Cardlytics dropped $275 million on Dosh Monday to access Gen Z and millennial consumers – who don’t bank the way older generations do.
Both companies are similar, delivering personalized offers (Cardlytics also uses these insights to build analytics based on consumer purchase behaviors). But Dosh works with banking upstarts like Venmo, Betterment and Ellevest while Cardlytics works with hundreds of the biggest banks in the United States, addressing a total of 163 million consumers.
But the younger crowd doesn’t use the same banks their parents do, said Cardlytics CEO Lynne Laube.
Dosh started out as a cash-back savings app that amassed “single-digit millions” of customers, Laube said, before realized it could quickly scale by partnering with banks.
Cardlytics now has the opportunity to experiment with new ideas and offers on Dosh’s small customer base – a direct-to-consumer testbed. The offers that work will be used by its larger, more risk-adverse, bank clients.
Because Dosh was originally designed as a cash-back app, not as a big bank partner, its tech prioritized agility over adherence to strict banking regulations. So its younger code base, not just its younger clientele, is also appealing to Cardlytics.
For example, Dosh uses machine learning to influence offers. If someone doesn’t respond to 10% off, for example, it increases the discount, or swaps the offer out for a new one. Cardlytics can use these test-and-learn scenarios to help its biggest banking clients.
Dosh has also tried a few things Cardlytics hasn’t. For instance, it’s worked with small, hyperlocal advertisers, an area Cardlytics wants to test itself. Dosh also knows how to drive engagement with consumers by redeeming an offer proactively on behalf of a consumer. And, Dosh experimented with offering travel booking, another intriguing product feature to Cardlytics.
For advertisers, the Dosh acquisition expands Cardlytics’ reach of Cardlytics, especially with younger consumers.
Dosh’s 84 employees will all join Cardlytics, and the strength of its team sweetened the acquisition – it was partially an acqui-hire, Laube said. Not even recent freezing weather and power outages derailed the Texans from closing the deal: “There were people negotiating from their car,” she said.
