financial services

Ads In Bank Statements: Latest Targeting Controversy


A new controversy about behavorial data-driven ads for McDonald's, Staples, Macy's and other brands now showing up in online bank statements is less-than-ideal timing for the advertising industry, to put it mildly.

The new channel -- a moneymaker for banks that's reportedly working extremely well for participating marketers -- generates ads, most often associated with discount and coupon offers, that appear in online debit card activity statements. The ads are based on a user's debit card transactions, and don't necessarily come from a company from which the consumer has purchased. For example, debit-card charges at one fast-food chain might trigger an ad from a competitor.

The test results thus far are impressive. Software firm Cardlytics, which was first to offer a transactionally based ad-generating service to banks (a growing number of others are now also in the game) told The Washington Post that more than half of users click on a link to activate an offer within the first month, and that advertisers are realizing an average sales lift of $5.49 for each dollar spent on marketing to existing customers.



A McDonald's test in Houston showed nearly one in five consumers who had been eating at a competitor having redeemed a cash-back offer for a McDonald's meal, and 60% of those who had used debit cards to buy $75 or more on fast food during the previous three months activated the offer, the Post reported.

The system suppliers have stressed that customers' personal data is not shared with marketers, and that customers can opt out of having the ads appear in their statements.

However, consumer privacy protection groups contend that most consumers don't notice, understand or take advantage of opt-outs.

Furthermore, while many consumers are clearly taking advantage of the offers, a growing number of articles in well-read news outlets bearing headlines like "Advertisers Monitoring Your Debit Cards?" are also generating negative viral attention for both banks and participating marketers.

In another sign of growing consumer awareness and concern about online privacy issues, in December, a New York City resident filed a class action suit in Federal Court alleging that McDonald's, CBS, Mazda and Microsoft engaged in illegal personal data-mining activities during campaigns, according to Courthouse News and The suit seeks statutory and class damages for computer fraud and abuse, violations of the Electronic Communications Privacy Act and of state business law, trespassing of personal property, breach of implied contract and interference with the contract. It also asks that the companies named be prohibited from using the data-mining tactics in question in the future (all worked with Interclick, but Interclick is not named as a party in the suit).

Such attention comes at a time when advertising industry groups are urging their marketer and agency members to implement a self-regulatory online behavioral advertising (OBA) program, in the face of growing threats of government intervention. The Association of National Advertisers this week issued such a call, along with supplying a toolkit to help members implement the program, which was developed by a coalition including the ANA, 4As, the American Advertising Federation, the Direct Marketing Association and the Interactive Advertising Bureau, and is supported by the Council of Better Business Bureaus.

Demonstrating rapid, significant progress on this front has become increasingly urgent for the industry in the wake of the FTC's proposal, released in December, for a do-not-track mechanism that would continuously alert ad-tracking and targeting firms that a consumer does not want to be tracked or receive targeted ads. Comments on the proposal are due Jan. 31, and the FTC will release a report during 2011.

In addition, while a U.S. Dept. of Commerce report on commercial data privacy also released in December expressed support for self-regulatory programs, "additional legislators are piling on with new privacy bill proposal plans," pointed out marketing writer Kate Kaye, in a recent article summarizing the online privacy scenario for 2011.

Kaye points out that the industry's initiatives were already well underway prior to the FTC's do-not-track proposal, with beta testing of its system for educating and providing consumers with an online advertising opt-out in progress and the largest digital media-buying firms on board. "Though legislators have taken action by holding hearings and introducing a privacy bill, and regulators have disseminated lengthy reports on the need for more consumer data usage transparency and privacy protection, the industry is ahead of government when it comes to actually developing tangible solutions," Kaye stressed.

However, "the question remains whether the alliance's program, or browser-based methods providing more control over third-party tracking and targeting planned for Microsoft's Internet Explorer and, reportedly, Mozilla's Firefox, will satisfy lawmakers and regulators," she added.

One potential issue: The FTC is proposing that consumers be provided with opt-out capabilities going beyond online ad targeting, to encompass all tracking by third-party ad and data firms.

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