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As advertisers continue in their quest to serve more relevant digital ads, companies that can track and target audiences online are able to charge a premium. But one group that has easy access to consumers' personal and financial information hasn't yet done much with it: the banking industry. A new company called Cardlytics is trying to change that, by showing personally relevant ads to consumers in their digital bank statements.

It's a practice that has a long history in the offline world. Flyers, ads and coupons are a common occurrence in overstuffed bank statement envelopes. But serving individually targeted ads alongside bills that prove their relevance is an opportunity that has many brands excited. If Cardlytics manages to avoid the dreaded privacy dilemmas that surround online targeting, expect to see many more ads coming to a banking website near you.

Banks have long been in the business of rewards programs, but offering specific ads alongside bills that prove a customer's track record with retailers is an attractive prospect for advertisers.

And according to AdAge, Cardlytics has already run 100 marketing campaigns since launching its banking program in November. They've reached about half a million customers and expect to have 50 to 70 financial institutions on board by the end of the year.  So far, McDonald's, Macy's and Staples are all signed on to serve consumers ads via Cardlytics.

AdAge documented a recent campaign that McDonald's served through Cardlytics:

"The fast-food chain offered customers 10% cash back which appeared in transaction statements alongside McDonald's purchases, as well as purchases made at competing fast-food chains. Of those who had not eaten at McDonald's in the last three months (based on debit and credit card transactions) but who had eaten at a competitor, 19% converted the Golden Arches' offer. The most-active fast-food customers -- those who had spent more than $75 in the channel over the prior three months -- converted at a rate of 60%. Average campaign activation rates are 15% but have been as high as 46%, according to Cardlytics."

If customers are already purchasing products through a retailer on a frequent basis, offering discounts next to their bills could be lost income for a company. But the real opportunity lies in offering ads next to bills from competitors, where a 19% conversion starts to look pretty promising.

Of course, there is still the issue of privacy. The beauty for advertisers lies in the granular access they have to consumers. But individuals seeing these ads may not be overjoyed to see specifically tailored ads amongst their monthly statements — one reason that banks have been so shy in this area to date. Cardlytics, however, doesn't see the privacy problem that has stalled behavioral targeting companies as an issue for its efforts.

Cardlytics has access to transaction data like merchant names, purchase dates and amounts. But while banks track their users' names, account numbers and home addresses, they do not share such info with Cardlytics or the advertisers.  

Hans Theisen, the company's chief revenue officer, tells AdAge:

"We don't get privacy information. We don't cookie customers and follow them around the web. It's less infringing upon a customer's privacy than many behavioral-targeting companies."

That is part of why the company thinks opt-out rates are so low. They were expecting rates of 12-15%, but are only seeing about 5% of people opting out of the ads. 

Considering that banks have long been in the habit of printing out offers with bank statements and redeeming offers online to reward their customers, this method of advertising seems a natural fit. However, combining offline and online user info is a tricky subject. While banks have access to priviledged information, they have to remember to treat it as such. If consumers see these ads as rewards for being loyal customers, they will likely be happy to see them. But advertisers using their purchasing habits against them could be seen as intrusive. (Especially if ads from a company you don't shop with persistently appears in your bank statements.) If Cardlytics expands as quickly as it hopes, we'll soon find out how consumers feel about such things. 

Images: Cardlytics

Meghan Keane

Published 19 April, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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