Posted by Moderator in Social Media Banks New Frontier
By Alisson Andrade, senior analyst at Corporate Insight's Small Business Card Monitor. She joined the firm, which researches the customer experience for financial companies, in 2005 as an intern and worked as a research associate on the bank and credit card team. She received her B.A. in Finance and Investments from Baruch College in 2006.
American Express recently announced that card members can use Membership Rewards points to buy advertisements on Facebook to promote their businesses. Clients can redeem points in increments of $50, $100, or $250 to use towards their Facebook Ads purchase. This new reward option should interest a good number of American Express' small business cardholders, many of whom are operating with limited marketing budgets in a difficult macroeconomic environment.
This isn't the first time American Express and Facebook have partnered to help small business owners with their marketing. In April 2011, the firms launched the Big Break contest for small businesses, in which five winners will receive a social media makeover package from Facebook and $20,000 that can be used for social media and strategy. (Big Break contest winners will be announced later this summer.)
Furthermore, in November 2010, American Express offered 10,000 small businesses $100 worth of Facebook advertisements when they signed up to participate in the Small Business Saturday Facebook page, which raises awareness on the impact small businesses have on the community. The firm plans to bring back Small Business Saturday again this year on Nov. 26, 2011, cleverly positioned between two of the biggest shopping days of the year--Black Friday and Cyber Monday.
Centurion's in social vanguard
American Express is one of the financial services industry's earliest and most successful adopters of social media.
As of June 1, 2011, the firm had four of the top ten Facebook pages in the financial industry, based on number of fans, and the two most-followed Twitter accounts.
This comes as no surprise to those watching the intersection of social media and financial services closely. Small business owners have long been a focal point of the firm's overall social media strategy. In 2007, American Express launched OPEN Forum, an online community for small business owners providing content from expert contributors; discussion forums where members can exchange their perspectives on different aspects of running a business; and the Connectodex, a tool that enables members to locate and build relationships with their peers.
Given AmEx's strong social media history and its focus on small business owners, the Membership Rewards Facebook Ads program will likely be a welcome addition to the company's already strong selection of rewards.
Data points the way for AmEX
A recent survey conducted by American Express OPEN showed that 44% of small business owners use social media as a way to promote their businesses. Facebook was the most popular social media advertising outlet in the survey, followed by LinkedIn and Twitter.
The same survey also stated that nearly half of all small business owners planning to use marketing money for online advertising via search engines or social media this year are looking to spend less than $1,000, which suggests that small, targeted ad buys on Facebook could have some appeal.
The popularity of Facebook and its relatively low-cost ad pricing structure (particularly in contrast to high-priced traditional media options such as television and radio) make Facebook ads a viable promotional option for many small businesses.
AmEx and Facebook aren't giving this exposure away, by a long shot. Certainly Facebook ads aren't for everyone. The point redemption rate--$6,750 for every $50 worth of Facebook Ads--is not particularly generous. Still, AmEx's new program helps position the firm as an innovator in the small business card space.
Assessing the competitive impact
According to the Census Bureau, there are approximately 30 million small businesses in the United States; roughly half of all Americans are employed by these small companies. While the economy still hasn't quite found its footing, new startup businesses are emerging every day. Innovative programs like the AmEx-Facebook partnership show that financial institutions continue to see the small business owner as a desirable target.
It will be interesting to see whether any of AmEx's competitors will seek out their own unique online ad-focused partnerships.