• by Laurie Sullivan , August 24, 2009

USAA has been quietly testing a platform that lets the financial institution, which supports former and active military personnel and their families, target and retarget advertisements based on debit card purchases, Hans Theisen, Cardlytics' chief revenue officer and co-founder, tells Online Media Daily. The service offered by Cardlytics supports data from both online and offline purchases.

Cardlytics and USAA began testing the platform with an unspecified number of bank customers in early August, with plans to test the system through mid-September. Both companies decided to make the project public after experiencing "much higher response rates than what you would see with typical banners and standard programs online."

Atlanta-based Cardlytics, which serves up the ads, tracks purchases to target and retarget advertisements to consumers. Theisen does not classify the service as a "BT platform," but rather a "digital direct marketing platform" -- and more accurately, a "transactional marketing" channel.

The platform, however, relies on online and offline consumer debit card and credit card transaction data supplied by banking partners, rather than online browser cookies, code in Web pages or ISPs. The targeted ads serve up in the online debit or credit card statements.

When a debit or credit card customer logs into their online bank account to look through their monthly statement, they see merchant ads and offers that link to specific payment transactions. Some offers might give the consumer 10% off their next purchase from merchants they have bought items from in the past.

If the person clicks on the link, the ad for the offer expands inside the bank page and links directly to the person's debit card. So, when the person makes a purchase with the same debit card at that retailer, Cardlytics can track the amount spent to issue a rebate, reward or redemption based on the purchase.

"The average U.S. consumer uses their debit card for 70% of transactions, which has prompted financial institutions and banks to adopt -- or look more closely at -- behavioral targeting platforms," Theisen says. "About 15% of consumers use a credit card for their primary form of payment."

USAA has several physical locations in San Antonio, Texas, but most of the bank transactions occur online. The bank can take depositors from every state because of its military affiliation.

Consumers must opt-out, rather than opt-in, because the service works as part of the bank's purchase rewards program. The bank retains and keeps customer information private and never reveals personally identifiable information (PII). Theisen says Cardlytics only receives aggregate transaction data to match offers from merchants.

The software allows Cardlytics to identify consumer trends. But aside from identifying purchase patterns that increase conversions, it also helps pinpoint reasons for not influencing specific customers.

Banks and financial institutions have become more comfortable with targeting ads based on consumer behavior, both online and offline, but a little skittish when it comes to using the term "behavioral targeting" or "behavioral retargeting." In June, Google revealed that it had been testing the ability to lay consumer FICO scores on top of its Google Content Network to identify people with good credit. The strategy aimed to help advertisers reach "credit-worthy consumers" through display and text ads.

Theisen says by the first quarter of 2010, Cardlytics will have about 10 banks on board, which means it will serve up targeted ads in aggregate to about 15 million unique customers.