Super Bowl 50: #Fintech Goes Primetime

SoFi attracts attention and scrutiny in big marketing bet

There is a single goal when advertising for the Super Bowl — get as much attention as possible. Whether companies are planning for it or not, that attention will include regulators and Members of Congress.

You don’t have to be Janet Jackson or Katy Perry’s #Left­Shark to know attention on a super scale doesn’t always end up being beneficial. For younger companies born of the tech-unicorn era, purchasing a primetime ad is a step out of the shadows and into the eyes of the American public. That’s never been truer than for a firm like SoFi, a five-year-old, online market­place lender that is trying to shake up the lending world.

SoFi — which stands for Social Finance — plans to spend nearly 20 percent of its annual ad budget on a Super Bowl ad campaign.

By raising money via venture capital (equity) and not de­posits (debt), the company is technically not a bank. SoFi is quick to remind its audience of this through its hashtag #DontBank, a marketing strategy to differentiate themselves from more tra­ditional competitors.

But the difference between a bank and a non-bank lender may be lost on some in Washington when they watch the ad.

SoFi is growing quickly, but is still small by lending standards. They also happen to be one of the smallest firms, if not the smallest, by total revenue, to buy advertis­ing space in the 2016 Super Bowl (Fig. 1).

Big Bets Are Risky

Explaining SoFi’s big bet is where the worlds of economics and marketing collide. In high­ly competitive markets, such as banking — there are over 6,000 banks in the U.S. — product and service differentiation are the only ways firms can distinguish themselves. Communicating differentiation is necessary because consumers have thousands of choices at their disposal.

SoFi has carved out a niche in the lending market by providing products and ser­vices that cater to a targeted demographic: higher-income millennials. Its Super Bowl commercial is based on the idea that only some people are “great,” and have the ability to bank with the firm. The original ad included the final line: “Find out if you’re great at SoFi.com; you’re probably not.” SoFi decided to remove that line due to negative social media feed­back, an early signal of the risks of consumer segmenta­tion in the public domain.

SoFi Super Bowl Commercial 2016 Great Loans for Great People

Even without the last line, SoFi’s “great” strategy is not without risk.

Lending to highly-qualified borrowers may have positive portfo­lio effects, but the polit­ical response may not be all smiles.

The #DontBank ad­vertising cam­paign seeks to capitalize on a populist moment (regardless of mer­it), but that same populism is also being fueled by the widening gap in incomes, rising student debt, and the economics of opportunity. In that context, a lender touting that not everybody is “great” is likely to raise flags.

There has been a political focus on disparate impact of lending practices for some time. So while SoFi’s loan portfolio of highly qualified borrowers may ease regula­tory anxiety about risk, it has the ability to raise political anxiety and scrutiny about exclusion.

Regulators are not shy about asking lenders to deliver a demograph­ic profile of their borrower base and approval rates for minority applicants.

Inciting Congressional scru­tiny is not necessarily de­termined by a firm’s indus­try or activities. A simpler reason for the possibility of increased scrutiny is if Congress knows who you are. With the combination of SoFi operating in a highly regulated industry and its decision to feature its brand in the living rooms of mil­lions of Americans, that day may soon be approaching. []

The full report can be read on the HPS website here.