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Rik Coeckelbergs

Rik Coeckelbergs - Clear2Pay

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Innovation in Financial Services

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Ad-funded payments are changing the merchant business model

24 May 2010  |  4188 views  |  0

Trialpay surprised me this week with a couple of interesting surveys: one on the effect of Motherday on the revenue in social gaming and one on ad-funded payments. Let us start with the ad funded payments. 

In fact, after reading the paper it looks more like a real marketing instrument rather than a payment instrument, but nevertheless it is worth talking about. The white paper defines ad-funded payments as: “it allows consumers to get a product (a) they want for free by trying or buying a product (b) they need from a blue-chip advertiser”. This means a consumer get its two products for only the price of product (b) and retailer of product (a) will be paid by the retailer of product (b). 

Result: retailer A sold his good to retailer B. This last one gave it away for free  simply used his advertising budget for the buying of products of retailer B. TrialPay explains how it works on the internet, what the requirement are for selecting the right platform etc... all online. I haven’t seen it only so far I think (I don’t buy too much online either), but in ‘the real world’ I have seen it a couple of times. Newspapers who give away a new book of a famous author, or a new DVD that inclused in a magazine... and it works! It truly does. So if you do it on the internet, on a bigger scale it must work as well! 

Loyalty isn’t simply collecting credits at a card or and account for buying at a certain brand. No, loyalty providers should look a little further and combine the credits with other brands as well... first a attract consumers and later to keep surprising them with new actions and rewards... I guess that is what ad-funded payments is all about. 

And that brings us to the next white paper of Trialpay I ran through. This was about social gaming and Mothersday. This survey is again definately worth reading. 

In short it states that merchants of social games offered free game points if the gamer would buy a gift for mom in a collaborating merchant of for example flowers, in this case ProFlowers. The result was that, according to TrialPay, $1 million per day was generated only by gifts for mom. Goods that would not be bought on an ordinary day of course, but thanks to the promotions via social gaming providers these merchants made a lot of new clients.

Once again we see a nice picture of what temporary loyalty can do to a consumer. 

TagsPaymentsRetail banking

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job title Management Consultant Payments
location Brussels
member since 2010
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As a Management Consultant I support Senior Management of Financial Institutions and Financial Departments of Corporates in developing or reviewing a strategy or tactical solutions in their payment bu...

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