertising for ISA Providers

Recommended Approach to Display Advertising for ISA Providers

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    ISAs: Tax Free Saving for the Masses ISAs: Tax Free Saving for the Masses Document Transcript

    • ISAs: Tax Free Saving for the MassesRecommended Approach to Display Advertising for ISA Providers GRAHAM RATCLIFFE Client Strategy Manager Q1 2011
    • ISAs: Tax free saving for the masses As we prepare to support our clients during ISA season, a period of intense marketing activity in the build up to the 5th April deadline, it is interesting to consider the following key questions: Who buys ISAs? What are an advertiser’s goals? What are the latest ISA market trends? Clients are always asking ad networks to find their customers for them, and based on rich user profiles we can do this. So what does the typical ISA investor look like? Are they interested in Finance? Yes. Are they interested in sports? Yes. Are they interested in parenting? Yes. I could go on, but the point I am trying to make is that ISAs appeal to a wide range of people, with many interests. Approximately 20 million adults in the UK currently hold an ISA1, making it a truly mass market product. However, the unique characteristics of the ISA product can help us to narrow down our audience somewhat. Firstly ISAs are only available to those aged 16 and over, and secondly the main benefit of using an ISA to save is that the interest is tax free. Figure 1 - ISA Campaign Targeting 1 HM Revenue & Customs, Individual Savings Account Statistics, Table 9.10, April 2010Tribal Fusion UK | Coin House, 5th Floor, 2 Gees Court, London, W1U 1JA | T: 0203.411.7401 UK.Salesteam@tribalfusion-corp.com
    • Therefore, we would propose that ISA providers target the ISA audience as shown in Figure 1. They should aim to exclude the following demographics: 4 0-16 yrs: too young to invest 4 <£5,000 annual income: not paying tax and not saving Similarly, our analysis suggests (see Appendix) the following demographics are less likely to perform well for ISA providers: 4 16-24 yrs: less focused on saving 4 65+ yrs: starting to spend and not save 4 £5,000-£10,000 annual income: low tax payers and little disposable income 4 £100,000+ annual income: focused on other forms of investing As always, it is critical to get the targeting right, but for mass market products like ISAs, campaign optimisation and innovative messaging are potentially more important. The UK ISA market is highly competitive and consumers are presented with a plethora of choice, especially when it comes to cash ISAs. In April 2010, the OFT found that there were more than 300 cash ISA products available to investors2. In addition, the market is already highly saturated, in FY2010 30% of UK adults subscribed to an ISA product3. This means that providers’ advertising goals should be more focused on gaining market share as opposed to attracting new investors. In contrast to the rest of the year, where ISA providers will be looking to communicate their unique brand message, ISA season sees a flood of investors who are already looking to invest. As a result providers turn to increased marketing efforts to help ensure that investors choose to save with them. Using dynamic ads is one way to get ahead of the competition. Dynamic ads have been proven to increase engagement and can be used to ensure that campaign spending is most effective. One example could be an ad that uses a dynamic countdown to the investment deadline to draw the consumer in, whilst communicating the urgency of making an investment (see Figure 2). Figure 2 - Example dynamic ad with countdown to invest 2 Office of Fair Trading, Cash ISAs: Response to super-complaint by Consumer Focus, Table 7.1, June 2010 3 HM Revenue & Customs, Individual Savings Account Statistics, Table 9.4, July 2010Tribal Fusion UK | Coin House, 5th Floor, 2 Gees Court, London, W1U 1JA | T: 0203.411.7401 UK.Salesteam@tribalfusion-corp.com
    • Furthermore, dynamic ads can be used to change the creative to reflect each user’s interests. For example, someone who has exhibited parenting behaviours could be served the message: “Save for your children’s future”, or someone with automotive behaviours: “Save for a new car”. Advertisers wishing to go even further could use sequential messaging. A sequence of ads could be designed to move the consumer down the purchase funnel and to help ensure that they choose the provider’s ISA when they decide to invest. By placing a pixel in the creative an ISA provider could deliver the following sequence of ad impressions to users for example: Figure 3 - Sequential Messaging Advertisers that use innovative advertising solutions to make their brand spend work harder this ISA season are likely to come out on top. Finally it is worth considering the latest trends in the ISA market, as shown in Figure 4: Figure 4 - ISA market trends (2006-10); HM revenue & Customs, ISA Statistics As mentioned previously, the first chart suggests that the ISA market is currently highly saturated, shown by a decrease in the number of investors in 2010. However, in contrast, the total amount invested has increased significantly over the past two years as the average amount invested has grown. We believe the recession has caused people to be more careful with their money and, where possible, save for the future. We can expect to see a similar number of investors investing even more money this ISA season given the current tax year’s increase in ISA limit from £7,200 to £10,200 (£5,100 for cash).Tribal Fusion UK | Coin House, 5th Floor, 2 Gees Court, London, W1U 1JA | T: 0203.411.7401 UK.Salesteam@tribalfusion-corp.com
    • APPENDIX – Supporting Analysis If we examine the proportion of the population investing in ISAs by age (Figure 5) we can see some interesting trends. Figure 5 - Percent of population investing in ISAs by age; HM revenue & Customs, ISA Statistics Firstly, there are no investors in the under 16 age band as law prevents them from investing. We also see that young adults (16-24) are less likely to invest as most are at a life stage where they are more focused on spending than saving. Finally, if we examine the upper age bands we see the proportion investing drop off in the over 65 year olds bracket, as people are starting to spend their savings. Similarly, we can look for investing trends by income band (Figure 6). Figure 6 - Percent of population investing in ISAs by income; HM revenue & Customs, ISA StatisticsTribal Fusion UK | Coin House, 5th Floor, 2 Gees Court, London, W1U 1JA | T: 0203.411.7401 UK.Salesteam@tribalfusion-corp.com
    • We don’t have any data on people earning less than £5,000 a year, but we can expect to see very little saving from this group. The proportion of adults investing across income bands between £5,000 and £50,000 is fairly even, it increases for £50,000-£100,000 earners, and then drops off again for £100,000 group. Once people reach the £50-100k band they have significantly more scope to save, but beyond the £100k threshold, although people have more income they tend to be more focused on other forms of investing than ISAs. Figure 7 - ISA investors by income; HM revenue & Customs, ISA Statistics The distribution of the population by income is not uniform however. While £50-100k+ earners are more likely to invest, there are far fewer of them. As a result, as shown in (Figure 7) the client’s focus should really be on the £5-50k bands. Other commonly used demographics are less descriptive of ISA investors. ISA investing is very even between men and women: Figure 8 - ISA investors by gender; HM Revenue & Customs, ISA StatisticsTribal Fusion UK | Coin House, 5th Floor, 2 Gees Court, London, W1U 1JA | T: 0203.411.7401 UK.Salesteam@tribalfusion-corp.com
    • Similarly, UK region makes little difference to the likelihood of people investing in ISAs. Figure 9 - Percent of population investing in ISAs by region; HM revenue & Customs, ISA StatisticsTribal Fusion UK | Coin House, 5th Floor, 2 Gees Court, London, W1U 1JA | T: 0203.411.7401 UK.Salesteam@tribalfusion-corp.com