In August, Facebook instituted changes to its advertising policies as the result of a settlement it reached with anti-discrimination groups and the federal Department of Housing and Urban Development (HUD). The social media site faced accusations that its ad-targeting platform — which allows ad buyers to select what demographic groups they want to target with their advertisements — was allowing and encouraging financial institutions (FIs) to violate non-discrimination provisions of the Fair Housing and Truth in Lending Acts.
Under the provisions of those laws, banks are explicitly barred from systematic attempts to ban or limit users’ access to financial services, or information about products, on the basis of race, gender or membership in other protected groups. HUD and various civil liberties groups argued that Facebook’s ad-targeting tools were a veritable menu of methods to improperly exclude protected groups from even seeing ads.
The terms of the settlement’s new ad-targeting rules went into effect on Facebook a month ago to correct many of these issues, and effectively limit the ways banks and other FIs can target their ads at certain viewing audiences.
The intention of those changes is good, PSCU Senior Vice President Tom Pierce told PYMNTS in a recent conversation, insofar as they are premised on the idea of making financial services more accessible to all, and weeding out discrimination in financial services. The problem, he said, is that — as is often the case with rules intended to protect consumers — the actual consequences of instituting the rules end up being a bit unpredictable, and carry unintended harms in their wake.
These harms are, in this case, disproportionately hitting credit unions’ (CUs’) member engagement efforts, and forcing them to rethink how to best leverage their social media channels going forward.
When Rules For The Few Hit The Many
Most of the limits in Facebook’s ad targeting mirror the consumer protection laws that the firm was accused of flouting. Broadly speaking, FIs are no longer allowed to target ads on the basis of race, gender, multicultural affinity or the likelihood of membership in any protected group. Those rules, Pierce said, more or less, do not have any major effect on credit unions.
What does have a profound effect, however, is the new rule that bans FIs from targeting their ads to specific ZIP codes. In regard to big national banks, or even regional banks, he said, that rule makes some sense. The intention is to prevent a variation of digital red-lining — wherein FIs can use known data about certain ZIP codes and regions as a proxy for screening data they are explicitly not allowed to use to exclude certain types of borrowers.
“But for credit unions, particularly smaller credit unions, they often have a minimal geographic footprint, and targeting their ads to the specific ZIP codes they operate in isn’t an attempt at discrimination. It is an attempt to make sure their advertising is reaching the relevant audience,” Pierce told PYMNTS.
Credit unions, with a few exceptions, are local institutions. In fact, locality and community are among their main selling features for consumers. Taking locality out of how CUs target ads on social media, he said, is a significant blow to their marketing efforts — which, by logical necessity, are narrowly targeted.
While there are some ways to mediate that difficulty on the advertising side, Pierce noted, the change is actually a bigger opportunity for credit unions across the board to think about how they leverage social media to reach their member bases. Ads, he said, might not be the most effective use of time or talent for CUs at this point. Generating content on those streams, on the other hand, might provide a better path — one more broadly supportive of organizational goals as a whole.
What A Content-Driven Strategy Looks Like In Action
Consumers, as a rule, don’t love advertisements — especially on social media, where they are bombarded with ads. When it feels like advertising copy, he said, consumers will scroll away from it almost instinctively. When they view it at all, they tend to discount the message pretty heavily, because it is advertising.
What works better, he explained, particularly for credit unions, is using social media channels as a space to generate a new community touchpoint among members. This doesn’t necessarily need to be complex or slickly produced content. As a simple example, Pierce noted that one of PSCU’s partner credit unions had an employee post a story about opening a checking account for a little girl 37 years after opening one for her mother in the same branch.
While the story didn’t go “viral” by any traditional measure, it did get a lot of user engagement, a lot of likes and a lot of comments. Most importantly, it delivered the message that every credit union is working to put out there (more effectively than any advertisement could): Credit unions aren’t impersonal vaults where money sits, but dynamic parts of their community.
“And if we look, this is what the data tells us, too. Around 60 percent of consumers say that user-generated content is the most authentic form of marketing, and 85 percent say that it is more influential than brand-generated photos or videos,” Pierce said.
The customer — particularly the type of member a credit union wants to recruit — is not necessarily looking for the most impressively produced Instagram video or Facebook story. The fact that it is now harder to target those to the user in ad form is a challenge for credit unions, he noted, but one that will perhaps help CUs nationwide become better at focusing their engagement efforts when it comes to online channels.
“For credit unions, what we see is that the best and most effective communications are ones that create a real connection for consumers,” Pierce said. “Instead of asking what ads can make that connection, the challenge now is about what stories they can tell to make that same connection.