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CPA Prescreen Direct MarketingLendit Fintech 2018

© Deluxe Financial Services, LLC. Proprietary and Confidential.

Prescreening is the process of using credit bureau data to select individuals for an offer – usually via direct mail

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Copy Language associated with Prescreening:

• “Pre-Approved”• “Pre-Qualified”• “Pre-selected”


Prescreening is defined in the Fair Credit and Reporting Act (FCRA)

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Fair Credit Reporting Act 603 (l):

“The term ‘firm offer of credit or insurance’ means any offer of credit or insurance to a consumer that will be honored if the consumer is determined, based on

information in a consumer report on the consumer, to meet the specific criteria used to select the consumer for the offer….”

Notes:• “Prescreening” is the process that is used to generate “firm offers of credit” The two terms are often used

interchangeably • There are a series of conditions that apply – but the basic rules are that a lender can use credit for

marketing, then can check to make sure the applicant still meets the criteria when they respond

• The marketing stage cuts can be stricter than the application stage criteria

Another way to think about prescreening: a lender can never decline a responder for something they could have know at marketing-stage


In 2017, marketers sent out 6.5B prescreen offers – down 145mm, or 2.2%, from 2016

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0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Card PersonalLoan

Insurance Mortgage Auto Student Home Equity

2016 2017

6.7 6.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

Prescreen

2016 2017

-25%

+29%

+8%+12%

-22%+33% -34%

-2%

2017 Prescreen Mail Volume(in billions)

Source: Mintel Comperemedia


Card was down 25% YoY, led by the big issuers

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2016 Chase AmericanExpress

Capital One Citi All OtherDeclines

(90)

Ollo TD Celtic BBVA All OtherGrowth (63)

2017

3,271

-352

-169

-145

-117

-161

+25+13 +9 +8 +59

2,441

Change in Card Prescreen Pieces Mailed, 2016 to 2017(in millions)



The Top 10 Card Prescreen mailers accounted for 87% of the 2017 volume

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Card Prescreen Pieces Mailed by Issuer, 2017(in millions)

519

373 361

304

181 132 131

50 35 33

323

-

100

200

300

400

500

600

Citibank Capital One Discover AmericanExpress

Bank ofAmerica

Barclays Credit OneBank

SynchronyBank

U.S. Bank TD BankFinancial

Group

All Others(96)



Personal Loans was up 29% YoY, with the growth led by Marcus

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Change in Personal Loan Prescreen Pieces Mailed, 2016 to 2017(in millions)

-74-23

-17 -10 -9 -9 -88+20 +20 +21 +23 +24 +27 +39

+47+65

+70+72

+144

1,836

2,361+181



The Top 10 Personal Loan Prescreen mailers accounted for 72% of the 2017 volume

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Personal Loan Prescreen Pieces Mailed by Lender, 2017(in millions)

358

234 222 208 178

145 126 84 74 74

659

-

100

200

300

400

500

600

700

LendingClub OneMainFinancial

Prosper Best Egg GoldmanSachs

SoFi Big PictureLoans

Discover CitizensBank

Barclays All Others(96)



Lending Club has grown using heavy direct mail – and their openness gives us a glimpse into their economics

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• 2016 Marketing Spend (1): $216mm

• 2016 Direct Mail Volume (2): 359mm pieces

• Estimated Cost per Piece (3): $0.40

• Estimated spend on Direct Mail: $144mm

• % of Marketing Spend on Direct Mail: 66%

• 2016 Vintage Results (4): 434k Accounts

• 2016 Vintage DM Results (5): 217k Accounts

• 2016 Originations via DM: $3.2B

• DM Cost per Account: $664

• Implied DM Net Resp Rate: 6bp

$0

$50

$100

$150

$200

$250

2016 Marketing Estimated 2016 DMSpend

Other Marketing

$216 $144

$72

2016 Marketing Spend (mm)

(1) 2016 10K(2) Comperemedia(3) Datamyx Assumptions(4) Https://www.lendingclub.com/info/download-data.action(5) Assume DM CPA = 2 * Other CPA


Deluxe Performance Marketing offers a pricing model that puts the marketing risk on us and can allow amortization

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Bears Marketing Risk

Typical Channels

Typical Accounting Treatment

Cost-per-Impression(aka: CPM)

Lender Direct Mail, Display, Mobile

Expense Marketing Costs

Cost-per-Action(aka: P4P) Supplier

Search Engine Marketing,

Affiliate

Amortize Marketing Costs


Our approach is to start small and expand with results

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Risk

Resp

Low

High

Low High

Risk Fails

Response Fails

Core (Pilot)

Expansion

We start with Pilot:

• We will design, execute, and fund a small campaign to gather empirical results

• Bounties are a function of credit criteria and product specifics – can range from $100 - $750 for personal loans

Personal Loan Prospect Universe


DPM offers fundamental benefits to our clients

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• Deluxe funds and executes marketing campaigns

• Client pays a bounty per closed account

• Marketing risk borne by Deluxe

• Opportunity to defer/amortize acquisition costs

cpa prescreen direct marketing · cpa prescreen direct marketing lenditfintech 2018 ... marketing,...

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