Targeted advertising has reached a whole new level in the “Card Linked Space.” If you bank with one of the 400 financial institutions (including Bank of America, Regions Bank, PNC Bank, Fiserv, and Intuit) that have partnered with Cardlytics, then every spending action that you make with a debit card is stored and analyzed to serve you with the perfect advertisement.
Shopping for groceries? Sporting Goods? Boutiques? Accessories? Home Improvement? You will receive ads that target items commonly sold by those types of merchants. If they had item level data on your purchases, you would see adds for individual items, but banks only get the total amount spent and the merchant names.
Understanding how the algorithms could work with your data takes a little imagination. Can your spending patterns lead them to the conclusion that you are a mom driving kids to and from school and after school activities. Can they tell if you are single or married? Can they tell if you are a baby boomer or senior citizen? Using this information can they predict what types of products you might be interested in?
Cardlytics, a company that analyzes $500 billion dollars worth of spending – over 11 billion transactions, seems to be able to accomplish this. They have been accurate enough that hedge funds call and ask to buy their data to predicts increases or decreases in sales. In fact, Cardlytics has patented (U.S. Patent No. 8,595,065) the spending algorithms calling them – Cardlytics Offer Placement System (OPS).
Is it all an invasion of privacy or is there some good to be found?
According to a recent article “Reading Your Financial Footprint,” in Forbes Magazine (Dec. 16, 2013), customers have saved $17,000,000. Sales generated were a staggering $700,000,000. Depending on how you interpret those results, it seems like the whole system actually saves you money.
Interesting to note is that the people that started Cardlytics, Lynne Laube and Scott Grimes had significant experience with the banking industry. Lynne Laube was the Vice President and COO of Capital One and Scott Grimes was their Senior Vice President and general manager. Both with finance, business and marketing backgrounds these two entrepreneurs look young enough to be included in the millionaires under 40 club.
For consumers, we are not likely to see this type of advertising go away. In fact, it will probably increase more as even more sophisticated algorithms are developed. The upside to consumers is not only saving money on products they would be purchasing anyway, but saving them time hunting for bargains, loyalty cards or bulk purchasing deals. Marketing certainly seems to be at the top of it’s game in 2014.
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