Are social media campaigns a viable alternative to direct mail?

A Facebook push might not initially reach as many people as a direct mail campaign, but the potential to garner valuable customer information makes social media a major contender, and the US finance industry is starting to take social very seriously.

A report in yesterday’s Wall Street Journal highlighted a new Facebook marketing effort by New York bank J.P. Morgan Chase – part of a wider offline advertising campaign. The bank ran a sweepstake for Facebook users who ‘Like’ its new credit card’s page on the social network, offering a grand prize of $1 million.

While the industry has been broadly slow to adapt to social media marketing, financial companies are now harnessing sites like Facebook, Twitter and Foursquare, primarily to gather data on consumer spending habits. Once somebody ‘Likes’ a company on Facebook, that company then has access to that user’s profile – offering a mine of useful information (as well as plenty of useless social titterings).

“If you are going to like something and through that mechanism be open to ongoing communications that says something about you,” Chase’s Card Services General Manager Matt Kane said. “What liking me does is allows me to push more information to you, which is what I will do.”

Factoring in hourly giveaways as well as the $1m jackpot, Chase (a division of J.P. Morgan) gave away a total of $1.25m over the Facebook sweepstake. But the bank believes that the value of potential new customers and the data gathered exceeds this amount.

Back in the summer, American Express launched an innovative Facebook application that customers link to their credit cards. The app trawls through the users’ and their friends’ likes to serve up a page with unique, tailored offers and discounts for both online and real-world shopping. According to the WSJ, the programme has been “well-received” and AmEx plans to follow it up with more social media activity.