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Direct-to-consumer (DTC) brands are often referred to as disruptors because they use digital and mobile channels to sell directly to consumers. By bypassing distributors and third parties, DTC brands can deliver a more convenient shopping experience while building a more direct relationship with customers. 

The movement toward DTC gained even more momentum during the pandemic. In fact, direct-to-consumer trends show that US DTC ecommerce sales have more than tripled in the past six years. Experts estimate that by the end of 2024, the market will grow to over $212 billion.

But how will DTC continue innovating and expanding to compete against traditional retailers? Let's review the key factors influencing the next evolution of direct-to-consumer disruption.

Key takeaways:

• Direct-to-consumer brands use emotionally charged messaging to build one-on-one customer relationships.
• Most DTC brands find success, meet consumer needs, and accelerate growth using a single channel.
• Successful DTC brands know how to maintain emotional connections by expanding customer loyalty programs.

How Has DTC Disrupted Traditional Retail?

With the rise of digital commerce, the modern consumer prefers personalization and direct engagement with the brands they buy from. The DTC model is built on relationships, and that's one of the main reasons these brands have seen so much success in recent years. DTC brands also offer other advantages over traditional retailers, which gives them a competitive edge.

These include:

• Emotional storytelling: according to direct-to-consumer trends, companies in the DTC space are pivoting to "ethos" as a competitive differentiator. Instead of focusing on manufacturing and distribution, the focus is on building one-to-one relationships through emotionally charged messaging on mobile and social media platforms.
• More attractive pricing: DTC brands enjoy more profits by eliminating the middleman. This approach provides more control over pricing and discounts, leading to better margins and perception of product value.
• Better customer experience: having access to detailed customer data is a huge advantage for DTC companies. That's because customer insights give brands visibility into who their ideal buyer is so they can deliver a personalized customer experience.

However, while direct-to-consumer trends indicate incredible growth, traditional retailers and wholesalers are catching up. So, how do DTC brands evolve to remain competitive? The answer is embracing an omnichannel marketing strategy.

DTC Embraces Omnichannel

Most DTC brands reached success by leveraging a single channel. Think about these hypothetical scenarios where that's the case:

A mattress company launched its website featuring one model at an affordable price delivered directly to a customer's home. That company reached $100 million in sales in less than two years. In another scenario, an eyewear brand launched its website in 2010. The goal is to deliver high-quality frames to a customer at a low price. Five years later, that company's value reached $1.2 billion.

But these companies have had to embrace an omnichannel marketing strategy to accelerate growth and meet new consumer demands. That means relinquishing control over some areas of distribution. For example, the mattress company sells its products through stores and conventional retailers.

That takes us to another hypothetical scenario. A men's razor company launched its website in 2013. But, today, these products are sold primarily in large retailers. As a result, the meaning of D2C has expanded. It no longer describes brands that only sell through their own direct online channel. Today you can find small D2C brands on Amazon that also have their own website. And then you have big brands that have their own online presence.

Expansion of Customer Loyalty Programs

D2C brands rely on the power of marketing much more than typical brands. Specifically, top-of-funnel branding activities are crucial in helping launch a product successfully. Then, as those brands grow, they must find ways to carry the emotional connection they have established to customer retention models. Retention is a powerful growth lever. For one thing, loyal customers spend 67% more than new customers. Then combine that with the fact that it costs five to 25 times less to retain a customer than acquire a new one.

D2C brands must evolve, or they'll perish over time. That means leaning into omnichannel marketing strategies and leveraging customer loyalty programs. Fortunately, those elements align with emotional storytelling and connection components that propelled D2C companies early on. With a view into 1 in 2 U.S card transactions, Cardlytics' Purchase Intelligence offers powerful insights that help brands shape their omnichannel marketing strategy. Contact us today for an analysis and campaign strategy customized for your brand.

The face of retail is changing. Over the last few years, spending with direct-to-consumer (DTC) brands has nearly doubled. While the retail industry suffered pandemic-driven setbacks, DTC ecommerce steadily grew. According to Cardlytics first-party data, DTC spending jumped from 8% in 2020 to 14% in 2021.

The growth in DTC eCommerce spending reveals bountiful opportunities for retail brands to improve sales performance by taking a page out of the DTC playbook.

Key takeaways:

• DTC companies capitalize on the tech-enabled service model, abandoning traditional retail outlets.
• As the demand for online purchase power increased during the pandemic, DTC ecommerce brands met that need effortlessly.
• DTC brands know how to build authentic customer relationships by delivering consistent and honest messaging.

How Has the Direct-to-Consumer Model Transformed ecommerce?

Direct-to-consumer companies cut out the middleman to save consumers money. But this business model is much deeper than a cost-saving ploy. Direct-to-consumer trends feature niche companies that embrace a digital-first operating model, appealing to younger adult audiences with significant buying power. 

Successful DTC ecommerce brands leverage technology to enable a complete product lifecycle feedback loop. These brands maximize their value proposition by providing simple solutions to common consumer complaints. When the cost of disposable razors had reached a fever pitch with shoppers in the retail market, DTC brands, like Dollar Shave Club, offered a solution–quality razors at affordable prices, delivered to your door.

What Can the Retail Industry Learn from DTC Brands?

Consumers flocked to DTC ecommerce, and while the easy success seen with these models began with a good value, there's a little more to it. These disruptors are doing more than filling a need. They're breathing new life into stale business models by abandoning traditional retail outlets for a tech-enabled service model. 

DTC companies are capitalizing on the digital experience by focusing on user-friendly design to create a simple, effortless shopping experience. And, with quality products and genuine interactions – all things the modern consumer craves, DTC brands are going beyond marketing claims to build authenticity.

DTC Marketing Abandons Outdated Systems for Reimagined Service Models

The idea that manufacturers don't need to rely on retailers to distribute their products fuels the entire direct-to-consumer market. The retail market, ranging from mom-and-pop shops to big box stores, might be the clear winner of the one-stop-shop experience; but there's something more convenient out there–home delivery.DTC brands are keen on data-driven strategies with nimble agility. They wholeheartedly embrace the idea of riding life on the leading edge of change. For example, when Warby Parker closed its 160+ physical locations during the pandemic, its tech-friendly, digital-first strategy paid off big. The brand effortlessly slid back into its eCommerce roots with the right technology in place to meet the needs of those looking for prescription glasses from a safe distance.

Capitalizing on a Mobile-First Experience

The customer experience is the top priority in DTC marketing. These disruptive brands understand that consumers want quick, simple, endlessly personalized interactions to their specific needs – something that's hard to achieve without technology. 

According to Salesforce, over three-quarters (76%) of consumers think companies should understand their expectations and needs. And as of 2020, Gartner says that over 40% of all data analytics projects are geared toward improving the customer experience. Retail is making headway, but this is one area where DTC brands are gaining the most ground.

These companies have built their service model based on the tech-friendly culture of millennial and Gen Z consumers, investing most of their resources into building a simple and efficient customer experience. Ordering products and services with user-friendly apps and AI integrations feels almost effortless.

Focusing on User Design & the Customer Experience

We've also noticed many DTC models obsessively prioritize the customer experience. It's not a coincidence that these brands favor clean, simplistic web design with intuitive features. Sure, the business model of providing just one specialized product or service helps keep the clutter down. Still, it's more than that – these brands are hyper-focused on delivering a seamless customer journey filled with big promises, bigger follow-throughs, and effortless upkeep.

While some retailers might shy away from the scaled-down product catalogs serving as the cornerstone of DTC ecommerce, there's something to be said for offering too many options. Decision paralysis, fueled by an overabundance of choices, often leads to abandoned carts. The feature of the traditional retail business model might be what stands in the way of future success as direct-to-consumer commerce gains a foothold, eating up competition across multiple categories.

Living and Breathing Brand Authenticity Through Social Media

Another cornerstone of successful DTC ecommerce is authenticity. Consumers are more driven than ever before to spend their money with values-aligned services and providers. In the last few years, hot-button topics like sustainability, diversity and inclusion, and employee culture have made news headlines. Many retail brands have been quick to take note of how important these issues are to consumers.

DTC brands seem to already be in the know, placing authenticity high on the company values list. Given the small, curated audience and built-in need for strong loyalty, the DTC business model is rooted in building authentic relationships. These brands are very hands-on with their customer communications, weaving between an active social media presence and a strong customer relations approach. Wherever customers are in their journey, the DTC business model is there, delivering a consistent and honest message.

Retail Brands Can Adopt a Similar Approach, Meeting Consumers Where They Are

Direct-to-consumer marketing trends and business models have laid out a clear path for the retail industry to follow suit. Instead of relying on convenience or bargain prices to get foot traffic, retail brands must adapt to modern consumerism with technology and a passion for customer-driven simplicity. This change requires the courage to try new things and a willingness to engage with customers on an authentic level. Change begins with quality insights, from reimagining the customer experience to embracing a digital-first approach. Cardlytics purchase intelligence can provide meaningful insights to help retail brands harness the same level of loyalty and engagement that direct-to-consumer brands have found. Imagine a future where weekly groceries arrive on auto-delivery and smartphones become personal shoppers, finding and previewing curated collections of new retail merchandise. Cardlytics first-party data insights can help transform your retail strategy.

Analysis offers insight from previous back-to-school seasons ahead of the second-largest shopping event of the year

ATLANTA – August 1, 2022 – Cardlytics (NASDAQ: CDLX) released its annual back-to-school (BTS) trend analysis, which underscores the importance of providing consumers with an omnichannel shopping experience to maximize consumer loyalty. The analysis, which comes as 62 percent of consumers start their back-to-school shopping this month, examines previous BTS spending behaviors for a sense of what to expect during the 2022 BTS shopping season amid the backdrop of rising inflation.

Key Takeaway

Notably, the analysis found that consumers who shop across channels (e.g., in-store, online, apps, etc.) spend more. In 2021, shoppers using just one channel spent an average of $900 during the back-to-school shopping season, but those who purchased items across multiple channels spent over $1,000. Even as customers spent more across both on and offline channels in 2022, in-store shopping remains the preferred method for most. It also shows that in-store sales are slowly returning to pre-COVID levels at 63 percent of total spend in 2021, compared to 61 percent in 2020, and 73 percent in 2019.

As shoppers gear up for the 2022 season, inflation may drive these figures higher due to spend per purchase, but that does not necessarily equate to increased purchases in any given category. Cardlytics’ Q1 2022 State of Spend report saw a slowdown in spending toward the end of Q1 as consumers made adjustments to accommodate increased costs in goods, food, gas, and housing brought on by the highest inflation seen since the 1980s. This could continue into the BTS and holiday 2022 seasons as customers focus on purchasing essentials and possibly engage in more one-stop shopping.

“Convincing your customers to convert on both online and offline channels is essential to maximizing incremental sales and customer loyalty,” said Nate Bucholz, Cardlytics’ vice president of DTC, Subscription, and Retail. “Our insights continue to show that people shopping across a brand’s available channels spend more than those who shop in only one channel. And they are more likely to return. Looking at your customer base through the lens of the channel they shop can help you get the most impact from your marketing spend. I would encourage brands to offer the best sales and cashback rewards now to acquire and retain customers as they head into the holidays, which is the last big shopping season of the year.”

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Additional Trend Highlights

The back-to-school season is the second largest shopping event of the year behind the December holiday season, making up 15 percent of annual consumer spending. The analysis includes sales for apparel, home décor, office supplies, sporting goods, shoes, and mass merchandiser, finding that:  

• Overall spend was flat with only a 1.2 percent increase between 2020 and 2021.  This is likely due to declines in customer volume and total purchases – defined as the number of actual customers making purchases in these categories. This trend may continue through the 2022 BTS season with minimal growth as customers tighten their wallets and only increase their spending in response to increased prices.

• Apparel had a strong 2021 back-to-school season as parents rushed to refresh wardrobes for in-person schooling. The data showed that spend increased by 24.3 percent year-over-year in this category, driven by strong customer and purchase growth. Spend increases in this category were due to genuine growth and are not a byproduct of current inflation. It is predicted that due to tightening economic conditions and the fact that people spent significantly more last year than the year before, it is likely that there will be a flat or negative spend growth for 2022.

• Shoes and children’s apparel saw significant increases as well last year. Shoes had a nearly 30 percent year-over-year increase while children’s apparel saw a 13.2 percent jump. But, shoe companies are bracing for weaker sales for the latter half of this year, which could impact overall growth for this category in 2022.

• Consumers cut back on home and office supplies in 2021, and this trend has a strong chance of continuing as more children return to classrooms in 2022. Home and office supply spending was down 8 and 8.8 percent, respectively, as fewer purchases were needed for homeschooling and to counterbalance heavy spending in previous years.

• Department stores also experienced greater sales with increases across volume of shoppers, number of purchases, and spend per purchase. Year-over-year spend went up by 22.4 percent. Spending in this category may also feel the impact of inflation, particularly when it comes to spend per purchase – while consumers may have less items in their cart, this may be offset by increased costs for each item.

The review covers an eight-week period beginning the second weekend of July and lasting through Labor Day. Early insights from the first two weeks of July 2022 show that spend is down 8.4 percent YoY as customers brace for economic uncertainty. This points to a decline in the number of customers and purchases resulting in a sluggish start this season across all categories. To view the full trend analysis, visit: https://www.cardlytics.com/blog/customer-loyalty-is-the-battleground-for-back-to-school/

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, Detroit, and Visakhapatnam. Learn more at www.cardlytics.com.

Atlanta, GA – August 2, 2022 – Cardlytics, Inc. (NASDAQ: CDLX), a digital advertising platform, today announced financial results for the second quarter ended June 30, 2022. Supplemental information is available on the Investor Relations section of Cardlytics' website at ir.cardlytics.com.

“I am pleased with our growth in the first half of the year despite the growing pressure macro conditions are having on consumer spending and ad budgets,” said Lynne Laube, CEO & Co-Founder of Cardlytics. “We are also pleased with the progress we are seeing in the Bridg acquisition and expect to see further proof points in future quarters. The combination of the Cardlytics and Bridg data sets has us on the cusp of being able to scale the business beyond our core platform, while our focus on financial goals will allow us to control our own destiny moving forward.”

“We are committed to meeting our adjusted EBITDA and free cash flow goals in 2023, and we’re taking several proactive steps to reduce our cost structure in recognition of the lower-growth environment we are entering,” said Andy Christiansen, CFO of Cardlytics. “We expect year-over-year growth of approximately 10 to 15% in the back half of 2022, and I believe we can navigate a lower growth environment with minimal impact on the long-term prospects of the business.”

Second Quarter 2022 Financial Results

• Revenue was $75.4 million, an increase of 28% year-over-year, compared to $58.9 million in the second quarter of 2021.
• Billings, a non-GAAP metric, was $107.7 million, an increase of 26% year-over-year, compared to $85.3 million in the second quarter of 2021.
• Gross profit was $27.0 million, an increase of 16% year-over-year, compared to $23.2 million in the second quarter of 2021.
• Adjusted contribution, a non-GAAP metric, was $35.1 million, an increase of 19% year-over-year, compared to $29.6 million in the second quarter of 2021.
• Net loss attributable to common stockholders was $(126.3) million, or $(3.75) per diluted share, based on 33.6 million fully diluted weighted-average common shares, compared to a net loss attributable to common stockholders of $(47.3) million, or $(1.43) per diluted share, based on 33.0 million fully diluted weighted-average common shares in the second quarter of 2021.
• Non-GAAP net loss was $(21.7) million, or $(0.65) per diluted share, based on 33.6 million fully diluted weighted-average common shares, compared to non-GAAP net loss of $(12.8) million, or $(0.39) per diluted share, based on 33.0 million fully diluted weighted-average common shares in the second quarter of 2021.
• Adjusted EBITDA, a non-GAAP metric, was a loss of $(15.8) million compared to a loss of $(5.7) million in the second quarter of 2021.

Key Metrics

• Cardlytics MAUs were 179.9 million, an increase of 7%, compared to 167.6 million in the second quarter of 2021.
• Cardlytics ARPU was $0.38, an increase of 12%, compared to $0.34 in the second quarter of 2021.
• Bridg ARR was $21.8 million in the second quarter of 2022.

Definitions of MAUs, ARPU and ARR are included below under the caption “Non-GAAP Measures and Other Performance Metrics.

Earnings Teleconference Information

Cardlytics will discuss its second quarter 2022 financial results during a teleconference today, August 2, 2022, at 5:00 PM ET / 2:00 PM PT. A live dial-in will be available after registering at this link. Shortly after the conclusion of the call, a replay of this conference call will be available through 8:00 PM ET on August 9, 2022 on the Cardlytics Investor Relations website at ir.cardlytics.com. Following the completion of the call, a recorded replay of the webcast will be available on Cardlytics’ website.

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, Detroit and Visakhapatnam. Learn more at www.cardlytics.com.

Lynne Laube to Retire, Serve as Strategic Advisor During Transition

ATLANTA, July 20, 2022 -- Cardlytics, (NASDAQ: CDLX), an advertising platform in banks’ digital channels, today announced that its Board of Directors has named Karim Temsamani as Chief Executive Officer of the company, effective September 1, 2022. Temsamani will also be joining the Board of Directors. He will succeed co-founder and current CEO, Lynne Laube, who has announced her intention to retire. Laube will continue to serve on the Board until its 2023 annual meeting of stockholders and will remain a strategic advisor until May 2024 to ensure a smooth transition.

Temsamani joins Cardlytics from Stripe where he most recently served as Head of Global Partnerships. Prior to that role, he served as Head of Banking and Financial Products, leading the strategic vision and execution across product and engineering, including Stripe Treasury, Issuing, Capital and Connections. Preceding Stripe, Temsamani spent nearly 12 years at Google, where he oversaw all of Google’s sales and operations across the Asia-Pacific region, determining the strategy for Google products including AdWords, AdMob, Google Maps, Google Apps for Business, DoubleClick Ad Exchange, YouTube, and AdSense. While at Google, he also established its mobile advertising business as its Global Head of Mobile, overseeing the growth of the business worldwide.

“I am honored to take the helm of this amazing company that Lynne, Scott, and the team have built – an industry leader that creates undeniable impact for its brands and partners while delivering real value to people,” said Temsamani. “There is so much potential for further growth following the company’s recent acquisitions and solid progression against its strategic initiatives, and I look forward to leveraging the strong foundation that has been developed.”

“After nearly 15 years of leading the company, I am truly thrilled to hand the reigns over to Karim as I know he is the right leader for our next generation of growth,” said Laube. “Karim brings a fresh perspective, coupled with deep expertise that is perfectly suited to expand our partnerships and enhance our platform. I can’t express the gratitude I have for the people who have worked so hard to make the Cardlytics vision into a reality. I remain as energized as ever and look forward to helping Karim and the entire team with this seamless transition.”

“After an extensive and lengthy search, I am pleased to announce that Karim is joining Cardlytics as CEO in September,” said Scott Grimes, Executive Chairman and Co-Founder of Cardlytics. “Karim brings a wealth of experience and a strategic vision to lead Cardlytics into its next chapter. He is a dynamic leader with a tremendous background in advertising alongside a keen understanding of the FinTech world. On behalf of the Board, I want to thank Lynne for her strong leadership and partnership. Her continued commitment to building and growing the company in the months ahead as she looks to retire will serve as a capstone to her highly successful and ground-breaking career.”

Second Quarter 2022   

On July 20, 2022, Cardlytics, Inc. (the “Company”) updated its billings, revenue, and adjusted contribution guidance for the quarter ended June 30, 2022 to be in the following ranges (in millions):

 Q2 2022 GuidanceBillings⁽¹⁾$106.5 - $108.5Revenue$74.5 - $76.5Adjusted contribution⁽²⁾$34.0 - $36.0

(1)   A reconciliation of billings to GAAP revenue on a forward-looking basis is presented below under the heading "Reconciliation of Forecasted GAAP Revenue to Billings."

(2)   A reconciliation of adjusted contribution to GAAP gross profit on a forward-looking basis is presented below under the heading "Reconciliation of Forecasted GAAP gross profit to adjusted contribution."

Reconciliation of Forecasted GAAP Revenue to Billings

 Q2 2022 Guidance
(amounts in millions)Revenue$74.5 - $76.5Plus: Consumer Incentives31.0 - 33.0Billings$106.5 - $108.5

Reconciliation of Forecasted GAAP Gross Profit to Adjusted Contribution

 Q2 2022 Guidance
(amounts in millions)Revenue$74.5 - $76.5Minus: Partner Share and other third-party costs39.5 - 41.5Delivery costs7.0 - 9.0Gross profit$25.5 - $27.5Plus: Delivery costs7.0 - 9.0Adjusted contribution$34.0 - $36.0

About Karim Temsamani

Karim Temsamani joined Stripe in April 2019 to lead strategic vision and execution across product and engineering for Financial Products (Stripe Capital, Stripe Treasury and Stripe Issuing). In November 2021, Karim transitioned to running Global Partnerships for Stripe across banks, networks, and technology companies.

Prior to Stripe, he spent 12 years at Google where he oversaw, for the last six years, all of Google’s sales and operations across the Asia-Pacific region, determining the strategy for 16 offices and the regional business strategy for Google products including AdWords, AdMob, Google Maps, Google Apps for Business, DoubleClick Ad Exchange, YouTube and AdSense.

Prior to this, he established Google’s mobile advertising business as its Global Head of Mobile. He oversaw the growth of Google’s mobile advertising business worldwide, leading the teams charged with providing advertising services and solutions to thousands of advertisers, developers, and publishers.

From 2007 to 2010, Karim was Managing Director, Google Australia and New Zealand, leading its business and strategic partnerships in those countries. Karim joined Google from Fairfax Media, where he was Commercial Director for Newspapers (responsible for agency and group sales, trade marketing and business development) and Group Director, Fairfax General Magazines.

He started his career in the media and publishing industries and graduated in International Affairs at the European Business School Paris. With a family background from Morocco, he was born and raised in France.  

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their banking rewards programs that promote customer loyalty and deepen banking relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, Detroit and Visakhapatnam. Learn more at www.cardlytics.com.

Whether filing up at the pump or stocking up the fridge, households across the country are feeling the squeeze as a hike in inflation increases the cost of everyday items. And the outlook isn’t very bright. Just this month the UK government appointed a ‘cost of living business tsar’ to advise businesses on schemes to help those struggling with rising prices.

Cardlytics UK’s latest State of Spend report analyses the impact of the cost of living on UK consumer spending and how people are shifting their behaviours as a result. With energy bills, petrol, and grocery spending seeing some of the biggest increases, the report finds that UK consumers expect to spend at least £2000 more on essentials this year. The impact is stark: Total UK consumer spend on essential items rose by 7% between 2020 and 2022, with the average transaction value increasing by 10%.  

But with three quarters (74%) of UK consumers saying they are spending more on day-to-day outgoings than a year ago, how are they responding to increased cost pressures? Here are three trends we’re seeing:

1. Non-essential spending takes a backseat

As prices on day-to-day essentials like food and fuel rise, consumers are looking to claw back spend on luxuries, such as leisure activities, eating out and travel. In fact, two in five (42%) consumers are planning to cut back on the number of holidays they take in a bid to curb their annual spend. 

2. Comparison sites are increasing in popularity

Three quarters (73%) of consumers plan to shop around for the best deals and more than half (58%) plan to use price comparison sites more frequently.

3. Supermarket switching 

Consumers are shifting spend away from the big four and toward the discounters, as every penny on the weekly shop counts. Total spend across the big four supermarkets fell 7% in the last year whilst discount supermarkets managed to uphold their market share.

But what is the impact on brands and what strategies can they use to engage customers and gain ground against their competitors?

There’s no doubt that brands across all categories are caught in the middle of the cost-of-living crisis and faced with a difficult question: should brands pass increasing costs onto consumers or protect their bottom lines?

But there is a third option. If brands can invest in their customers now, they are likely to reap greater rewards down the line. 

With the cost-of-living crisis eroding brand loyalty and competition at an all-time high, keeping customers happy and giving them a reason to spend with you should be a top priority. 

Whether it is through tailored rewards, cash back, or loyalty offers, brands can create long-term brand affinity with their customers and support them when they need it the most.

Download the UK State of Spend report here.

Atlanta, GA – July 19, 2022 – Cardlytics, Inc., (NASDAQ: CDLX), an advertising platform in banks’ digital channels, today announced that its second quarter ended June 30, 2022 financial results will be released on Tuesday, August 2, 2022, after market close. The company will host a conference call and webcast at 5:00 PM (ET) / 2:00 PM (PT) to discuss the company’s financial results.

A live audio webcast of the event will be available on the Cardlytics Investor Relations website at http://ir.cardlytics.com/. A live dial-in will be available after registering at this link. Shortly after the conclusion of the call, a replay of this conference call will be available through 8:00 PM ET on August 9, 2022 on the Cardlytics Investor Relations website at http://ir.cardlytics.com/.

About Cardlytics

Cardlytics (NASDAQ: CDLX) is a digital advertising platform. We partner with financial institutions to run their rewards programs that promote customer loyalty and deepen relationships. In turn, we have a secure view into where and when consumers are spending their money. We use these insights to help marketers identify, reach, and influence likely buyers at scale, as well as measure the true sales impact of marketing campaigns. Headquartered in Atlanta, Cardlytics has offices in London, New York, Los Angeles, San Francisco, Austin, Detroit and Visakhapatnam. Learn more at www.cardlytics.com.

Cardlytics and our network of banking partners created and then scaled the most influential, trustworthy, and value-focused platform to bring brands and consumers together. Over the last 12 years, our global monthly active users have grown to 178M, and our core value proposition of offering cash-back rewards to bank cardholders remains to this day. But what has changed is the vast digital marketplace in which we compete.

The digital media market is expected to reach a staggering $286B by 2026, creating an immediate opportunity for banks and their customers to capture more partner-funded value from brands. This growth is amplified by the shift in merchant preference for cash-back rewards as compared to investment in social media, according to a recent study by the Digital Commerce Alliance (DCA).

So how can our banking partners capture more partner-funded dollars and consumer spend in the face of this opportunity? The first key to success is driving demand.

Driving Demand: Tackling GAFA

Cash-back offers are so hot that even Google has gotten into the game with the launch of Google Pay Offers in 2020, in partnership with Rakuten. And speaking of Google, it’s just one part of the digital triopoly with which bank-offer programs compete for merchant media dollars.

Google and Amazon control a vast amount of shopping initiation, putting them in the advantageous position to win the basket. Fifty-three percent of U.S. ecommerce searches start with Google, and 40% of global consumers start a product search first on Amazon.

For banks to compete for the consumer mindshare and the payment at checkout, they need to start thinking like the digital giants. They need to drive demand, not wait for it.

Taking on GAFA by Driving Demand

The time for banks to act is now. First, with the deprecation of the cookie and regulatory pressures facing GAFA, banks have an advantage: they are already highly regulated. Second, consumers trust banks to manage their data, with 37% of consumers trusting banks the most. Finally, banks—and, by connection, Cardlytics—have precise transaction data, giving us the advantage on measurement and attribution merchants really want.

So how can banks drive demand? Here are four recommendations:

· Modernize their consumer UX to accommodate expanded advertising budgets such as brand and affiliate media dollars;

· Promote their card-linked offers and cash-back rewards program in card benefits, BAU (business as usual) communication, and dedicated email and mobile communications;

· Publish “beyond the tile” by creating live links to the card-linked offers and cash-back rewards programs throughout their experience and through connected commerce;

· Create more expanded partnerships with merchants in loyalty benefits and other value propositions throughout their organization.

Stay tuned for Part 2 of 4 of our Winning the Basket series. Next, we’ll discuss stimulating cash-back reward activation.

As parents and students gear up for another school year, retailers are scrambling to get their slice of the pie. Traditional gift-giving holidays aside–back to school is the second-largest annual shopping event.

The dust is still settling from the sucker punch that the COVID-19 pandemic hit the retail industry with. But there is hope on the horizon. According to Cardlytics’ purchase insights, 2021 spending was strong and showed signs of growth, with a few caveats. Here are the key trends to watch for as you plan your 2022 back-to-school campaigns.

Key takeaways

• Back-to-school shopping is the second-largest annual shopping event, accounting for up to 21% of all non-holiday spending.
• Spending across back-to-school categories is returning to pre-pandemic levels while the overall trend points towards fewer, more loyal customers.
• Uncertainty in school enrollment levels still looms, but retailers can make the most of the upcoming back-to-school shopping season by focusing on building customer loyalty.

The Importance of Back to School

Between school supplies, new clothes, sporting goods, and home decor–students and their parents make many purchases before going back to school.

The big back-to-school shopping season typically kicks off in early-to-mid June, with a peak in those final few weeks before school starts in mid-August. The uptick in sales tapers off by the Labor Day holiday, and retailers shift their focus to the December holiday shopping season.

But how big is big?

Cardlytics data shows that back-to-school shopping accounted for 6 out of the top 10 non-holiday shopping weeks in 2020. In fact, it comprised a whopping 21% of non-holiday spending that year, with only a slight dip to 19% in 2021, when back-to-school accounted for only 3 of the top 10 non-holiday shopping weeks.  It’s a surge in retail shopping that everyone from big box stores to specialty shops simply can’t afford to miss out on.

Consumers are spending more across popular back-to-school shopping categories. In 2021, we saw a 1.2% increase in spending over the previous year, despite a drop in customers and frequency. This growth highlights an opportunity for retail managers to focus on building customer loyalty to maximize sales across a noticeably shrinking pool of customers.

Customer Consolidation: Pre-Pandemic to Present

While spending is on the road to recovery, the landscape for retail has changed. The academic calendar drives back-to-school sales, but the number of shoppers and where and how they shop has undeniably changed. 

At face value, the numbers look good–all spending categories saw growth in 2020 and, with the exception of the home and office supplies categories, 2021 witnessed similar growth. One clear insight from 2021 is that the number of customers is steadily shrinking. That means a smaller group of shoppers spend more to account for the overall growth.

Breaking Down the Data

That could be a sign that customer loyalty is suffering. Convenience still seems to be a key driver for shopping decisions, pushing consumers to consolidate trips and shop with fewer brands. When looking at 2021 compared to 2020, there is a slight shift back to in-store shopping, up 3.4%, while online shopping is down 2.3%. 

It also makes sense that the 2020 spikes in books, supplies, and technology that fueled virtual learning are down 8.8% in 2021. Other trends that we saw come and go during the pandemic included an uptick in home decor spending as we grew bored with our surroundings, and dips in clothing and shoes with fewer opportunities to go out. 

The 2021 data shows that home decor is down 8.0%, clothing is up 24.3%, and shoes are up 28.6%. These are much closer to 2019 numbers, signaling a return to normalcy.

School Enrollment & Retail Trends

We can’t blame the pandemic for every little nuance. Lingering fears over supply chain issues, economic headwinds due to inflation, and erratic social behaviors have taken their toll on the retail industry. In difficult economic environments, consumers will look to find savings wherever they can to ensure they are maximizing the value of their hard earned dollars. Advertisers should look to promote deals and incorporate value messaging into their strategies this back-to-school season. As every purchase will be carefully considered, savings is the name of the game. Being able to put dollars back into customers’ wallets through rewards is an effective way to capture consumer spend. 

But there have been significant changes in public education as well. 

There are whispers about plummeting public school attendance rates across the nation. While we can’t say there is any direct link between school enrollment and back-to-school retail trends, it’s hard not to notice the numbers in two of the nation’s largest public school systems.

During the 2020-21 school year, coinciding with the height of the COVID-19 pandemic, Texas Public Schools dropped in attendance rates by 2.2%. It’s the first time Texas has seen a drop since the school board began collecting enrollment data. This decline is confounding considering that Texas also saw significant growth from domestic migration in the same year. 

Similarly, the California Department of Education released numbers for the 2020-21 school year, citing a decline in enrollment by more than 160,000 students. That was also a first in at least two decades for California schools.

Again, a drop in public school attendance doesn’t necessarily translate to a decline in shoppers during the back-to-school 2021 shopping season. These students are still learning–through homeschool, private school, or other educational programs and therefore still need school supplies, sporting equipment, and clothing. But there could be a correlation due to less pressure to be well-dressed or fewer requirements for educational expenses outside of public school systems. 

So, how do fewer customers during the school enrollment period translate to your customer experience strategy? It’s simple–the key is to focus on customer loyalty programs and the digital customer experience.

Loyalty Becomes the Name of the Game

Retail brand managers, e-commerce directors, buyers, and planners are regrouping to improve the customer experience and lure shoppers back to their stores. There’s a premium on building customer loyalty for the 2022-23 back-to-school shopping season. 

A smaller pool of bigger spenders translates to a higher value on each acquisition. Retail brands have been meticulously tracking the cost of gaining a new customer and comparing it to the cost of keeping that customer. And those data sets aren’t going away any time soon. They’ll get more attention as boardrooms full of marketing professionals and business executives try to crack the code for the retail customer experience.

As you pour over the numbers, remember that Cardlytics data can provide a more complete picture, helping you re-evaluate a customer’s lifetime value in today’s market.

The Bottom Line on Customer Loyalty and Back to School

The bottom line is that the customer pool is shrinking. While shoppers might be spending more freely, they choose convenience over specialty shopping experiences. Many customers are still choosing online retail and mass-market retailers, shifting back in favor of the one-stop-shop mentality. And that makes your dwindling pool of customers much more valuable. 

Now is the time for laser-focused, optimized customer loyalty programs to draw the big spenders back to your stores. That’s where Cardlytics can help–we specialize in providing high-quality, first-party insights to help you re-evaluate your customer experience strategy and improve customer loyalty.