Credit Card Companies Spending Millions on Social Media
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whalen at The Wall Street Journal in New York. Remember getting mountains of credit card offers in your mailbox? Well, nowadays, they're likely to show up in your social media feeds. We'll explain in a moment. First, these money and market stories you should know. The Employee Benefit Research Institute says that retirees... And workers' confidence in having enough money for retirement have risen over the past year to all-time highs. Specifically, 82 percent of retirees polled said they're optimistic about their ability to live comfortably in retirement. That's up from 75 percent last year, and it's the highest since the survey started in 1990. Now, among working Americans, about 66 percent said they or a spouse have saved money for retirement.
How are credit card companies shifting from mail to social media advertising?
On one end, 40 percent of workers reported the total value of their savings, excluding home equity, is below $25,000. In contrast, 23 percent said they have saved $250,000 or more. And the consumer banking company Sallie Mae is out with its newest Majoring in Money study. It indicates that college students have a lot to learn when it comes to finances. When asked multiple-choice questions about how interest accumulates and the meaning of interest capitalization, also minimizing costs and repaying loans and how payment behavior impacts can impact credit costs, only 25% were able to answer each question correctly. Also, a majority of those polled said that family and friends are their main resource for learning money management.
And about half said the reason they don't have a credit card is to avoid debt as much as possible. By the way, Sally Mae quizzed about 2,400 students, a mix of college students, also recent college graduates, and those who left college without a degree.
Say what you will about online ads, but they're cutting into the amount of junk mail we get in our snail mailboxes. Maybe that's a good thing, but credit card companies see it as a potentially lucrative opportunity. And Wall Street Journal reporter Anna Maria Andriotis is here with some details. So, Anna Maria, it's not like companies are dipping their toes into the waters here. Capital One and American Express are spending large amounts of money to reach customers online, and specifically social media.
That's correct. 2018 was the first year where there was significant spending on social media, specifically with regards to credit card solicitations. American Express and Capital One. definitely led the way in terms of the increases. Capital One, for example, spent nearly $19 million on Facebook ads that were geared at getting consumers to sign up for their credit cards. This was in 2018, so that $19 million figure was just shy of $3 million in 2017. Similarly, American Express, which was at around $13.5 million, spending, again, on credit card ads geared at new consumer customers.
Which card issuers are spending the most on social media and how much did they invest?
That $13.5 million figure was $4 million in 2017. So it's a sizable increase. It's important to point out that this spending still pales in comparison to the amount of money that card issuers are spending on traditional mail solicitations. In particular, when looking at Capital One, there is still quite a big difference there.
But if you're looking for a young customer base and to build a future customer base, it makes a lot of sense. You have to fish where the fish are.
That's true. And so one of the reasons why issuers, in addition to Capital One and American Express, we've seen an increase with Discover as well in terms of spending on social media. Wells Fargo also has been present on social media recently. And essentially what they're all going after in large part are the young adults, people in their 20s, their 30s, who they are hoping to get now, to get them as card customers and hopefully turn them into lifelong customers. And so they're basically exploring their options in social media to see where do we go and what strategy do we use to try to appeal to these people. So in many ways, it's still pretty experimental, though more money is going towards this effort.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:50
2
How are credit card companies shifting from mail to social media advertising?
0:50–3:18
3
Which card issuers are spending the most on social media and how much did they invest?
3:18–5:32
4
Why are issuers targeting young adults on social platforms?
5:32–6:14
5
How do issuers balance broad social reach with the need to target creditworthy customers?
6:14–7:25
6
How are credit card companies using influencers and partnerships to promote cards?
7:25–7:52
7
What targeting limitations do social media ads have compared with mail solicitations?
7:52–7:57
Speakers
2 identifiedMore from WSJ Your Money Briefing
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