New Google Personalized Ads Policy – What It Means for Credit Unions

Online advertising has become a marketing staple in the financial services industry, evidenced by 2022 spending of just over $27.6 billion. It’s notable, therefore, that Google has updated its personalized advertising policy as of February 28, 2024, in a way that waters down the effectiveness of this digital channel for credit unions. Credit unions should act now to ensure the disruption caused by this change does not endanger their marketing operations.

What is Personalized Digital Advertising?

One of the most significant innovations resulting from the rise of the Internet has been digital advertising, with its ability to target consumers individually. Who among us surfing the web has not been amazed (sometimes unpleasantly) by how ads mirroring our particular interests have popped up? Personalization is popular with marketers because of its effectiveness. Research by McKinsey showed that “companies that excel at personalization generate 40 percent more revenue from those activities than average players.”

Personalization can be used in a number of digital settings.

• search engines
• websites
• social media
• emails

Digital platforms like Google Ads, Amazon Ads and Meta Ads Manager gather data about people using their services. These users are categorized into “audiences” based on their browsing behavior, location and other characteristics. Companies pay for digital ads promoting their products and services, intending that the ads will be seen by audiences receptive to those offerings.

Google: The Biggest Dog

In comparing the top five digital advertising platforms, Google leads the pack (2024 forecast, Statista).

Percent of digital advertising revenue:

As of Q4 2023, Google reported $65.52 billion in annual advertising revenue.

As the biggest dog, when Google changes its policies on personalized ads, everyone perks up their ears.

Google Policies on Personalized Advertising

Digital platforms quickly learned that personalized advertising needed to have some guardrails. Google explains why in the preamble of its personalized advertising policies document.

“We recognize that certain interests are sensitive and that targeting based on them could negatively impact user experience.”

The “sensitive interests” categories Google carves out for special attention are:

- Google – “Personalized advertising”

• Ad or asset disapproval – An ad cannot be run until it meets policy rules.
• Ad serving eligibility – Ads can be restricted from showing in certain circumstances.
• Account suspension – The advertiser's account can be suspended, sometimes without warning, if Google determines that the violation is bad enough.

What’s Changing at Google?

Google’s policies can change anytime as they gauge users’ experience. The “Access to opportunities” category is the one that affects credit unions.

The current policy is under the subheading “Credit in personalized ads,” the overarching restrictions are:

“In the United States and Canada, the following sensitive interest categories cannot be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”

The current focus of this subcategory is described as:

“Offers of credit or products or services related to credit lending. Examples: credit cards, loans including home loans, car loans, appliance loans, short-term loans.”

However, on February 28, 2024, the subcategory name will change to “Consumer finance in personalized ads.”

The restrictions are the same regarding what data cannot be used to personalize ads. What’s different is the breadth of financial products affected:

“Offers relating to credit or products or services related to credit lending, banking products and services, or certain financial planning and management services.

Examples: Credit cards and loans including home loans, car loans, appliance loans, short-term loans, banking and checking accounts, debt management products.”

How This Affects Credit Unions

The increased scope of Google’s policy makes it even more difficult for credit union marketers to target consumers with digital ads cost-effectively. Even though other ad platforms like Meta and Amazon don’t have personalization restrictions for financial services ads (yet), extra hurdles at Google narrow credit unions’ marketing options.

Filling in the Gap

Credit union marketing teams need to think creatively about how to fill in the gap caused by Google. One creative and cost-effective option would be to add a niche marketing campaign.

As noted in an earlier post, Rediscovering Roots: The Biggest Opportunity for Credit Unions”, a niche marketing strategy targets existing members by leveraging existing credit union data. The basic steps for executing this option are:

1. Assess the credit union’s product strengths and weaknesses to leverage the organization’s most promising areas for growth.  
2. “Mine” existing members’ internal data to identify sub-groups based on such dimensions as demographics, location, occupation, current products, etc. The resulting subgroups are the proposed niches.
3. Match the resulting niches against the organization’s product strengths and prioritize based on the niche with the most significant growth potential.
4. Tweak existing products (if necessary) for the top-rated niche and establish growth goals.
5. Design the information campaign for the niche, including blogs, videos, and other digital media targeted at the group's interests. While primarily informative, the content should contain calls to action directing niche members to the relevant credit union products and services.
6. Execute the program and measure results against product growth and media engagement goals.

The beauty of a niche marketing strategy is that it easily co-exists with other marketing priorities. For example, it can run concurrently with online advertising campaigns with minimal cost and confusion since the target audiences are relatively distinct, members and non-members who might become members. It costs less to run a niche campaign because there is no new member acquisition cost. The strategy seeks to build deeper trust and credibility, thereby capturing greater wallet share for those niche members.

Conclusion

While Google’s policy change in ad personalization is a headache for credit union marketers, Nook offers a solution to this problem. Paid advertising has become more complex; building niche experiences offers further opportunities to engage highly targeted demographics without paid advertising costs. Online advertising is still a powerful marketing tool, but using it along with a niche strategy could provide better overall results for credit unions.