CardMarketing 2.0

by Charles Davis

Web 2.0: depending on whether your paycheck depends on it, it’s either (a) the next great thing (b) the future of the internet and/or (c) much, much more.

Somewhere online, a skeptic knits a furrowed brow and asks, “Yeah, yeah. What’s in it for me?”

Hype aside, let’s examine what the future of Web 2.0 looks like for card marketers, and how the ever-evolving future of technology might work itself into your marketing plans.

Web 2.0 can encompass a number of concepts including social media, blogging, RSS feeds, wikis and social networking communities like MySpace.com. The definition isn’t the important thing: what matters is the devotion to user-generated content, community-centered dialogue and lack of centralized control on the user experience.

In other words, Web 2.0 is more about engaging the visitor in a dialogue and providing different ways for them to interact with the site. That engagement currently centers around enhancements to navigation, functionalities and content, with the goal of encouraging users to participate actively in the construction of the online experience.

Huh?

Take a look at Root Vaults or Zillow and you’ll begin to gain some sense of what the future holds.

Issuers have invested mightily in CRM systems, and quite rightly so. But CRM has its limitations: marketers have historically collected and bought information about buyers and kept it as their own property. Along comes Web 2.0, and that time-honored way of looking at data shifts significantly and permanently.

Instead of snooping around collecting data, buying it third-hand and constantly battling with regulators, Root Vaults founder Seth Goldstein has a more straightforward approach: he built Root Vaults as a collective marketplace for “attention data”, and he wants to sell it.

Root Vaults allows users to store and see their browsing history as it happens, providing a secure location where attention data can be stored. It offers a dashboard view of your clickstreams and other personal data, giving users new insights into their own online behavior. And – this is where it really gets interesting – the individual can share, barter, lend, or sell the information to a marketer in order to get a better deal, a customized product, or a better rate on, say, a credit card.

Data exchanges are but one way in which Web 2.0 could change the very nature of card marketing. Dan Schatt, a senior analyst at financial strategy consultancy, Celent, said that issuers would be wise to start experimenting with a variety of Web 2.0 tools to develop a comfort level with the way in which the internet is moving.

“There is a lot under the hood with Web 2.0 and not all of it makes perfect sense for issuers,” Schatt said. “But there is a lot they could be doing even now, with regard to using RSS feeds, participating or aligning with social networking sites and using some of the emerging tools internally.”

Schatt said that issuers should be using their sites as social networking tools themselves – but only if they invest in high-quality content.

“Issuers must realize that if they want to play in this space, they have to commit the resources to compete with some really slick sites, and many might be better off exploring joint ventures, co-branding arrangements or marketing partnerships,” he said.

Ashley Steele, managing director of Indiginox, a Germany-based Web 2.0 consultancy, said that issuers should consider the advantages they currently possess.

“As we move from a ‘push’ environment to a ‘pull’ environment in terms of data flow, issuers are in a great place,” Steele said. “They have a lot of information about spending, and could build environments in which the consumer views and manages transactional data”.

Steele sees real potential for issuers to build “closed communities” — a social networking site built around a defined group of cardholders that share the same interests: holders of an affinity card for a sports team, say.

“Card marketers have the advantage of already knowing a great deal about segments of their market, and it wouldn’t be difficult to conceive of ways to build social networks using affinity relationships,” Steele said.

Or, he said, card marketers could look at spending patterns to identify affinity relationships.

“You might spend a fair amount of money at a certain pet store, every week. So do lots of other people, and that’s a potential relationship to be developed that issuers can identify,” he said. “Web 2.0 just facilitates the creation of new forms of social interactivity, and marketers should come at it that way. They should be asking themselves what potential relationships they can form, and around which products.”

One inescapable reality for card marketers: Web 2.0 produces armies of networked consumers who are anything but passive participants in the consumption process. These tools make it easier than ever for them to ferret out unbiased, independent information about companies, products, or brands and to post in turn their own opinions about the same — ouch!

But the real beauty of Web 2.0 is its ability to effortlessly provide hyper-detailed data to marketers. Issuers must take a more collaborative, rather than manipulative, approach to marketing. That’s not such a bad thing, now, is it?

Charles Davis has been writing on all things cards-related for the past 20 years.