Why Fintech is the Next Ad Industry Disruptor: Creating Offline Transaction-Based Advertising
As 90% of sales still take place in-store, digital marketers are still challenged to tie in-store sales to online activity. In this piece, Dosh founder and CEO Ryan Wuerch explores how new fintech solutions present a way to fill this gap.
The relationship between retailers and advertising is at an interesting cross-section. Retailers are pouring billions of investment into advertising, specifically digital, at a record amount this year alone. While much attention is focused on “why now and why digital?” the real discussion should be around “what does the next evolution of digital advertising look like?” and “why do digital and in-store remain siloed?”
Over the past decade, the rise of e-commerce and its reliability on advancements in digital tools has created new preferences and demands for retail marketers. Today’s retail CMOs are fixated on proving how their efforts map back to their business’s bottom line — a sale — and how they can ensure every investment and campaign is not only measurable but able to make a direct correlation to a transaction. But moreover, research shows that companies with strong omnichannel engagement retain 89% of their customers.
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Innovation in digital advertising spearheaded by Google and Facebook has spurred an industry obsessed with clicks and the ability to track customer behavior. Its’ given digital marketers a seat at the table and amplified the power of digital marketing. However, when it comes to validating what was actually purchased across channels, the buck stops there. Clicks, impressions or pixel tracking are useless for digital marketers when it comes to connecting digital demand generation to in-store purchases.
There’s promise in the near future. As the ad industry undergoes its next evolution specifically for retailers looking to better connect with consumers and make use of their brick-and-mortar investments, the financial industry is also being completely transformed. While Google and Facebook were the ad disruptors of the e-commerce era, the ad disruptors of tomorrow will be those rooted in fintech and aligned the financial infrastructure of tomorrow.
Fintech as the next frontier in digital marketing
Why? With in-store sales still accounting for 90% of all retail sales and U.S. consumers spending more than $3.1 trillion in offline sales last year, the real need of ad innovation is centered around better capturing in-store activity. Marketers are in desperate need of the same level of disruption e-commerce has seen but to the physical world. A means for them to bridge their omni-channel marketing efforts and tie both online and offline tactics to the trackable in-store purchases.
Simultaneously, credit and debit cards have increasingly become consumers’ purchase method of choice. Even for consumers who have a complete distrust in banks, new options like prepaid debit cards have eased the barrier to plastic. In fact, the total dollar value loaded on prepaid cards was expected to be $112 billion in 2018.
These payment options are also impacting retailers. With more consumers using credit or debit cards either by swipe or tied to their mobile wallets, cashless stores are taking root and becoming the norm. And new payment entrants -like Square, Stripe and Shopify – have streamlined and modernized POS systems, allowing retailers and merchants an easily rip and replace solution for their dated cash registers. For retailers, the future is one focused on digital first transactions.
These two trends combined have created a nascent opportunity for the ad market: CLOs or card linked offers. CLOs incentivize consumers to make a purchase – through a linked credit or debit card – in return for rewards and cash back offerings. Since CLOs are built directly in banking and credit lines and weaved in with a retailers’ point of sale, these offers bring the opportunity to connect an ad to a 100% attributable in-store purchases.
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The missing link in digital advertising
While CLOs are not an entirely new concept, their relation to advertising is. Credit card companies and banks used to hold the power and insights behind transaction behavior, leaving very little opportunity for retailers and merchants. However, as open networks and new entrants are working to break the mold, retailers are seeing the promise behind frictionless CLOs. These offerings allow them to tie their ad campaigns to physical store transactions through the use of mobile – the one device that seamlessly connects the online to offline shopping journey.
The success of CLOs hinge on its ecosystem of merchants. The more merchants that adopt CLOs, the more effective this form of advertising will be. Through partnership with CLO companies or through credit card companies directly, retailers are now starting to have the insights they need to show measurable ROI and return on advertising spend (ROAS) for in-store purchases.
It’s hard to tell what the future will hold, but for marketers, it will continue to focus on new solutions that can deliver proven ROI and direct ties to transactions. By moving ad spend directly to consumers’ mobile wallets, the future of advertising is a closer connection to fintech.
