Community Banks Miss Out on Pay-for-Sale Advertising

Community Banks Miss Out on Pay-for-Sale Advertising

Radio listeners believed that Nixon won the first 1960 debate, while TV viewers gave the edge to the youthful Kennedy. This factoid has since become a cautionary tale about the importance of adopting new media, but it misses the mark. Nixon, indeed, had already been a television pioneer. Eight years earlier, as Eisenhower’s Vice President, he appeared in the first such campaign ads of the new medium.

For bankers then, the more nuanced lesson should be clear. Adapting to new mediums is a job that never ends. But why then are so many buying digital advertising as they have always done, despite a recent estimate in the Harvard Business Review that half of the $50-billion-a-year digital marketing industry is fraudulent?

Bot traffic. Fake publishers. Simulated page views. Programs designed to “click” through ads. All designed to increase traffic in a world where fees increase whether a human eyeball sees the ad or not. This should be a concern for anyone with digital advertising programs, but HBR reports that pay-per-lead or pay-per-sale models only account for 15% of the digital advertising market.

Affiliate marketing and pay-per-sale models work a lot like the name suggests. The publisher only gets paid when a user clicks through and actually buys a product. The old adage, of course, was that half of advertising is wasted but it was impossible to tell which half. The promise of a pay-per-sale model is that nothing is wasted.

The concept hasn’t caught on with banks yet.

“No, I don’t know what that is,” said a CMO at a Texas mid-tier bank when I asked if the bank did affiliate marketing. “We are new to this (online account opening) and have not thought about how to promote these accounts.”

“We have some banner ads on a few local newspaper sites that promote the bank as a whole,” said a marketing officer at a Mountain West mid-tier bank when asked if the bank digitally promoted its checking product, which could be opened online. The banner ads she said were place a lot like traditional media, with last year’s budget as the guide.

That banks wouldn’t be using pay-per-sale models isn’t surprising since a sale of many core products couldn’t occur online until recently. But now that so many banks have adopted online accounting opening for more products –including traditional demand deposit accounts — is it time for that to change?

A select few banks have changed and added pay-for-sale offers to their sales and marketing efforts. At Commission Junction, a leader in the online affiliate marketing industry, there are offers from BBVA Compass and Discover Bank. For example, at current terms, BBVA Compass is offering a publisher $50 when a user submits a completed application for its ClearChoice Free Checking account.

The publisher must be signed up with Commission Junction and must request to publish the offer. Once permission is granted, the ad then appears on the publishers’ website. The magic is this: a million bots (or humans) might review the ad, but if no one signs up for the checking account, then BBVA Compass pays nothing.

The strategy has some risk. The advertiser reviews the publishers before granting permission, but no website is static. Let’s say Bank A grants permission through its affiliate network for Mommy Blogger to place ads for the Bank A checking account on her site. In the pay-for-impressions model, Mommy Blogger may have been generally indifferent to her advertisers. Now, since she only receives compensation when one of her readers opens a checking account at Bank A, she’s incentivized to direct attention to the Bank A advertisement.

In part, this is the desired outcome. But the trouble arises if she begins making deceptive misrepresentations in order to induce her readers to open accounts at Bank A. If a bank discovers or becomes aware of the misrepresentations, it could be held liable for the misrepresentations.

To minimize the risk, select and manage publishers almost like employees. The newer ones require a little more oversight and more periodic reviews. Add terms to the offer on the affiliate network to control the content of the publishers. Thus, if a publisher can’t use the words “Bank A” or “checking account” in its content, making misrepresentations becomes more difficult.

Of course, at anytime a rogue employee can go off program and so it is with affiliate publishers as well. The risk will never be zero, but on the other hand, a bot reading an ad will never become a bank customer.


#FinTech #digitaladvertising #communitybanking


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