Marketing Strategy Review: Varo targets the underbanked
Varo is seeking to set itself apart from other neobanks through unique messaging strategies that leverage the power of possibilities and build trust through partnerships.
Marketing that is fully digital
Busting out of traditional banking norms, Varo has opted to pursue a no-direct-mail, fully digital, and national TV approach to appeal to younger consumers. Additionally, Varo leveraged Twitter to announce its partnership with Russell Westbrook.
Leveraging the power of possibilities
In an ongoing national television spot, Varo targets underbanked consumers by casting historically underrepresented individuals. The ad challenges consumers to see the world differently by asking a simple question: “What if?”
Building trust through partnerships
By partnering with professional basketball player and philanthropist Russell Westbrook, Varo allows its target audience to interact with a role model they might relate to more than a spokesperson from a traditional financial institution.
Prior to the start of 2021, Varo did not participate in significant marketing activity. In February of 2021, Varo saw a 110% increase in spend through its first significant investment into online video. During that month, online video accounted for 33% of ad spend. All marketing spend for Varo is top-of-funnel, or general branding spend.
In March 2021, Varo introduced national television. From 12% share of its media mix in March 2021 to 69% in September, they began to prioritize their national television presence as the summer came to a close.
Varo morphed its corporate leadership to better connect to its targeted audience. In 2020, Black and Hispanic consumers were twice as likely to be unbanked, and Varo is targeting these groups by establishing its ethics from the ground up.
Varo’s website states, “[its] executive leadership team is comprised of 40% female, 50% non-white and 10% LGBTQIA+ individuals – in all 75% of Varo’s executive team is diverse. Similarly, over 75% of Varo’s nine-member Board of Directors are diverse.”
By engaging in strategic partnerships and diversity-centric hiring practices, Varo shows that they are committed to connecting to the desired target audience.
Appealing to the target audience
Varo appeals to its target audience through inclusive messaging, leveraging the power of possibilities by asking “what if?” This ad was most frequently aired on A&E Network, Adult Swim, Comedy Central, and ESPN. All channels provided broad reach amongst younger audiences.
Varo used an omnichannel approach with character callbacks to their national television ad in their display marketing. By illustrating the faces of historically underrepresented individuals on the dollar bill, Varo acknowledges that banking – like the honor of being portrayed on the dollar bill – has not been for minority demographics. While taking this stance, Varo offers an alternative, “a bank for all of us.”
Varo encourages individuality through unique partnerships
To Varo’s target audience, Russell Westbrook represents hope. His passion for community impact and financial success in his own life makes him the ideal face for a bank that serves the underserved. In every facet of his existence, Russell Westbrook is unapologetically Russell Westbrook, which encourages potential customers to be proud of who they are. In congruence with diverse character portrayal on the dollar bill, Varo’s marketing sends a message: Banking is for all of us.
In February 2021, Russell Westbrook announced the #RUSSXVARO partnership on his own Twitter handle. In the post, Westbrook leverages his own desire for positive community impact and change as being in alignment with Varo. Finally, in a call to action, Russell asks viewers of the post to follow @VaroBank for more information.
In this brand awareness campaign, Twitter served as the perfect advertising vehicle. The casual nature of the social media platform allowed potential consumers to digest Russell Westbrook’s message in an authentic way. Additionally, as Varo is an online bank, potential customers are only a few clicks away from conversion.
What we think
Varo’s business and marketing will continue to evolve. As Varo Bank continues on its path to building a fair financial system for everyone, it needs to start building awareness for its various product offerings. While its brand awareness campaigns are successful, as seen through growth in active users, its marketing material which discusses its product offerings is jumbled and makes it difficult for potential consumers to differentiate between products. Moving forward, Varo should seek to tout its high APY savings accounts, its Varo Believe credit builder credit card, its fee-free banking experience, and its Varo Advance cash advance separately while clearly describing the benefits of each.
Competitors should consider the innovative, creative messaging that separates Varo from the pack when thinking about their own marketing material. When targeting underrepresented minorities across all industries, a company first needs to look internally and make changes before trying to represent diversity in creative messaging. By creating a diverse C-Suite and partnering with celebrities of minority status, Varo bolsters their authenticity.