Google will be implementing new targeting restrictions for its ads, preventing customers on its platform from targeting based on certain demographic factors including age. This is based on a communication that the tech giant distributed to users of its advertising platform, which was obtained by RMD.
One of the newly-implemented restrictions involves targeting ads based on the age of the end-user, which could have an effect on the ways in which reverse mortgage companies use Google’s ads platform in trying to generate new leads for loans. This is according to the perspectives of two lenders.
The new policy: targeting based on age now disallowed
Google describes the policy by saying that it is aiming to avoid ad targeting to people who may be inordinately affected by “biases” in society, according to the policy.
“On October 19, 2020, Google will update its personalized advertising policies to introduce new targeting restrictions,” the company told customersat the end of August. “In an effort to improve inclusivity for users disproportionately affected by societal biases; housing, employment, and credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Some of the products or services which could be impacted by these new restrictions include three core, overarching business types: employment (such as ads for jobs, job recruitment sites or job listing sites); housing (housing listing sites, individual houses for sale or rental, or real estate services); and credit (including credit cards, loans, home loans, auto or appliance loans or short-term loans).
The new policy when implemented will only apply to ads in the U.S. and Canada, according to Google. Sometime prior to the effective date of the policy, users will be prompted to acknowledge and accept the changes in their Google Ads account, and will be unable to create any new campaigns until they agree to acknowledge and comply with the new restrictions.
“Additionally when the policy goes into effect on October 19, advertisers promoting housing, employment, or credit products or services will no longer be able to target audiences based on gender, age, parental status, marital status, or ZIP code,” the company says. “Any existing campaigns featuring housing, employment, or credit products or services that target newly restricted audiences will no longer be eligible to serve. Advertisers should update their campaigns before this policy goes into effect to ensure they aren’t negatively impacted.”
Possible impacts on reverse mortgage businesses
Age is a critical component of lead generation for reverse mortgage companies, since the products are reserved for customers who are over a certain age threshold. The Home Equity Conversion Mortgage (HECM) program backed by the Federal Housing Administration (FHA) is only reserved for customers aged 62 and older, while four of the current proprietary reverse mortgage product suites are limited to borrowers aged 60 and older, with certain state restrictions bringing that age back up to 62.
Reverse mortgage companies who use the Google Ads platform will be negatively impacted by this change according to Cliff Auerswald, president of All Reverse Mortgage based in Orange, Calif.
“Come October, Google advertisers will no longer have access to filtering by age or zip code when targeting prospects in areas such as housing, credit, and mortgage lending,” Auerswald tells RMD in an email. “When I first read my updated advertising policy, I instantly knew Google was taking direction from the Equal Credit Opportunity Act (ECOA) verbatim.”
ECOA, signed into law by President Gerald Ford in October 1974, prohibits creditors from discrimination on the basis of race, color, religion, national origin, sex, marital status or age and requires applicants denied for credit to be supplied with a reason for their denial within 30 days.
“It appears to be shortsighted for Google, Facebook, or any marketing platform to include certain age specific programs into these new advertising policies which are clearly intended to curb discrimination, when age itself is the qualifying component for many housing and credit programs such as the HECM, insured by the U.S. Department of Housing and Urban Development (HUD) since 1988,” Auerswald says.
Also observing potential difficulty in its use of Google’s platform is Austin, Tex.-based Open Mortgage, which sees the generalization of ad targeting as detrimental. This is according to Paul Herrera, director of marketing at Open Mortgage.
“The new Google advertising policy will make it challenging to target audiences and get in front of people looking to purchase a home, refinance, or get a reverse mortgage,” Herrera says. “We do follow HUD guidelines and fully support access to equal housing opportunities throughout Open Mortgage, but these changes will result in ad targeting becoming more general and therefore making it a bit difficult to advertise on Google, which will affect our online strategy in 2021.”
Age targeting for compliance, not discrimination
The implementation of this policy is shortsighted in that it doesn’t take into account that some age restrictions exist not for discriminatory purposes, but to comply with existing regulations, Auerswald adds.
“With no way to exclude impressions via target demographic, lenders reliant on search marketing will undoubtedly face a higher cost per lead (CPL) and subsequently, higher costs to originate loans,” Auerswald says. “Hiding reverse mortgage ads from prospects in their 20s isn’t age discrimination; it is common sense. Sadly, these higher costs will reach the end consumer, an unintended consequence of recent events as tech companies begin to look under the hood of their own advertising platforms.”
Targeted advertising in the reverse mortgage business has led to the ads being seen by the right customers, but businesses will have to re-examine advertising budgets and potentially place their resources elsewhere, Herrera says.
“The strength and success of online marketing have been in large part due to its targeted approach, an advantage it has over offline media such as TV, radio, outdoor and publishing,” Herrera tells RMD. “Those channels tend to provide more of a broad stroke approach to get your message out. For mortgage companies that are housing-oriented, the new policies will require them to get more creative in how they get in front of their target audiences and could potentially encourage them to reallocate advertising budgets to other channels with more tangible benefits for ROI.”
Of course, other industries that primarily serve certain age demographics are likely to be bluntly impacted by these changes as well, says Auerswald.
“These protocols reach further than the reverse mortgage business,” says Auerswald. “Industries such as Medicare, real estate, insurance, long term care are also likely to face adjustments to their costs to acquire new customers.”
Some reverse mortgage companies, however, do not believe they will be affected by this policy change. An official with American Advisors Group (AAG) explained to RMD that since the company does not target its online, internet-based ads based on age, gender, zip code etc. they do not expect the policy to impact the company’s efforts in its online campaigns.
Last year, Facebook implemented similar targeting restrictions into its own advertising platform in response to a series of discrimination lawsuits the company had been hit with. Another such lawsuit from HUD struck that company barely a week after it announced its new policies.
