Marketing is a major effort for any retail customer-centric firm. It becomes even more crucial for the three London-listed FX and contracts for differences (CFDs) brokers—IG Group, CMC Markets, and Plus500. All three need to convince new traders to deposit money and trade on their platforms while strengthening their brands.
So, how much are these retail brokerages spending on marketing? Has it gone up or down over the years? And most importantly, where are those marketing expenses going?
Deep-Pocketed Brokers
When it comes to marketing spending, Plus500 (LON: PLUS) is ahead of its other two London-listed competitors. The Israeli broker spent $54.2 million on advertisements, marketing, and commissions on media buying in the first six months of 2024. In the same comparative period, IG spent £39.3 million (about $51 million) on ads and marketing, while CMC kept its marketing costs as low as £16 million (about $21 million).
Notably, all three UK-listed FX and CFD brokers follow different fiscal rules for their accounting. While Plus500 follows the calendar year, CMC Markets follows April to March, and IG follows June to May.
Interestingly, CMC's half-yearly marketing budget peaked in H2 FY23, when it spent £17.2 million. In the last fiscal year, it cut its marketing costs by 4 percent. The broker also highlighted that it had taken a “more cautious approach” to marketing spending and is focusing on “product development and expansions across [its] platforms.”
Regarding brand-building campaigns through marketing, CMC is going very niche. Unlike many brokers that sign big-ticket sponsorship deals in football and motor racing, CMC continued to sponsor New Zealand’s professional rugby team, the Blues. While promoting its cash-equities investment platform, the broker onboarded Singaporean athlete Shanti Pereira as an ambassador. It also sponsored an Australian domestic cricket team.
Big Deals and Big Bangs
However, things are different at Plus500. The Israeli broker garnered its reputation by becoming the shirt sponsor of Atlético Madrid during the club's peak, which came with an estimated price tag of €17 million a year.
Although Plus500 ended its deal with the Spanish football club in 2022, it maintained its sports spending by sponsoring the American basketball team, the Chicago Bulls. The broker's sponsorships are very strategic, as it inked its American deal when it was trying to capture the local futures trading market.
The Israeli broker also developed a “sophisticated proprietary marketing technology” that helps with its marketing efforts and offline deals. In the first half of 2024, its investment in marketing technology was $84.5 million, compared to $75.2 million in the first half of the previous year.
Out of the total, its advertising and technology costs were $79.3 million, while it spent $5.2 million on commissions for media buying. “Plus500 has an established track record of delivering high ROI on marketing spend owing to its unique technological capabilities and global reach,” the broker highlighted in its latest results.
Keeping Expenses Efficient
IG Group, the largest of the three London-listed brokers, also spent heavily on marketing. However, it must be noted that IG generated £514.7 million in the second half of fiscal 2024, compared to $398.2 million by Plus500 in H1 2024 and £210.2 million by CMC in H2 FY24.
IG’s six-month marketing expense touched its lowest between December 2023 and May 2024, since the second half of FY22, when it spent £49.1 million. The broker also reduced its annual marketing spending by 11 percent last fiscal year, as “acquisition spend was scaled back in line with lower market demand.”
“Organisational changes during FY24 included allocating technology and marketing resources from central teams into divisional teams,” the broker added.
But where is IG's marketing spending going? Although the broker did not elaborate on the spending of its different marketing streams, it does believe in putting its name on offline real estate. It bought the naming rights for an arena in the Japanese city of Nagoya, which is set to become a cultural landmark, offering space for sports, music, and family events. The IG Arena is scheduled to open in 2025, so the entire expense is not likely reflected in its current marketing spending.
The London-headquartered broker is also sponsoring England’s national cricket team, with its logo displayed on the team’s jersey sleeve.
Indeed, companies’ marketing spending depends on their size, and this holds true for retail brokers as well. CMC, the smallest of the three London-listed brokers, recently spent 7.6 percent of its total revenue on marketing. At the same time, the ratio for IG and Plus500 is 7.6 percent and 13.6 percent, respectively.
