Credit-Card Issuers Boost Spending on Social-Media Ads

American Express boosted the amount spent on Facebook ads designed to sign up consumer-credit-card holders to $13.5 million in 2018 from $4 million in 2017. Photo: Photo Illustration by Emil Lendof/The Wall Street Journal; Photos: iStock 

 

Credit-card issuers American Express and Capital One have significantly increased their spending on ads on Facebook in hope of attracting new customers to sign up to be credit-card holders.

Moving from your mailbox to your social media feed, credit-card companies are adapting to the changes of their technological, cultural, and social external environment to increase customer acquisition rates. Major credit card companies such as AmEx, Capital One, and Wells Fargo & Co. are now targeting younger consumers. Credit card companies are luring them in through their favorite social media influencers, with the promise of perks such as money back on dining or discounted flights for traveling. The main goal for these companies is to incentivize young consumers to spend more, thus, understanding their new target market is essential in avoiding problems that can result into big issues for the company.

Young people are clever in swindling a system and, in result, some consumers have figured out how to spend just enough money to gain the perks and bonuses the card offers before repeating the process with a new credit card. Consequently, there are many inactive credit cards and banks must issue more to replace them. In addition, young consumers aren’t reliable when it comes to managing money, so it is essential that these credit card companies are checking credit scores to permit the use of their credit cards. Sarah Prohm, managing director of financial services at Competiscan, states, “Analysts are split on the effectiveness of targeted social pitches because they generally don’t take into account credit scores. Yet tapping into consumers’ interests is a potential ‘gold mine’ for the issuers”.

Large issuers are spending more to advertise consumer credit cards to potentially new customers on Facebook.

 

Being a young college student, I chose this article because it is a growing trend that college students don’t prioritize their money wisely, and most students graduate college in tremendous debt. In college when you don’t have a lot of money, the perks which credit cards promote make you believe that, in some way, you are spending your money wisely. This article reiterates that credit card issuers know the vulnerability of the target market they are promoting to.

This article relates to marketing because the credit-card companies are demonstrating various types of advertising objectives. The money spent to attract new customers to sign up for their product through Facebook, Instagram, Twitter etc. bring awareness to sign up for the product, using social media influencers help to stimulate interest for the product, and having an influencer or celebrity give a personal testimonial about using the product serves as a confirmation or reminder as to why you need to sign up for their product. Through product advertising, the credit card companies meet their advertising objectives by informing, persuading, and reminding their consumers of their product.

By: AnnaMaria Andriotis

Updated April 23, 2019 5:30 a.m. ET

https://www.wsj.com/articles/credit-card-issuers-boost-spending-on-social-media-ads-11556011801?mod=hp_lead_pos4