Card-linked marketing is a useful but underused method to reach consumers, according to a new survey of chief marketing officers by Bank of America and The CMO Club.

The survey polled chief marketing officers on preferences and marketing program needs, revealing 90% of CMOs who used card-linked offers experienced revenue lift from a program, 98% deemed it an effective solution for reaching a target audience, and 96% plan to use card-linked marketing in future campaigns.

"There's an uptick, the message about these programs is getting out there," says Jason Blackhurst, the emerging capabilities executive for the consumer bank digital solutions group at Bank of America. "A year ago I would have said there was a lot of testing going on, but we're getting reports of programs now."

Despite that successful track record, only 78% of CMOs are aware of what card-linked marketing is, and 62% have never implemented a program. Of those who have not used card-linked marketing, 53% say they don't know how it works and 34% are unsure of its effectiveness.

The gap is partly because of merchants not understanding changes in data management that result from card-linked offers, Blackhurst says. When that learning curve is scaled, adoption improves, he adds.

Seventy-five percent of CMOs say targeting and customer insights such as purchase history, frequency, location, spend, etc. are the most crucial aspects to a marketing program’s success. But 44% say targeting and reaching the right consumer ranks as the most difficult part of marketing, while 23% say performance measurement was the greatest challenge.

Bank of America also reported that 64% of CMOs say card-linked offers drive customer loyalty. In addition, 54% say it generates repeat sales, 48% say it drives store traffic, 44% say it helps with brand recognition, and 40% say it introduces new customers. The bank provides card-linked offers via BankAmeriDeals, which uses Cardlytics' marketing program.

"It is true that card-linked offers and card-linked marketing programs are effective, but there is still a lack of understanding of how they work, particularly among the merchants," says Zil Bareisis, a senior analyst at Celent. "While card-linked offer programs can be very useful for driving customer loyalty, there is a perception that they more effective for customer acquisition. So, depending on their objectives, some merchants might need more convincing and explaining how they can use the program to achieve those objectives."

Card-linked offers are starting to gain momentum in the payments industry. Cardlytics recently changed its logo as part of an expansion plan that includes a move into card-linked offers. And edo has built a portal that allows merchants to manage their own offers. VeriFone is also pursuing the market through a partnership with Cardspring.

Card-linked offers do pose some challenges, says Richard Crone, a payments consultant. "The problem with card-linked offers is that they are based largely off of historical spend data and are typically active for months at a time," Crone says, adding that opposing merchants claim the majority of redemptions are predisposed or "accidental" from existing baseline customers, and would have taken place regardless of the card-linked offer.

This "predisposed" issue causes the most frequent merchant objection to the card-linked category, Crone says, adding merchants are concerned about a lack of incremental revenue or paying extra for consumers who were already planning a purchase.

"The big win will not be from linking offers to cards, but to mobile wallets," Crone says. "Mobile will challenge most card-linked offer platforms to move beyond the static, after-the-sale batch data feeds of transaction and statement processing systems typically used today."

Consumers who shop for an item are intending to make a purchase—the card-linked offer is more about building a connection between a merchant and a consumer, Blackhurst says.

"I would hope there is a predisposition to make a purchase," Blackhurst says. "The object is to get the consumer to purchase something at a particular merchant."

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