Digital Dollars: Why the Marketing and Ad Industry Are Afraid of New Regulatory Watchdogs

Marketers are stepping up their campaign to undermine the Obama Administration’s proposed Consumer Financial Protection Agency (CFPA). Why are their lobbyists, including the interactive ad trade association representing Google, Yahoo, Microsoft, Time Warner and the New York Times, worried about having to face a new formidable regulator? They fear coming under serious scrutiny for the growing role digital advertising of financial products plays in today’s online economy. Already a big business, financial service advertisers spent some $3 billion last year to target U.S. consumers online -- for mortgages, credit cards, insurance, and loans for education. Online financial marketers have also so far been immune from criticism about their own activities that helped trigger the economic meltdown -- remember the torrent of flickering interactive ads offering easy credit and mortgages? But a savvy new regulator might uncover how all those millions of online ads for subprime loans contributed to the fiscal debacle.

Banks, credit card providers, mortgage and insurance companies are already using the full range of contemporary advertising tools to target consumers, including social media, search marketing, interactive display ads, blogs, email and even Twitter. Last July alone there was nearly a mind boggling 36 billion online ads served to users for financial services, with almost 5 billion from Experian (a credit reporting company), 2.7 billion from Citigroup, and more than 2 billion from Bank of America. Financial marketers are taking advantage of the dizzying array of Ph.D. developed mechanisms designed to harvest the digital gold of the 21st Century -- information about us, our online (and offline) travels, networks of friends, what we post online, the content we view, and what we place or discard in our electronic shopping carts. Increasingly, as we go online to search for financial information and services, companies scoop up data about our transactions online and combine it with the reams of offline information. For example, mortgage lenders are offered an "atomic" level of information on consumers, including "up-to-date transaction, credit, demographic and behavioral databases."  Largely invisible are companies such as eBureau, which sells "instant insights" on our financial status to online financial services companies and other marketers. eBureau says it has a "vast data network that seamlessly integrates billions of records across thousands of databases that cover nearly all US adults and households," adding over "3 billion new records each month."

Financial marketers regularly use so-called behavioral targeting, where online users have had their browsers tagged by a small data file called a cookie that contains information on them. Bankrate.com, a leading "financial information and advice" online site that had nearly 72 million visitors last year, allows financial advertisers to track its customers through behavioral targeting. A visitor looking for mortgage or loan information at Bankrate.com will be tagged so they can be followed even while on other websites (according to its media kit, "Bankrate’s Behavioral Targeting network encompasses hundreds of the most recognized publishers on the Web, with a reach exceeding 90% of the U.S. Internet audience."). Companies specializing in behavioral targeting, such as Tribal Fusion and Audience Science, are affiliated with scores of financial websites. As consumers search for information on loans, for example, they are literally spied on by a host of companies looking for a sale. Audience Science explains to its potential financial advertisers that it can help them follow online consumers interested in a mortgage, retirement, student loans or stocks. One of its targeting categories is for "Credit card applicants…including those who recently filled out an application, have researched credit card terms, and who have shown interest in financial planning on financial sites. They tend to visit personal finance sites and are actively involved in managing their savings, debts, and personal budgets." Microsoft has researched how its online users search for financial services on its own sites, explaining that "Live Search visitors are more likely to have shopped and purchased online for investments, credit cards, banking, mutual funds, and stocks versus the online population… most searchers on financial services terms are female. Females not only see more impressions in financial services categories but they are more likely to click on ads."