Citi launched a new venture on September 23 called Citi Commerce Media, built on a simple but powerful asset: your purchase history. With 6.5 billion transactions a year across more than 700 spending categories, the bank plans to spot what you're about to buy and sell merchants the chance to put an offer in front of you first. A pending acquisition of rewards platform Kard is meant to sharpen that targeting further.
Citi isn't alone. Chase Media Solutions helps brands win new customers, win back lapsed ones, or squeeze more spend out of existing ones. American Express's Amex Advance uses machine learning to predict when you'll next be in the market for something. Cardlytics does similar work through banking channels, letting a merchant target people who spend in its category – including with competitors. That's the machinery behind Amex Offers, Chase Offers and Citi Merchant Offers: the discounts that show up in your card app.
Here's the friction, though. What's good for you isn't necessarily good for the merchant. If a hotel knocks $20 off a $200 stay and you were booking there anyway, you pocket the savings, the bank picks up interchange revenue and card spend – and the property has simply discounted a booking it already had. Brands often use these offers to acquire customers, then quietly let them lapse once they've captured everyone likely to switch. That's one reason cards that justify their annual fees with merchant offers need a constant pipeline of new ones.
There are cases where offers genuinely create business: you book direct instead of through an online travel agency to trigger the offer (saving the hotel distribution costs), add a night to hit the minimum spend, or even take an extra trip. But a Korean study of 96 million credit card transactions across roughly 230,000 customers found that elaborate customer 'personas' layered on top of basic spending history improved predictions by a mere 0.09 percentage points. Recent purchase data, it turns out, already does most of the work. An eBay advertising experiment told a similar story – ads targeting people searching for eBay's own brand did essentially nothing, because those shoppers were going there regardless.
Why should a traveller care? Because these offers are essentially free money when you claim them on purchases you were making anyway. The smart play is to opt into every relevant offer before you book hotels, flights or rental cars, rather than letting a discount nudge you into changing your plans. Tools like Cardpointers automate the opting-in so you collect the rebates without altering your behaviour. The card issuers get your spend, the merchants hope for incremental sales, and you – if you're disciplined – just get a cheaper trip.
