| 9 min read

Your Current Credit Cards Don’t Work for Advertising Expenses

Even though banks and big credit card providers can see the value to their financial institutions of facilitating online advertising transactions, they aren’t the right choice to pay for big advertising expenses. They recognize that online advertisers are poised to become a trillion dollar industry, but banks, bankers, and traditional credit card companies just don’t understand how to accommodate the needs of online advertisers—because their needs are very different from their regular business customers.

Providing adequate access to capital for online advertisers is one of the big hurdles your current credit card just can’t get over. Advertisers need more capital than AMEX, Chase, or CapOne can provide on a regular monthly basis. Their credit models are unable to accommodate the needs of a big online advertiser.

You’ve probably heard of Ridge Wallet. It’s a minimalist front-pocket wallet designed to take a smaller profile in your pocket than other wallets. I’ve carried one for years—but I digress.  Despite the fact that they do over $100 million in annual sales, a long-standing relationship with their bank didn’t make it any easier to leverage their Chase credit card to pay for advertising expenses.

“We bank with Chase and had a normal Chase credit card with a $100,000 spending limit. We would sometimes spend more than $100,000 a day in online marketing,” says Sean Frank of Ridge Wallet. “To keep our ads running, we were paying off the balance every day and had to switch to a debit card over the weekend so the card wouldn’t get declined. Chase doesn’t process credit card payments on the weekend, so this was the only way we could ensure our ads kept running; because we were spending so much.”

To put this in context, a $100,000 spending limit is considered a very large limit reserved for some of the most creditworthy business customers. The average small business credit card limit is only around $50,000.

Thomas Porter, writing for mybanktracker.com writes, “Based on 2020 data from Experian, the consumer’s credit limit was $31,015, while the average small business credit card limit was $56,100.”

There are a handful of roadblocks banks and traditional credit card providers unintentionally put in the way, making it hard for online advertisers to scale. What’s more, any one of these could make it impossible to grow an online business.

Card failure is lethal for online advertisers

Online advertising platforms like Facebook, Twitter, Instagram, and TikTok are all algorithm based. In other words, a user's behavior drives the content they see or don’t see. The same is true for how well an advertisement spreads across the platform. If any particular advertisement is doing well, you would expect the advertiser to increase spend to maximize the profitability of the successful ad. My grandpa would call it, “Making hay while the sun shines.”

In other words, it’s probably a smart idea to increase the budget on a successful ad campaign. Unfortunately, a lot of advertisers are unable to double down on a successful ad because their bank or credit card provider might reject the charges—stopping the campaign dead in its tracks. 

If you’re not familiar with how the algorithm works or are new to the business you might be thinking, “Just pay the bill and re-engage the campaign.” A good idea, but a time consuming and expensive one. Getting the credit card payment made can take up to a few days and re-entering the ad auction (even with a new credit card) to kick-start the campaign again puts the re-started ad at the bottom of the heap—it has to start over again. In other words, not only has the advertiser lost the income of the successful ad that lost its place, it likely won’t be able to regain that place and will likely never be as profitable as it was.

Both the algorithm and the credit card provider have hobbled the advertiser.

Virtual cards aren’t just for allocating budgets

Most bankers think of virtual credit cards in terms of allocating spend across different budget items, but digital advertisers are using virtual cards to keep their campaigns alive.

Advertisers spending millions of dollars frequently run up against the standard terms of services networks like Google or Facebook require when advertising on their platforms.  When a network temporarily or permanently shuts down an account, the network also bans the payment source associated with that account. In addition to disputing a wrongful termination of their ad account, the merchant now has to request a new card from the card issuer which could take anywhere from a few days to several weeks, hamstringing the brand’s ability to advertise. Quick access to new virtual cards is something a merchant can do to protect themselves in this situation.

Many direct-to-consumer (DTC) brands leverage multiple accounts for each product line to optimize network algorithms at the product level. However, ad networks sometimes decline cards on file with another ad account or if the card authorization data doesn’t match up perfectly with the brand (company name, address, zip code, card number, etc.) For example if the ad account is generated from a different address than the company’s home address it could be declined. Because of this, another need of multi-product DTC brands is often virtual cards for each ad account, network, agency, and product line.

Traditional banks and credit card providers don’t think in these terms when authorizing virtual cards. Outside of this advertising use case, most virtual cards are used for budgeting purposes and to control spending. The last thing an advertiser wants is an arbitrary spending cap on their virtual cards; or be required to go to the finance department every time they need a spending increase approved. If an ad campaign is winning, they don’t want a spending cap to slam on the brakes.

What advertisers really need

Advertisers need a card provider that not only understands how to make the best card, they need a provider that understands the needs and challenges of online advertising. They need to understand how to make the best card for advertisers.

dash.fi offers multiple ways to approach the underwriting process to help you access the limits you need to keep profitable ads running and grow your business. This enables us to work with a much broader range of potential customers—from early stage businesses, businesses in growth mode, as well as mature businesses.

Along with these benefits, dash.fi offers some very competitive cashback opportunities depending on your card spend. We’d welcome the opportunity to discuss what that could mean for your business.

Here’s how it works:

  1. Complete an application

  2. Discuss your credit needs with one of our experts

  3. Sign a spend agreement to determine your cash back opportunities

Advertisers aren’t the only businesses that can benefit from working with dash.fi, contact us at www.dash.fi to learn more and start an application.

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