Here’s how the collapse of Silicon Valley Bank could impact marketing and media
The fall of SVB – and its subsequent takeover by federal regulators – has left many across the finance and tech industries feeling shaken. We asked experts to weigh in on how marketers might be affected.
Silicon Valley Bank has been taken over by the FDIC. / Adobe Stock
On Friday, Silicon Valley Bank (SVB) became the largest US bank to collapse since the onset of the 2008 international financial crisis.
SVB, headquartered in Santa Clara, California and founded in 1983, was the banking partner to some of the biggest names in the tech and media industries, including Roku, Roblox, BuzzFeed, crypto lending firm BlockFi and crypto management company Circle. On its website, the bank describes itself as “the financial partner of the innovation economy” and listed its total client funds in Q4 2022 at $342bn.
It was by no means one of the most powerful banks in the US and had become a major financial force within the fabulously wealthy and influential tech sector over the four decades that it remained in service.
The collapse and federal takeover of SVB was essentially the culmination of what’s known in the financial industry as a “bank run,” wherein spooked clients rush to withdraw massive sums of money from the coffers of a bank more or less simultaneously. The bank’s holdings had grown significantly as much of the tech industry thrived during the pandemic and in 2021, it invested large sums in government-backed long-term US Treasury bonds, which are normally regarded as safe and secure financial instruments.
But beginning last year, rising interest rates issued by the US Department of the Treasury have caused the value of government-backed bonds to decline, causing SVB to sell a portion of its bond holdings at a loss, which then prompted a number of the bank’s depositors to withdraw funds en masse.
On Friday, SVB was taken over by the Federal Deposit Insurance Corporation (FDIC), a branch of the US government created during the Great Depression to regulate and support the US financial system. Federal regulators also took over the New York-based Signature Bank – which had close ties with the crypto industry – on Sunday, following a massive withdrawal spree sparked by the SVB collapse.
President Biden issued a statement from the White House on Monday: “Americans can have confidence that the banking system is safe,” the statement read. “Your deposits will be there when you need them.”
How might the media and marketing industries be affected?
The assurances from President Biden yesterday morning should make most professionals across adland feel confident that their businesses will not be dramatically impacted by the collapse and federal takeover of SVB.
That said, the incidents should make marketing organizations pause and reflect on their banking strategies, according to Ashwini Karandikar, executive vice-president of media, tech and data at the 4A’s. “We will see ripple effects from SVB for quite some time,” says Karandikar. “From my perspective, agencies need to consider two things as we move forward: First, agencies will need to do proper due diligence to check for company viability, financial status, and product viability before an agency engages; and second, it will be critical that agencies ensure that sequential liability is in place with all vendors.”
In short: make sure you can trust your banking partners, and also that you understand the mechanisms they have in place to ensure the protection of your assets. That basic piece of financial wisdom has become much more salient in the aftermath of the collapse of SVB, just as it did in the wake of the 2008 crisis.
Diversification – not placing one’s proverbial eggs in a single basket – is also likely to become a larger priority for professionals across the media and marketing industries. “In the near future, advertisers may prefer working with [banks] that have diversified their cash holdings and avoid those with too much exposure to a particular financial entity [such as government-backed bonds],” says Jeremy Goldman, senior director of marketing, commerce and tech briefings at Insider Intelligence’s eMarketer.
That point is echoed by Jeremy Bloom, an adtech expert, advisor and investor who is currently developing OhHello, a networking community for the adtech industry: “There'll be greater diversification among many banks for each company,” he says. “Most smaller adtech companies only bank with Mercury, First Republic, and previously SVB. You better believe media and advertising companies are going to be diversifying where they keep their money. As a startup tech entrepreneur, I'll be using multiple banks.”
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