Data In, Offer Out: Cardlytics Connects Advertisers, Financial Giants Behind Firewalls

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KaseyByrneThe rise of debit and credit card transactions over cash and checks (remember those?) created a wave of data that essentially time-stamped consumers’ daily purchases down to the second.

This sea change in consumer purchase behavior created the need that card-linked marketing technology company Cardlytics, which recently expanded to the UK and snapped up client Lloyds Banking Group, has worked to fill.

Launched by former Capital One execs in 2008, Cardlytics was built on the premise that from this ever-growing pool of purchase data, “you could figure out what people buy and what they’re going to want to buy in the future, which is … a [strong] predictor of what marketing offers the consumers will find relevant,” said Kasey Byrne, SVP for marketing at Cardlytics.

Byrne spoke with AdExchanger further about the platform’s growth.

AdExhanger: How much data, sales and ad impressions do you deliver?

KASEY BYRNE: We drive about $500 million in sales for our advertisers every quarter. We serve about a billion impressions a month. I share that number with some trepidation because our system is not really an impressions system. Really, the way we work is we place a marketing recommendation in a program like Bank of America’s BankAmeriDeals rewards program. The consumer sees it when they log in, so it’s not just an impression. They’ve logged in to their online or mobile banking account. They’re interacting in a private, secure environment.

As a consumer, how does a Cardlytics-powered offer work?

In order to use the deals, they first see the ad from the retailer. As a consumer, when I click on it and it becomes activated, that means it’s automatically active on my Bank of America debit card. Now, all I have to do is go use my card and I get the reward via Bank of America. Because we sit with our bank partners behind their firewall, we see transactions on which we base our targeting and we see anonymized transactions that resulted from campaigns.

Say I got a Starbucks offer, presumably because I drink a lot of coffee. If I activate and participate in that campaign and make a purchase at Starbucks, Cardlytics also sees that. So what we charge our advertiser clients on is actual performance, not impressions. Really, I think the impression number belies this question of, "We get paid when somebody spends one of that $500 million dollars with our advertisers," so it’s completely trackable.

How do you securely move data that benefits advertisers and bank partners without violating consumer privacy?

Our technology has two pieces. One piece sits on our servers in Atlanta and the other piece sits behind the bank’s firewalls for each of our partner banks -- Bank of America being the largest. The idea here is we install software behind bank firewalls in order to find a way to gather that [consumer] data, anonymize it and then share it, without any personally identifiable information, back in our system so we can match consumers with offers from our advertising clients.

What’s the relationship between the banks and your pool of advertisers?

Our advertising clients place campaigns with us, and they select the length, how much they want to spend and [the] target criteria for consumers. Their campaigns are shared across our network of 400 banks. Similarly, our bank partners use our program and have access to all of our advertisers. Each of our bank partners have a number of different bank rewards programs. Each bank has different tools they bring to their consumer to increase loyalty and improve the quality of the consumer experience with the bank and each one of them is doing something a little differently.

What’s your consumer reach?

There are about 110 million households in the US. We believe we have data insight into about 70% of them. What has grown dramatically since 2011 and launching Bank of America’s [BankAmeriDeals] is our advertising network.

How about retailer partners?

There are two pieces to this story. On one side, it’s how many consumers we’re able to make recommendations for through our partner banks. On the other side, having a rich inventory of retailers placing offers in the system is pretty important. We have hundreds of national advertisers and a couple thousand regional and local advertisers that participate in our platform, and that’s a lot of it too – you have to have all the pieces … to have a really successful marketing platform.

What are those pieces?

You have to have the consumers to reach and you have to have content that feels rich and moving and relevant to them and then you have to have a system to make sure they match appropriately. In our case, we use past purchase history to match consumers with marketing offers.

What are the key challenges for marketers considering card-linked offers?

The first challenge is understanding where this fits within your marketing mix. Our marketing team does a lot of education about that, to help marketers understand how it’s a very targeted media at scale. You can reach a lot of people and yet be very precise in your targeting. Typically, you either have to choose a well-targeted advertising buy or a scaled advertising buy, but card-linked marketing can do both.

The challenge in card-linked marketing is the same challenge any new form of digital advertising has faced in the last 10 years. Marketers at large retailers are trying to figure out what this means, how it works and how you use it. My background was in paid search. I worked at Overture, which became Yahoo, and we’re in the same situation as we were 12 years ago.

[It’s similar to when marketers found out] they could pay to be at the top of the search results. It was like, “What?” It just didn’t parse. And I know social media has faced the same thing.

Are there any online/offline connectivity challenges?

If you stop doing [digital advertising], your [in-store] sales could go away. But it’s [still] hard to track. It’s important, though, because the vast majority of sales in this country are made in-person still. That’s the other aspect of card-linked marketing that is kind of hard to understand.

You mean the fact that online and offline business departments tend to gauge success differently?

People say, “Oh, digital advertising? You can go talk to my search and affiliate people,” and search and affiliate marketers are compensated for increasing online store sales.

We do that, but not as much as we drive in-store sales. So we go to the in-store people [who might] say, “We don’t have a digital ad budget -- that’s back at headquarters.” There’s this issue that is related to how, organizationally, it’s hard to find the right lever where somebody is both responsible for in-store sales but also has [online] budget.

Mobile banking has exploded. Are you facilitating geotargeted ads?

Card-linked offers lends itself to mobile because, again, it’s related to in-store sales. I personally get out my BankAmeriDeals on my phone and say, "Yep, time for lunch. What [offers] do we have?" It drives my behavior.  … Geomobile capabilities are on our product road map and it’s in a very nascent phase of getting adopted because changing a bank user experience is no small feat. There’s a lot that goes on to design what your look and feel as a Bank of America customer will feel like over time, but our product includes a short-term road map of a number of mobile capabilities.

Sitting so close to transaction data, have you forged any data partnerships?

No, we don’t have exclusive data partnerships. But it is true that the insight based on this data is very important. Our use of the data with our bank partners is to provide benefit to consumers. Right now, our advertiser partners who participate in the channel – we do additional analysis for them that provide insight to them that might help them in ways other than just placing a campaign. I’m sure venture capitalists [or other third parties] would love to have access to this data, but it’s not what we do.

Where are you in terms of funding and headcount?

Our most recent round we closed in spring was $45 million, so we have total funding of about $100 million. We have about 250 employees. Most of them are in Atlanta and have a small office in San Francisco, New York and London, where we have maybe 25 people. We’ve grown by about 50 a year ago. We feel comfortable right now and we’re not sharing more details about going forward, but we are planning for growth.

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