Let The Data Talk: Understanding the Future of Consumer Purchasing Behavior with Nate Bucholz, Vice President of eCommerce Partnerships at Cardlytics

After working for some of the biggest tech companies in the world, Nate Bucholz was ready to leave his Google and Facebook roots behind for something smaller and an opportunity to experiment and move fast. He found that opportunity at Cardlytics, where he serves as the Vice President, eCommerce Partnerships. In this role, Nate and his team are working in new and exciting ways on a platform for an industry that isn’t typically considered new or exciting. Cardlytics works exclusively with banks to build their digital and eCommerce platforms, connect with customers and create rewards programs that lead to mutually beneficial relationships between customer and company. And to do all this, Nate and his team are analyzing troves of data and using technology in unique ways to truly perfect the digital experience for all involved. On this episode of Up Next in Commerce, Nate explains it all, including what data is the most telling and how to utilize said data in the best ways possible while also building and maintaining trust among all parties involved.

Key Takeaways:

• Forget metrics about who and how many people are on your platform and really hone in on where they are laying out their money. Then use that data to decide where your marketing dollars should be spent
• Using anonymized data, you should isolate data sets and analyze specific behaviors to predict who might leave your platform or service, then create an action that will make them stick around
• The ROI from purchase behavior insights comes when you change your targeting practices based on the data you collect

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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--- Transcript:

Stephanie:

Welcome back to another episode of Up Next In Commerce. This is your host Stephanie Postles, and today I'm joined by Nate Bucholz. Nate, thanks for coming on the show.

Nate:

I'm happy to be here. Thanks for having me.

Stephanie:

Yeah, and where are you in the world today?

Nate:

I am sitting in my office/guest bedroom in Alameda, California.

Stephanie:

Yeah, keeping all the kids out as best you can. Right?

Nate:

The door knob rattles, but it is locked so we should be safe, I hope.

Stephanie:

We'll see. Yeah, once all this is over, it'll be nice to be able to bring people back to our studio and not have to do bedroom meetings anymore, but for now we'll make it work.

Nate:

Sounds very scandalous, but yes.

Stephanie:

It is a little scandalous. So I'd love to hear a little bit about, actually, I want to go back, back background on you. I want to start in the early days because I saw where it led up to, of working at Google, and Facebook, and where you're at now at Cardlytics, and I actually was wondering, I'm like, what is Nate's first job he had because everything else looks amazing. Was he working out on a firm when he was little? What was your first job?

Nate:

I was a dishwasher at a local restaurant in Lake Oswego, Oregon where I grew up.

Stephanie:

Oh, that's awesome.

Nate:

Worked my way up to busboy and waiter at some point.

Stephanie:

Very cool. Yeah, I think a lot of us started out in those kind of, I was a silverware roller, and so I would just roll silverware for eight hours a day. And I asked to be a hostess and they were like, "No, you can't be a hostess yet. I mean, you're not that senior."

Nate:

You've got to earn that.

Stephanie:

Yeah. It was good times. So you went to University of Oregon, right?

Nate:

I did, yeah. I did my undergrad there and then went on to work in public relations for a little bit. I had the, not so enviable job of getting good press coverage about Windows in Millennium Edition which is quite old now, but it was pretty the bad operating system and that was my first time-

Stephanie:

Oh, man.

Nate:

... post college job.

Stephanie:

I'm sure you learned how to be pretty scrappy in that job though, don't you think?

Nate:

Yeah. I mean, there's always something good I think that you can find or an audience for a product if you can find the right one. After that I was in the Peace Corps for a couple of years in Ukraine doing business development and volunteer work. And then I came back for graduate school here in the Bay Area at the hospice and school at UC Berkeley.

Stephanie:

That's Cool. And then did you head right to Google after that or was there something between?

Nate:

I did, yeah, there was a brief internship, but after getting my MBA I went on to Google, in a travel vertical, or their travel vertical, I should say, up in the Seattle office.

Nate:

I was going to say that I was with Google for quite a long time, almost 11 years, and got to move around in a good way quite a bit. So I started out in Seattle and travel, then moved over to our London office for four years where I led a sales team there and so I oversaw the advertising sales for airlines and car rental. And then my wife and I had a son while we were in London and it kind of changed the lifestyle a little bit. We decided to get back to the US, moved back to the Bay Area, in retail-focused industry, mostly e-commerce, for about a year and a half, and then, actually, the last intake Google was in Malaysia where I was in the office in Kuala Lumpur looking after the branding and YouTube partnerships.

Stephanie:

Oh, wow. Very cool. What was that experience like?

Nate:

It was great overall, personally, it was amazing. We had this amazing expat lifestyle where our son was in this wonderful private school, we had lots of travel and so forth. Professionally, it was a real challenge, there were some of my, I'd say professional strengths that kind of turned into weaknesses in a different environment. Being quite loud and outspoken, and non deferential, didn't apply necessarily so well in some of the situations over there. But I mean, it was great. It was a good learning.

Nate:

At the same time my whole career had been and is now, once again, focused on more direct response marketing. And I had jumped not only into a new geography but also into the more brand forward environment working with Johnson & Johnson and Procter & Gamble and kind of the sort of traditional marketing that would have been on TV before, and online now is more about reach and frequency rather than getting people to buy things immediately. So that was also a new world.

Stephanie:

Got it. So then you quickly decided to head back to your e-commerce marketing type roots and go to Facebook afterwards?

Nate:

I did. So it was a finite assignment over in Malaysia and when I came back with Google I kind of felt like I was coming back to the same thing that I had left and I wanted to do something different. Facebook offered me a role, very similar but leading the team that that worked with one of their very largest advertisers. And that was more of a product heavy role in terms of working with the product teams to build things that would allow the largest, most sophisticated advertisers to grow their spend more.

Nate:

It was interesting, there were a couple of things that prompted me to leave. Which one was, it was very similar to Google, which is a wonderful thing, but you're part of a giant machine and it's hard to feel like you have a real big impact. And at the time, though they've changed this and allowed people to work from their San Francisco offices as well. I was commuting down to Silicon Valley from Alameda, which is about an hour and a half each way. So-

Stephanie:

Yeah. No, thank you.

Nate:

... it's kind of brutal. And actually a colleague at Facebook connected me to someone they knew at this company I had never heard of, Cardlytics. It's a ad platform, much like Google and Facebook, except it operates entirely on banking channels. So if you log into Bank of America or Chase, Wells Fargo, one of many, many banks, you'll see offers from different companies for some sort of incentive to purchase like a cashback rewards or something like this. And that's where we operate.

Nate:

And it's a much smaller company for one so I enjoy feeling like I have a bigger impact, but the common thread through these three companies that they all sit on an amazing trove of data. So Cardlytics can analyze the purchase behavior of about half of the credit and debit card swipes in the US and we're in the UK as well.

Stephanie:

Wow. That's a lot.

Nate:

It is. It's amazing. And so I've learned from Facebook and Google that when you've got an amazing first-party data set, then you can kind of get a seat at the big kind of table and so it's a lot of fun to analyze that and see how it can apply to marketing.

Stephanie:

That's cool. Were there any learnings that you had from Google and Facebook that you kind of brought with you or best practices when working with large brands or a large e-commerce like store owners that you saw where you're like, Oh, a lot of people were doing this and we noticed that was actually the wrong move, or here's some best practices we learned from the top brands that smaller brands could apply, that you maybe brought with you to Cardlytics?

Nate:

Yeah, I mean, the first thing that I tried to do with my team when I came into Cardlytics was change the mindset about what is big and the impact that we could have. So we'd gone from this really small company to now, there's about 400 employees, and we've been public for about a year and a half, but it's still pretty early, pretty young. And I think a lot of the Cardlytics employees had viewed the going public as, Hey, we've reached the big time and we've made it. And I kind of tried to share this viewpoint of the ad budgets, the marketing budgets that are out there, the potential for growth that I saw at Facebook and Google to really kind of pay them big I would say.

Nate:

And I also saw that because Cardlytics is a different sort of advertising platform, but a lot of the language was language that we spoke internally and we have kind of impressed that upon the marketing teams and so there was a lot lost in translation. So I think one thing, Facebook and Google have almost been able to use their own language because they're so large, but it's become industry standard and we need to conform to that to make it easy for marketers to make apples to apples comparisons when they're thinking about their budgets and how they spend it. But there's been an evolution. So I started Google in 2007 and at that time it was all about search and it was all about clicks and-

Stephanie:

And still is.

Nate:

Well, it is, it got more sophisticated though, you know what I mean?

Stephanie:

No, no. I mean, I just left, let's see, two years ago from Google and I still feel like they're so heavy on search.

Nate:

This is true but it was the greatest sales job in the world. I'd go in, I'd say, well, you got a hundred clicks, but your competitive group got 200 clicks so let's go ahead and double your clicks. Here's the budget that'll do that for you. But it evolved, it went to measuring the money that was spent off of each click for example, looking at your conversion rates and getting into the mobile experience, trying to get marketers to catch up to consumers in terms of the fact that everybody was shopping on their phones or a good enough amount of people to warrant some serious attention.

Nate:

And then moving on over to Facebook, because Google had that first mover advantage of everything being based off of what you see from the click, it was trying to open up people's eyes that there's more than just last click when you look at an attribution model, that there's a lot of influence that happens prior to that. And Facebook always, we always said internally they figured they were undervalued by like 30% because of all this view through attribution that they're losing.

Nate:

And then ironically getting people to stop targeting so granularly, even though it's possible to let the machine do its work and start doing machine learning, based targeting so that Facebook could open up its inventory more. And I think that the evolution, and I'm definitely biased obviously, these are the moves that I've made in my career, but part of the reason I've made these moves is I see the next stage of marketing getting more and more rigorous about what is actually bringing an impact. This is why it was so hard when I was doing branding work in Malaysia. It was not so much a return that was required, but a reach and frequency, and it didn't really matter how that was gained.

Nate:

It was just, let's hit a lot of eyeballs a lot of times, and Cardlytics is on a totally other end of the spectrum where it's not even about your interests online. It's just, where do you lay down the money, on what sort of categories, what have you done in the past, what's the basket size and the frequency, and these sorts of things. I think that's a natural evolution of marketing as you get better data, you're able to cut out the waste more and more and get more efficient. At least that's the idea.

Stephanie:

Yeah. How do you see marketing spend evolving over the next couple of years when it comes to measurement and ROI? Do you think it'll change how people think about things? Like you said, they used to just think about clicks and maybe impressions and then they started niching down a bit and wanting to actually target maybe who their customer is, and where do you see that heading over the next five years?

Nate:

Five years is a long time to make-

Stephanie:

I was going to say 10.

Nate:

Oh, my gosh but yeah. It'll be implanted in my retina somehow in my screen. I think, obviously I'm talking to you now from my guest bedroom and there's this whole pandemic going on. These kinds of catalyst events are what I think make large vector changes in things that would happen slowly over time anyway, right? There's a shift to digital over time. If all of a sudden everyone's TVs had exploded, there would have been a faster shift. And I think that the fact that a lot of marketers have either pulled back their spend or just paused all spend entirely, means that there's going to be a whole new shift when they go back to whatever the new normal is because you're going to look at every channel from a totally fresh perspective.

Nate:

And obviously things have shifted online more and I have some interesting stats that I can share about that as well. There's been this online shift of people who maybe had never purchased groceries online or maybe they were happy just with their broadband cable and now they're doing all sorts of streaming services, whatever it may be. So I think online is going to benefit a lot as people see that they didn't have such a huge downswing or maybe they didn't notice a big change when they canceled some channels and not others.

Nate:

But I also think over time, and we were really good selling with data at Facebook and Google to explain why more and more money should be shifted through those channels. And they weren't bad decisions but there are a lot of other marketing channels out there. Obviously, Cardlytics is one on my mind but there are several that have the scale and have the data to challenge some parts of the marketing budgets that have just almost, not mindlessly, but I don't know if they've followed the trends to shift to Facebook and Google.

Nate:

And so both of those channels have diminishing returns. Like your first audience that you target on Facebook will have amazing ROI and pretty soon you're going to get a look alike audience and pretty soon you're going to just kind of expand it out and the ROI falls as you do that because it's a less rich pool of potential consumers. And it's the same thing with Google, if you think about the keywords and for some reason I use running shoes as an analogy a lot, but that first keyword that says, I want to purchase running shoes today, will have an amazing return if you bid on that.

Nate:

But there's only so many and if you want to grow, pretty soon you're bidding on tips for healthy lifestyle or something like that. You're still trying to sell some shoes, but it takes a lot more clicks to get those shoes sold. And so one of two main points that we try to make when we speak to marketers is, Hey, listen, you'll be fired if you don't advertise this on Facebook and Google because they're amazing channels and you should use them. But there's a point where just because it's easy doesn't mean you pump more money into those. You need to take the lowest performing set of your marketing spend and see where else you can put it. So that's a lot of the conversations that I'm having these days.

Stephanie:

So you said you have access or, Cardlytics has access to lots of data and I think right now is a perfect time to wonder what kind of spending habits are happening in this COVID environment? What are the changes occurring? What are people spending on? What kind of info do you have to share around that if any?

Nate:

I have some interesting info. So we have a great marketing team but what I meant to say was, also we have a great analytics team and no more than a week into this stay at home lock down that most of us are experiencing, they built this dashboard where we're looking at quite granular categories and how the spend is changing year on year, updating every week, looking at all the different DMAs in the United States, and so we can see what happened. And right around the beginning of March, all spend everywhere just plummeted, as you'd expect, online as well. And if you look it's quite a depressing heat map. It's just a red United States with various shades of red.

Stephanie:

Yeah. As expected I guess, but still sad.

Nate:

It was sad, it was sad. However, we've seen some interesting shifts and there's some that are pretty obvious, like people shifted to online grocery for example. There are others that are coming in that I think are kind of interesting and you saw where it was quite depressed in the home improvement category for example. And now online for home improvement has gone up like 64% last I saw, and you'd see where there's this trough of people not doing anything and hunkering down and then all of a sudden they start spending on their homes. What happened-

Stephanie:

Oh yeah. Getting all handy at home. I can-

Nate:

Exactly.

Stephanie:

I started looking at things being like, could I fix that? No. But it's a good idea.

Nate:

Following home improvement was when parents I think started to lose it a little bit and so the online toy purchases and kids' products have gone up significantly. We just bought a small kitty pool to put in the backyard as we realized we can't go anywhere else.

Stephanie:

Yeah, I bought into that as well. I bought a, let's see, a scooter for my two year old, a lawn mower bubble machine. I'm like, anything that helps, here just take it.

Nate:

Absolutely. Exactly. So health and beauty has gone up a lot and pet goods up a hundred percent. A lot of that is shifting from offline to online, but that's one that happened almost right away. And so you see, and I guess these aren't surprising, it's following what you'd think of in human behavior, but make sure the kids are occupied and, Oh my God, what if we run out of pet food? And so that's gone up quite a lot.

Nate:

But I think the bit about online versus offline was a little bit surprising to me, but I suppose makes sense. And lends itself to how I think marketing is going to change, is how it's changed geographically over the United States. So if you look at online spend year on year, it's gone up across the United States, but on the coasts, especially if you think of DMAs like San Francisco and New York, it hasn't gone up as much because I would hypothesize there's not as much change in behavior that's really needed. People are already buying largely online.

Nate:

If you look at the smaller DMAs, especially the more in the middle of the United States and just smaller city areas, they've spiked a lot more. And so their year on year changes are more toward the high, not high, but mid double digits increases in online spend. So that's one of those catalysts like I mentioned where maybe people were just fine doing their brick and mortar shopping because that's what they were used to and their peers and people around them in their communities were kind of doing the same thing. This has really changed the behavior specifically in these smaller DMAs. And that's where I think after this whole thing is over, you'll see a level rise in e-commerce. Some people will go back to their old behaviors, but I think a lot of them will stick.

Nate:

And I was reading an article of some, there was a financial article and this guy was, I think he managed a hedge fund or something like this, and he was writing about how shocked he was at how easy online banking was, which is like, well, I've been doing that for a long time, but there's some people that were just stuck in their old ways. And once people realized that it's quite easy to get your groceries delivered online or to do whatever shopping it is online, online banking, we've seen an increase, which has obviously helped Cardlytics since that's our whole platform, is online banking.

Nate:

But I think those customers, some of them will stick around and the challenge for marketers that we're starting to talk about now is, Hey, if you are lucky enough to see an increase in your category, as soon as things start going back to normal and businesses start opening up in reality, like brick and mortar, how do you retain those customers? And I think that'll be a big challenge for marketers just to hold onto as much as they can of whatever they've gotten from this if they're online already.

Stephanie:

Is there any advice during that transition of like, here's some ideas of what you could do to kind of keep that clientele? Because I could see you're saying the more urban areas who maybe were not online before, having to use different messaging for them to convince them, this is still the way, which it probably is. Like online banking, whenever my parents were like, I'm headed to the bank to cash a check, I'm like, Duh, why? And they're like, I'm not doing that on the phone they might take my data. And I'm like, okay, go ahead. You drive 15 minutes to go cash your check mom. But is there any different advice that you would give for those kinds of communities who maybe weren't online for certain things before versus other ones that didn't really change as much?

Nate:

Yeah. I mean, it's going to be, a loyalty marketers are going to be in their sweet spot where that'd assist building that, but there's a lot of companies that we work with that are all focused on customer acquisition, and they're loath I think to spend advertising dollars on existing customers because they already have their access to these customers, whether it's a mailing list or whatever it might be. But the reality is a lot of those emails aren't opened or bounce or for whatever reason. I mean, even Amazon advertises quite a bit with us and just because you have people shopping in one business area doesn't mean that it's easy to get them to shift to another business area. Right?

Nate:

So what we've been saying is, before these people leave let's anticipate who's likely to leave and we're looking into models for propensity to churn, for example. So we can look at who stops using a certain service or stop subscribing, and then look back at six months and when I say who, this is all anonymized data. By no means do I know you and your bank account. I would know bank account, 5632 or whatever it might be and a whole group of them, but what is the change in purchase behavior that happens leading up to this and then who can we identify that hasn't yet churned but is starting to exemplify that sort of behavior. And so you can start isolating groups that maybe haven't reached this type of loyalty that means they're going to stick around.

Nate:

And it could be as simple as just analyzing your own data as a marketer and seeing what's the average frequency of purchasing or the spend amount of those who have stuck around for a long time. And then those who are, we call them one and done, right? They try the service because they have some offer and then they're gone. And the people that are still beneath that threshold, whatever it is that you designate, are the ones that you need to invest in and hit up with a message before they go away.

Stephanie:

Got it. What are your views on how e-commerce is going to change after all this is done? I know that certain people will be doing more things online, some of them might drift back to their old methods. Is there any other things that you see happening or changing for good or are new things coming about over the next year or two after this kind of calms down?

Nate:

Speaking as just a consumer one thing that's been convenient I would say is, I'd like the ability to go into a store of course, but those that are open, that do curbside pickup and things like this, they all want payment beforehand online, right? So there's no contact between two people. I think I could see a mesh of online and offline happening a lot more frequently where you've already selected whatever it is that you want, maybe you've already made your payments, whatever it is. So that when you go into the store, it's more like an Amazon store almost where you go in and you get your goods and you just leave. Right?

Nate:

So using technology even in the brick and mortar environment to make a more seamless process and it can allow for maybe fewer lines, better customer service, that sort of thing. I think on the marketing side, e-commerce is nothing new, but I think this shift is going to mean even those that had topical knowledge of things like measuring incrementality or looking at the analytics of their marketing programs, they're going to be forced to dig in even more because it's just going to have a shift in importance and you can no longer be on the surface and do your marketing. I think there's going to be a requirement to dig in a little bit deeper on the numbers and know the impact of your marketing. Which I guess is a natural trend anyway, but as I said I think this will accelerate that.

Stephanie:

Yeah, completely agree. So you said you have 50% of insight into the spend in the US with people moving to more banking online. Where do you guys project yourselves to be within a couple of months? Do you think you'll have 60%, 70%? What are you thinking?

Nate:

Well, the percentages is derived from the banks that we have partnerships with. I'd love to say they're nimble and quick to form these agreements, but it takes a long time. But Cardlytics, when I joined, or I guess for most of its history it was this long tail of credit unions, there is something around 2000 financial institutions in our network, but it's a really, really, really long tail. The anchor partnership that we had was Bank of America, and then early last year we brought Chase on as a partner, and then Wells Fargo and later this year will be US Bank. So it will grow but it happens slowly over time. The shift online just means that there's going to be more people who are, hopefully, interacting with these offers and looking a little more closely at their finances and hopefully, using our ad network kind of more regularly I suppose.

Stephanie:

Got it. How does that partnership work? Because I was reading through that you guys partner with the banks and you run their rewards programs, right? And in turn you have access to the data and all that. Can you explain that a little bit more because it's a super intriguing model, but it also sounds very complicated where I'm like, wait, who's doing what? And so you guys are running rewards programs, and you're doing marketing stuff. How well does all that work?

Nate:

Yes. So we kind of think of it as three groups that that can benefit. So you've got Cardlytics and we take in advertising revenue, which is wonderful and we like that. You've got the bank and the reason the banks are motivated to do this with us is because they get to offer something to their customers that's a value add. So we call them offers rather than ads, which they are. And so a logo that'll allow you to have say, 10% back if you go and purchase with a certain company.

Nate:

And from the bank's perspective, they're differentiating themselves from some of their peers who might not offer this. And a customer comes on and says, Oh, well, because I'm a customer of Chase, look what they're offering me, this 10% back or $5 back or whatever it may be. And in fact, when you do get your money placed back into your account, the money comes from the bank. So this is why the average consumer hasn't heard of Cardlytics, because Cardlytics is simply the, I guess the technology behind the platform and the Salesforce to bring on these brands.

Nate:

And so we will share some of the revenue that we bring in with the banks, but a large portion of what we share goes to the customers. So I think we've rewarded something more than $500 million in these rewards over the course of when the company's been doing this, which is great. And then we retain a portion as well.

Stephanie:

Okay. Got it. And then how do you take that data that you have access to? What do you do with that afterwards?

Nate:

Right, so the data, it all remains behind the bank firewall and when we analyze it at all, as I said, is anonymous as far as who it is. But we can look down to spend at a zip code level and we look at category spend and all this. The way we do it is in a couple of ways, primarily it's to target. So we might say, Hey, we know people that like to buy pet food but they've never bought pet food with your company, and we'll show an ad. We can get quite granular with that. We might say someone who did buy from your company six months ago but then hasn't bought since is a lapsed customer so let's target them.

Nate:

At the end of the campaign a big differentiator is that we'll actually look at the incremental impact of the ad.So we'll do a holdout group, and it's just a test versus control, which is not totally uncommon in marketing, but the difference is we know who's spending the money and who's not spending the money. And so we'll take this holdout group, we'll make sure that the way that they spend is the same as the test group by and large over the past year or so. And then we'll just look at the lift in spend between those who saw the ad and those who didn't, and the idea is that it would take into account anything you're doing on TV, on Facebook, on Google. So at the end of it you can actually say, well, what was the incremental gain that I got for the money that I spent?

Nate:

And incrementality is tossed around a little bit, but at an analytical level, at a 95% statistical confidence, you can actually see what the impact is of the ad spend, which is kind of the-

Stephanie:

The goal?

Nate:

The end goal. Right. And so that's quite interesting, and then I would say the targeting and the measurement are the primary ways that we use the data but we'll also work with some of our advertising partners to show a different business insights. And we can look at where the, if you shifted spend to you, where did it come from and how did that change over time or we can look even at, for brick and mortar companies, we've helped them decide where to open businesses based on where they have low market share and where there's increases in demand and things like that.

Nate:

I mean, it's almost endless, the possibilities, as long as we are careful about observing our, we don't want to give too much data that anyone would be able to make market decisions or certainly not reveal anything personal about a customer, which we don't have access to any way, the banks scrubbed that before we get that information.

Stephanie:

Yeah. They know better. So is there any themes that your partners come and ask you guys for help with, like you said some of them asking for where to open a brick and mortar location. Is there a couple of questions where you're like, Damn, we get this a lot, them coming and asking us for help around this or that?

Nate:

I think a lot of them are curious if their perceptions of market share are real and whether they really are strong or weak in certain areas and we can confirm that for them and help sustain it or change it depending on the situation. I think that's kind of the most common but I'd say also, as far as spend categories, people are curious about who their competition is. And by that I mean it might not be the same type of service.

Nate:

So if you think about audio streaming, is that a competition for book purchases or is it competition for music streaming? Is it books on audio or is it podcasts or is it music or is it something entirely different? Is it, I don't know, travel or sporting goods or something like that, and so we can actually look at, in a campaign, if you bring over customers, where does their spend decline in other areas?

Nate:

So for example, on podcasts and books, the competition is share of ear, if you will. So they might decline in how many books that they're purchasing, but actually they'll be more correlated to maybe fewer premium subscriptions for music, as an example. Which makes sense I guess, like there's only so much time you can put something in your ear and go about your business and listen to it whether it's a spoken word or it's music, really makes no difference to the customer.

Stephanie:

That's great. And how do you guys, you were talking about there's a lot of privacy efforts that you guys make sure when it comes to the bank data or your data, what are some big things you're doing to make sure that data is protected and similar there'll be one question everyone's like, Oh my gosh, Cardlytics has all this data. What are you guys doing to make sure it's protected and used and not abused?

Nate:

Sure. We take it very seriously obviously, it's something, I remember a same question would come up to me at Facebook and Google. It might be about the customer or it might even be, Hey, you're also working with my competitor. Right? And the first thing I would say then, and I'd say now as well is, look, if we messed up here and did anything wrong, the whole model comes falling down, nobody would trust you, nobody who does business with you. The bank certainly wouldn't partner with us if we weren't responsible. Right? And the banking industry is one of the most regulated that we have in the US, and so there are a lot of safeguards, for one, before we see any data from the banks, the banks are stripping out anything that we could see that would actually tie to us that person. Right? So we don't even get that.

Nate:

Second, we have to operate behind the firewall so any data that we see about market spend and so forth at a raw level doesn't leave our servers. So we don't actually give that to the marketers. So by the time it gets to the marketer we'll definitely share specific insights, but it'll be trends that are grouped together in terms of people or companies. And so we've got quite explicit guidelines on our data practices that we follow. There's a few different checks and balances I suppose.

Stephanie:

Got it. That makes everyone feel better I'm sure. But yeah, like you said, Google and the Facebook Store, when you see how much data they have, any other company's no match to that. How do you think about, when it comes to acquiring new customers in your, like to me all the customers you're working with sound much harder than some of the other guests we've had on the show. You know, acquiring normal consumers, you're having to acquire banks and big brands. How do you all go about creating those partnerships and keeping them and keeping those clients happy because I could see banks being hard to keep happy because they're just kind of, some of them anyways are in a different era it feels like, at least some of the banks I work with.

Nate:

There is a spectrum of the banks that are more or less progressive or more or less digitally savvy. I work on the advertiser side, but we have a great bank team which partners with these guys, our founders, our CEO, they came from the banking environment as well so we kind of speak that language. And I think what we offer is one, there's this reassurance that on the, for example, the privacy side and the data protection that we do well with it. We take it seriously and we haven't breached that trust with any partner before. And then every bank wants to please their customers and retain their customers and you might not always see that in practice, but that's what they want and they're all competing with each other.

Nate:

So if we can offer a great customer experience where the customer can get some cash back from some different brands and make some money from it. Some banks are more concerned with the revenue share and some would rather plow that revenue share back into the customer rewards, just kind of depends on their approach, but it's a way to help their customers and retain their customers. But it takes a long time to form those partnerships and it's a lot of technical integration as you can imagine. And so once they're formed they tend to stick with it for a while because there's a lot of investing on both sides.

Nate:

On the advertiser side, I mean, once we get to the point where we've really explained everything, typically they want to advertise with us, but the challenge is one, they've maybe never heard of us so we have to start from zero. Two, we have to explain how we're different than something else, like an affiliate marketing channel or something like that. And then to really figure out if we're worthwhile, you have to dig into the incremental return, which is why I touched on that because we are behind the bank firewall, we're not going to share all the impression data and who your campaign reached exactly on a one to one basis. And so if we don't plug nicely into whatever you formed when you're marketing with Facebook and Google, it's a bit of extra effort and there's a lot of work getting our data scientists together to kind of verify, what we say we do is what we actually do and so there's this rigor that's needed.

Nate:

Which is why, going back to what I said about the shift that e-commerce and marketing experts having to get more under the hood with what they're doing will benefit us because if you're willing to spend the time on looking at the numbers, we usually benefit. But people are busy and they don't always have the time to do that.

Stephanie:

Yeah. Do you spend a lot of time training them on, here's some metrics you maybe should look at or here's things that are important that you never considered before, and if so, what kind of things should they be looking at that maybe a lot of them aren't right now?

Nate:

Sure.

Stephanie:

Or what data do you give them where they're like, "Ooh, that's good I've never seen that." And you're like, "You should have seen this before."

Nate:

Yeah, we've kind of got two sets of advertising partners. There's those who don't really want to be bothered with those details, and it's a little frustrating because I feel like there's this wealth of data that they could analyze. They just want to know that they're getting a customer for 20 bucks a pop or whatever it is and they're good. And then there's others who dig in more and tend to eventually become our larger partners and they really want as much data as we'll give them.

Nate:

And the things that we educate them on, it might be like what their expectations should be on marketing incrementality, like how much bang do you really get for your buck? And when you do bring a customer on, like I said, where is that share coming from? Where are they declining in spend? Because it's rare that somebody just spends more money. Sometimes they do, but not on a frequent ongoing basis, and so where's the money coming from and is your competitive set what you actually thought it was or is it something a little bit different?

Nate:

And then looking at why people stopped using a product so I mentioned this propensity to churn, which is kind of predicting the future of what somebody is going to do, but you can statistically do this in a lot of cases by analyzing large groups of people who have had this behavioral change in the past and then seeing who else fits that model, has it quite reached the point of stopping their spend. That's something that I think is kind of surprising to some as well.

Nate:

And we've got a kind of an intro slide that we use where we say, you see these three data points from your customers, once they're on your platform you know what they're doing, but we know everywhere that they're spending their money. And that sheds a lot of light on to the type of person that they are. And the analogy I use in, University of Oregon wouldn't really like this, but I love Oregon Sports and Facebook would look at me and say that I'm a huge sporting fan, specifically Oregon Sports, but I almost never spend any money on it. Right? I do a lot-

Stephanie:

You're the worst kind of customer.

Nate:

I'm the worst kind of customer and so there's this discrepancy between kind of your behavior and so a marketer would say, Ooh, let's target him for a lot of jerseys or whatever. Cardlytics would say, no, this guy, he's a cheapskate. He's not going to go and buy-

Stephanie:

Stay away.

Nate:

... anything. Let's get the person who, whatever they do online, they're plunking down their credit card for certain products and so I think that's kind of a different mindset as well. Looking a little differently about how you form your ideal audiences for targeting.

Stephanie:

Yeah, that makes sense. Do you give them dashboards that they can actually play with or do you kind of give them customer reports based on what they want, and if so, how do you manage those different types of clients. It sounds like a lot of different clients to manage how do you keep track of it all?

Nate:

Yeah, so it kind of depends on how big the partnership is with us. Right? We haven't really built out our long tail so most of it is pretty white glove service, but by and large, a smaller advertiser will get certainly access to their ad spend, how many clicks, impressions, conversions and all that. And then we'll make agreements as part of a partnership. Certainly if someone makes a commitment to be with us for a year and to be advertising over time, we'll agree to it. Certain analytical, custom analytics is what we call them, and that's jointly determined by our, was really designated by the client themselves, but our analyst team will come in and talk about what we can do and we'll figure out what the problem statement is and what they want to figure out and we'll deliver a customer report.

Nate:

And then we're starting to develop a dashboard as well which some advertisers have access to. And there you can look at the competitors and the competitor category that you'd like your information on, geographic areas. And then that data is updated periodically and it's limited set of data but it kind of answers on an ongoing basis what the customer analytics might do on a one off basis. So we're moving in that direction, providing more and more insights into the business or we're trying to. There's always a challenge of you've got a lot of data, but making sense of that is another matter altogether so we really try to figure out what the business problem is rather than, it would be interesting to see, and then throwing out a lot of requests.

Stephanie:

Yeah. Got it. But therefore the other-

Nate:

But it is pretty interesting.

Stephanie:

That sounds really insightful to be able to provide that information to them and see how they actually utilize it to change their marketing strategies or product strategy or any of that so yeah, that sounds really cool. All right, so we only have a couple minutes left. At the end of each interview we do something called the Lightning Round, brought to you by Salesforce Commerce Cloud. It's where you quickly answer a question, whatever answer comes top of mind, and you have one minute to provide an answer.

Nate:

Okay.

Stephanie:

Let me know if you're ready, and I'll start with the easy ones first.

Nate:

I'm worried but ready.

Stephanie:

All right. What's up next on your reading list or audible or podcast?

Nate:

Yeah. I want to sound a lot more intellectual here, but I've been into C.J. Box as an author and it's like this super fictional reading about this game warden in Wyoming and it's kind of an escapist.

Stephanie:

Hey, I like those kind of books I feel like I have to read it right now. All right, what's up next on Netflix or Hulu queue?

Nate:

Netflix. I would like to watch Extraction.

Stephanie:

Okay.

Nate:

Yeah. But typically we're watching a lot of cooking shows, we've gotten into that a lot.

Stephanie:

Any good recipes recommended, [inaudible 00:45:02]?

Nate:

Mostly they've been focused on restaurants that I can't go to, which is really frustrating.

Stephanie:

Oh man. Yeah, that's sad. All right, what's up next on your shopping list? Doesn't have to be groceries, it can be anything that you want to buy next.

Nate:

I've heard about the therapeutic values of pressure washing. I want a pressure washer. We'd go out there and just clean the house. It's part of that home improvement upswing.

Stephanie:

Yeah. You're that person. We're going to walk by and be like, Nate, take it away from him. He's been doing it for eight hours. All right. The next hard question. So your job is to stay ahead of expectations and your competition. What do you think is up next for e-commerce pros?

Nate:

I think within the marketing budgets that you're spending, up next is slicing those more and more granularly, and by slicing, I mean looking at the impact of each portion of your marketing, even within the same channel, and figuring out if that can be better employed elsewhere.

Stephanie:

Great answer. All right, well, this has been a really fun interview. Thanks for coming on the show and see you next time.

Nate:

It was a pleasure. Thank you very much.