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Alex Matjanec is head of media and communications, and managing partner for AD:60, a web product development agency, designed to help companies get their digital products off the ground quickly.

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The Payment Graph: The Future of Targeting Consumers

Written on
Apr 29, 2011 
Author
Alex Matjanec  |
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The Payment Graph: The Future of Targeting Consumers

swipe_smallADOTAS – As brands and ad executives look to target consumers through social or interest graphs. Those institutions closest to consumer’s wallets are looking to offer brands another way to reach their audience: by targeting user payment graphs.

The concept of a payment graph is very simple. Essentially, it is the relationship a consumer has between the vendors and suppliers they purchase goods from. If you are wondering who is responsible for tracking this relationship, it simply comes down to banks and credit card companies.

Timing is everything; currently financial institutions are eliminating debit reward programs, leaving consumers looking for new ways to earn discounts from their purchases. By offering connections through payment graphs, brands now have the ability to target consumers by understanding what significance specific relationships are valued.

For brands (retailers/merchants) both large and small, this creates a huge opportunity to take existing marketing dollars for couponing or direct mail and dynamically present offers to consumers for how they spend and where they spend. The end results in stronger effectiveness and better value.

The Advertising Platform: Merchant-Funded Rewards

Much like digital networks that buy or present offers through affiliate program, the advertising platform to target payment graphs is run by third-party vendors who have formed relationships with financial institutions.

If you are a member of a participating bank or credit union, chances are you have already begun receiving merchant reward offers through the banks online banking interface. Based on statement activity, consumers are presented offers tied to purchases made.

Here is how it works. The debit card that is linked to the account acts almost as a tool for different businesses to compete against each other. Say you go to Dunkin’ Donuts (DD) one day for your morning coffee. Well, Starbucks wants your business as well so they will work with your bank and a offer a discount, which will appear in a drop-down of potential deals as well as beside the DD purchase listed in your statements.

To take advantage of the deal, all you have to do is choose to activate it onto your card where it will remain and be valid for a certain amount of time. Now when you go to Starbucks and pay with your card, the discount will automatically be applied, no coupons or explanations necessary.

Currently, there are a few players who are offering this service; the biggest is Intuit, creator of platforms such as Turbo Tax. Intuit reaches 6 million users, and has found that approximately 3 million are take advantage of these discounts. As more financial institutions begin to offer this platform the goal is to allow merchants to reach 40 million, 60 million or even 100 million consumers.

With these rewards, consumers are presented with deals that are more targeted to their spending habits, while merchants have the opportunity to interest users with specific products and offerings. Banks also win because the consumer has to dedicate their purchases to the card the deal is linked to.

As consumers continue to look for deals, there is the threat of spending more than saving. Groupon and Living Social are notorious for creating this type of increase in spending. Google points to this type of local targeting as a big market, but what if purchasing habits are where the highest conversion sits? Though I have no doubt merchant-funded rewards will also lead to over-spending and consumption, at least the results are targeted to what I am already buying.





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