This afternoon I received two emails from Chase. One email notified me that I was being removed from its affiliate marketing program. The second email notified me that Chase is, effective immediately, pulling itself out of the LinkShare affiliate marketing channel. From what I've been able to glean, Chase is pulling out of all of its affiliate channels. Chase says its decision is based on "current market conditions." Just how bad are things right now for Chase and its credit card unit?
(Editor's note: the following paragraph was added to the story at noon eastern on November 22.) This exit, meanwhile, follows on the heels of a memo directing all affiliates to remove "instant approval, instant decision" applications from the marketing channel. Why were these ads pulled? It turns out that they were drawing in weaker-than-expected applicants. Said Chase: "We have found that these categories do not generate quality applicants for Chase." That notification was sent on November 17. Now you have Chase exiting the channel completely. I don't think we can be read too much into the timing of both announcements, however. Instant decisions don't often allow for the most thorough underwriting. At this point in the cycle, I can see why Chase would want to put an eyeball on every application it gets.
In the meantime, here is a copy of the notification Chase sent today:
As far as I know, none of the other credit card companies that participate in the affiliate marketing program have pulled out. This seems like a drastic move, quite frankly. If Chase is pulling out of the channel, that means it doesn't want new customers applying for credit through Web sites such as CreditMattersBlog.com. In essence, then, Chase has decided that it will only be offering credit cards through its own Web site. It stands to reason that Chase's decision to pull out of the affiliate channel will result in fewer applications -- and less loan growth -- for the credit-card giant.
I don't have anything more to offer at this point. I'll be keeping my ears and eyes open for further developments.
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Friday, November 21, 2008
Chase Pulls Out of Affiliate Marketing Channel -- Just How Bad Is This Credit Market?
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40 comments:
Game Changer!
Indeed, BW. You don't pull out of marketing channels lightly. This is a big deal. And citing market conditions?
Chase is saying that it wants to lend less. Not more. It's not as though consumers don't want to borrow.
I guess things are going to get much worse before they get better :-(
I think so. There are days when I think we've hit rock bottom. But the news (bad) seems to keep on coming.
Doubt anyone will be sending out a notice that all things are clear when things finally do get better.
I'm sure you'll be one of the first to know :-)
What's nice about the blog is that I am finally starting to break more news these days. Early on, before I had any sources, I was merely following the news. But I've been developing sources over the past five months. As a result, more news is being broke here.
I'll try to be one of the first to know, BW. : )
Can you explain more what a marketing channel is and the impact of this?
Thanks
Nikky
Just logged onto Chase, they drastically changed the look of their website since this morning.
Nikky, sure.
So, you know when you visit blogs and other sites, and you see Chase ads strewn about the site? Those are likely affiliate ads. Indeed, once upon a time, my blog used to have Chase ads on it. If someone clicks the ad, and applies for a credit card (and gets approved for the card), I get a small commission.
I was an affiliate in the program. An affiliate of Chase's. Because of all these ads all over the Internet, Chase gets people to apply for its credit cards. Imagine how many affiliates there must be on the Internet right now.
Now imagine all of those relationships suddenly ending.
Anon, thanks for the heads up. I am logging on to Chase right now.
There are still a lot of cards listed on the site. My guess is that Chase won't change the site much. They'll be the primary marketing channel now.
http://www.firstusa.com/cgi-bin/webcgi/webserve.cgi?partner_dir_name=browse_our_list&page=index&MSC=LSBROWSEALLAB&AFFID=9C.eSeL3cao-rz.xX8L5m7SfasrdAPzbmA
Corrected to say that the welcome page changed but once you loginto the site is pretty much same old same old.
Anon, thanks for the follow up. I haven't checked my account today.
I see, wow that is huge. Chase is not aggresively seeking new customers. Plus as others have pointed out on creditboards the new chase freedom cards are not as good as the current ones. I'm expecting them to change exsiting for the worst.
We have already seen Chase adverse action in my house when they cut my husband's $20K limit by more than half on a card we PIF each month. A quick phone call go that line restored though because of his high credit score and perfect history with them. We don't have joint accounts so I'll be curious if they touch me.
Nikky
Affiliate programs are ending all over the place. It's been happening all year in various industries, and it stinks :(
-MelNYC
Yep. That's right, Nikky. Chase is essentially turning off the credit spigot. It's saying we don't want new customers coming through the affiliate channel.
Mel, I can tell you that I am part of three affiliate programs. No credit card companies have pulled out of the channel. Indeed, as far as I know, Chase is the first.
But I do think you're right. Other programs have been cutting back -- or gotten eliminated.
I knew it was going to happen sooner than later. The wait-and-see-ers won again.
Sorry, I hope they mess with your further.
How much further to the bottom are we as consumers going to fall?
How much longer are the credit giants going to survive?
Cosmo, no idea. We're clearly still not at a bottom.
Someone mentioned this earlier on my blog: everyone is getting a bailout but consumers. We're bailing out these banking giants but all they're doing is hammering customers.
I meant to say..I hope they DON'T mess with you, a bad typo, please excuse me, I had a long day at work..Friday emergencies and tonight I am on call tonight...psych social worker in the ER. I'm the back-up just in case they need an extra social worker, I need the extra $$$.
I knew that was a typo, Cosmo. Figured that you lost a word in there.
No worries.
Am I the only one still paying my bills? These drastic changes are on the credit card company side, not mine. I havn't changed my habits one bit. Is everyone defaulting or is this just in anticipation?
Clutch, you'd think so, huh. Have you read my thread on Citibank? So far there are 129 comments. Everyone seems to be paying their bills, but that isn't stopping Citibank from jacking up rates on everyone in the thread.
These credit-card companies seem to be bracing for something. Or they're reacting to what's already going on. My reader comments make me think that the worst is yet to come.
By the way, just keep paying those bills.
Clutch, here is the address for that Citibank thread I was talking about. Read some of the comments in it.
http://www.creditmattersblog.com/2008/11/citibank-to-raise-interest-rates-on-its.html
Thanks CM, catchng up on it now. Shocking stuff.
Enjoy the read, Clutch.
This is not to be taken lightly. They see trouble ahead, or some metric they are looking at telling them to pull out of affiliate marketing. All this bad news makes me think the economy is worse than I first thought.
Anon, I agree. I think this is a big deal. On another board where I post, one person doesn't think this is a big deal. Seems to think that this is just one credit card company pulling out of the channel for whatever reason. I disagree. It's more than that.
It's a card company that is trying to slow down applications. It's a company that, essentially, wants to do less lending.
CM I agree completely. It is intentionally slowing card growth. That action speaks volumes about how dire they view the economy, as a whole. That is, at a macro-economic level.
If you really think about it, it's scary.
Anon, thanks for posting at this late hour. One nice thing about being on the west coast is that I can handle comments until well after midnight eastern time. Many, many of my readers hail from the east coast. So this works well.
Anyhow, yep. I think this Chase move is worthy of a story. We'll see if anyone else picks it up.
I don't fully understand how they benefit by pulling themselves off of the internet. Wouldn't it make more sense to become more stringent on the rate of approval, then to demolish your marketing efforts? Some customers is better than no customers, or even less customers. It seems like they may be shooting themselves in the foot. But, I'm no expert.
Caleb, you'd think that it would be smarter to do better underwriting. But to cut off a marketing channel? Seems desperate to me.
Also, I have updated my story with a little more information. The change is in the second paragraph of my story.
They have to enter in this market again soon, at some point? Right? (insert a scream here)
Freaking here because I had a whole marketing plan in development which directly relied on these affiliate commissions.
Josh, the move was sudden. I have now talked with people about the notification they received. Some affiliates -- large ones -- got phone calls from Chase. The withdrawal was immediate.
As you can see in my story, this was not just one affiliate pulling out of a single relationship. I have three companies that I work with. Chase pulled out of all of them.
Chase says that it would like to reenter the channel next year.
We'll see.
It's so ridiculous it's hard to comprehend but it does make sense given the climate, I guess.
The affiliate business is a billion dollar industry - just another indirect hit from all of this.
Yep. Very interesting. I can only wonder how many applications Chase was getting on a daily basis through the affiliate marketing channel. Thousands I would imagine.
Several thousand without a doubt....that's a lot of customers and a lot of money to be made.
I put my hope that with Obama taking charge and some more bailouts that we will start the turn around, sooner rather than later ;)
Well, I just think that Chase is hunkering down.
I don't think this bodes well for Wamu cardholders, by the way. At some point, those Wamu customers are gonna be looked at by Chase underwriters. If Chase is spooked by this market, it may be chopping a bunch of Wamu cardmembers -- as in completely getting rid of them.
Hi Creditmatters, check out my amazon/Chase observation on credit boards. I wonder if its related to what you wrote here.
Happy Thanksgiving!
Nikky
Will check it out now.
Thanks, N.
And have a happy T-Day.
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