Third-party comparison websites (TPCs) are invaluable tools that enable consumers to make informed decisions before purchasing products and services. One of the most popular uses for these sites is to compare credit cards—and through an analyst team and by using proprietary methodologies—TPCs track and rate credit cards. The result is to get consumers to apply for these credit cards from their partners, who in turn pay these sites for securing new customers.
In a recent report, “Third-Party Comparison Websites: A Tried and True Method for Digital Marketing,” Ben Danner, Senior Analyst of Credit and Commercial Payments at Javelin Strategy & Research, delves into how consumers are using digital services to carry out credit card research, how TPC websites contribute to their digital marketing efforts, and whether or not the TPC Model is successful.
How Customers Leverage Digital Services to Conduct Credit Card Research
Based on the report’s findings, 25% of respondents used a financial institution’s website for online services. Interestingly, 38% of respondents said they were still visiting their local financial institution branches to apply for a credit card. This was to be the top method used.
According to Danner, younger generations are using social media platforms such as TikTok and YouTube to gather their information from financial influencers. These personal finance gurus specialize in sharing their tips by doing the comparison work of all the credit cards currently on the market.
How TPC Websites Contribute to Digital Marketing Efforts
TPC websites typically have a massive audience base. Credit Karma, for example, has roughly 44 million monthly active users. This means that issuers have a significant pool of potential customers to tap into if they were to feature their credit cards on these websites.
“Sometimes they do pay to feature their cards on the website,” Danner said. “They pay an extra fee, or they might pay for a story for promotional purposes. You’re putting your card in front of a huge share of people on the Internet. These are not random people on the internet. These are people that are actively seeking a new card, and so it’s important from that standpoint.”
“Also, having your card on a TPC website is good because some of these websites have member services,” he said. The member can sign up with all their details, and you can actually customize card marketing efforts towards those details. So it’s a great way to engage your potential market.”
Equally important to note is how much issuers are currently spending on digital credit card marketing, that also includes TPC websites, and even affiliate marketing. Danner explains:
“Digital marketing spend for credit cards was about 10% in Q4. And when we say digital, we mean display online video and various paid social categories. The average was about 9%.”
“If we look across 2022 for digital ad spend, credit cards have traditionally been through direct mail and that hasn’t changed. That’s the primary vehicle for advertising those little pamphlets you get in the mail.”
These ad spend metrics are incredibly useful for credit card issuing banks as they can see firsthand, where the industry is investing its money. Furthermore, it also serves as a guide to know what competitors are doing and which marketing activities are delivering the most return on investment.
Is the TPC Model Successful?
When it comes to determining whether the TPC model is successful, you simply need to look at the numbers.
“There’s a lot of money wrapped up in this and you can see by the amount of revenue some of these companies are bringing in,” said Danner. “Credit Karma had $1.8 billion in revenue last year. LendingTree had $984 million. NerdWallet, which runs a simpler operation, made $539 million.”
“What they’re doing is just organizing information that’s out there and available but presenting it in a way that is consumable,” he said.
Learn more about the popularity of TPC websites, and how they can be a prime source for new customers for issuers.
