New Technique: Transpromo Marketing

While bill ads have been around for a while, in general they have not been targeted based on actual transaction history. Cardlytics, the company behind this new program officially launched last November, has done just that.

How does the program work? When bank customers sign in to view their online statement, they see reward offers in three different places:

1) Alongside transactions

2) In a column on the transaction page, or

3) On a rewards-summary page.

An offer is activated once the customer actually clicks on it. Following activation, when the customer uses the credit or debit card with the featured merchant, the reward is then processed by the bank. Rewards can be applied to transactions made online or offline, and no special software or interaction is needed by merchants.

The program makes use of a pay-per-performance model, so Cardlytics is paid only when consumers redeem the offers. Costs vary based on the client category and the specific offer type. Average campaign activation rates are 15%, but have been as high as 45%. According to Cardlytics, advertisers, consumers and banks alike have embraced the new concept, and so far, major marketers such are McDonald’s, Macy’s and Staples have signed up. The company has implemented more than 100 marketing campaigns reaching nearly half a million customers to date. By the end of the summer, they expect to have 50 to 70 financial institutions on board, which will enable it to reach 10 million customers.

McDonald’s ran a 6-week test campaign in their Houston region encompassing 140 stores. The 10% cash back offer appeared in transaction statements alongside McDonald’s purchases as well as purchases made at competing chains. Of those who had not been to McDonald’s in the last three months, but who had visited a competitor, 19% converted the McDonald’s offer. The heaviest fast food consumers, those that spent over $75 on fast food over the three month period, converted McDonald’s offer at a rate of 60%.

Privacy concerns are not an issue because while Cardlytics is privy to transaction data (name of the merchant, transaction date, amount spent and customer’s zip code), it does not have access to customer names, account numbers or home addresses. That information is managed by participating banks, and it stays behind the bank’s firewall. In fact, Cardlytics argues that their ad model is less intrusive than many behavioral-targeting tactics because it doesn’t cookie customers or follow them online. The lack of negative reaction from the consumers is evidenced by low opt out rates – less than 5%, which is about two-thirds less than the 12% – 15% the company was modeled for.

Transactional promotions or transpromo marketing is one of the most effective channels for customer retention strategies and loyalty programs, providing numerous up and cross sell opportunities. Its top advantages are:

1. Precise targeting capabilities

2. High response rates

3. Pay-for-performance model

4. Turnkey set-up

5. No creative fees

6. Fast implementation

One disadvantage of transpromo marketing is a potential of enticing and rewarding customers to make purchases that would have been made regardless of the offer.

What are your thoughts on transpromo marketing? Are you ready to embrace it?