Facebook on Tuesday announced sweeping changes to its advertising policies that will likely cause a shift in the way mortgage marketers use the platform to reach prospective borrowers—reverse mortgage lenders included. By limiting the demographic filters that marketers can use to target Facebook users in certain product categories, the social media giant will change the marketplace, some lenders say.
“Facebook’s ad policy changes will have some impact on our social media strategy,” said Reverse Mortgage Funding’s Chief Marketing Officer Jean Noble in an emailed statement to RMD. “Without the ability to age qualify our audience, relying on Facebook as a lead generation tool is impossible.”
Stemming from discrimination lawsuits, the changes will eliminate the ability of marketers to advertise based on geography, age and other demographics in housing, jobs and credit products.
In its announcement of the changes coming to its ad platform by the end of the year, Facebook specified how the new rules will affect ads on its platform that relate to matters related to housing.
“We believe that the changes we’re announcing today as part of our settlements with the NFHA, ACLU, CWA and other groups will better protect people on Facebook,” said Facebook COO Sheryl Sandberg in an announcement on the company’s “Newsroom” website. “Anyone who wants to run housing, employment or credit ads will no longer be allowed to target by age, gender or zip code.”
While some in the reverse mortgage industry have reacted to this news with surprise and disappointment, at least one social media expert sees the potential impact on industry-specific targeting parameters as less pronounced than some may believe.
Older users and discrimination accusations
52 percent of people ages 50 to 64 have Facebook profiles, marking an 18 percentage point increase since 2011 according to a 2018 survey conducted by AARP. The survey also found that Facebook use among people over the age of 65 rose 18 percent when compared to the same time in 2017.
“[Older] people are on the platform,” Jim Berkowitz, Founder and Lead Growth Consultant at LaunchHawk Marketing based in Telluride, Colo., tells RMD in a phone interview. “They’re not on it as frequently as younger people, but they are on the platform.”
While Facebook’s action is likely taking this action to assuage rising public concerns over the company’s practices concerning user data, some legal experts see the company’s posture as excessive.
“I do think they’re over-complying,” says Gary M. Singer, a board-certified real estate attorney in Fort Lauderdale, Fla. “I think they are having that ‘head snap’ reaction, especially on this subject, but I definitely think they needed to do something.”
Facebook’s methods of advertising do have problems, Singer says, particularly in terms of the way that it has targeted leads. “Whether or not that amounts to discrimination or not, we’ll leave that to the attorneys and the judges that are working on the case,” he says.
Reverse mortgage industry reaction
Those within the reverse mortgage industry have expressed some dismay concerning the policy changes that Facebook is imposing onto its ad platform, while others are discouraged but still determined to use an aggressive social media marketing strategy that involves the popular platform.
“Without an audience filter for age, lenders and other marketers will find challenges seeking new prospects using the Facebook Ads program,” says Cliff Auerswald, president of All Reverse Mortgage in an email to RMD. “The cost to generate reverse mortgage leads is costly enough now, but having no option to segment an audience will likely send advertising partners (and their marketing budgets) to other platforms.”
The reason the industry’s advertising efforts remain focused on older people is not out of an attempt to discriminate against younger people, but because younger people simply don’t qualify for the product that reverse mortgage companies sell, Auerswald says.
“No matter how you look at it, reverse mortgage ads are not targeted to younger borrowers simply because they do not qualify for the loans – not due to any desire to exclude those who could use the program or possible Real Estate Settlement Procedures Act (RESPA) violations,” he says.
While dismayed about the new difficulty that these rule changes will create for its advertising strategy, Reverse Mortgage Funding (RMF) is still planning on using Facebook to reach potential borrowers, but anticipates a change in the way it will go about leveraging the platform. However, Facebook still has immense value as an educational tool in teaching potential borrowers about the realities of reverse mortgage products, Noble says.
“The long and short of it – Facebook is still a valuable tool in our quest to educate the masses but when it comes to generating ‘sales-ready’ leads, [we’ll] stick to organic and paid search,” Noble says.
More legwork
When asked if this will force fundamental change on the way that financial industries interact with Facebook’s ads platform, Jim Berkowitz was skeptical.
“In order to do Facebook advertising, now what you need to do as the person who wants to do the advertising is go and acquire third-party data yourself,” Berkowitz says, citing an example of one company that matches marketers with social media users based on demographic criteria.
What this means, according to Berkowitz, is that instead of relying on Facebook’s ads system to do the targeting for an ad buyer’s potential audience, that ad buyer will need to do more legwork and spend a little more money.
“So, you have to acquire third-party data, select the data you want, and the parameters that you want,” he says. “So, they set up within your own account a custom audience that you can run Facebook ads against. So, that’s how you have to get around [these changes]. You just have to do a little extra work on the data yourself in order to make it viable.”
In other words, there may be extra cost and extra work for a company buying ads on the platform, but the interaction of the industry with Facebook’s advertising is not crippled by these changes, Berkowitz says.
“It’s no more difficult than running any Facebook ad because, instead of building your own audience, you’re just using an audience that’s been set up for you by a third-party data company,” he says. “So, it’s not difficult, it’s easy to do and allows you to be pretty precise in terms of the people who are on Facebook that match the criteria that you would be looking for as someone who should potentially be interested in a reverse mortgage.”
