This week American Express (NYSE:AXP) announced a partnership with social networking behemoth, Facebook, sure to blur the lines of rewarding social actions vs. purchasing habits.

These are exciting times in the finance realm, both for financial products, as well as the payments and offers spaces. Due to the recent rules and regulations from the Federal government banks have begun to flush out their existing rewards (a.k.a deals) programs, while introducing a slew of new ones. In just a few short months, Ally bank introduced Ally Perks, FNBO began to heavily push MyDeals, and Intuit with the help of Cardyltics brought merchant-rewards to a slew of smaller banks.

If you’re not familiar with merchant-rewards, I recommend you read our coverage on the new platform. In each case, the core offering is technically the same: Retailers and merchants tell banks what kind of customers they want to reach. Banks extend merchant offers to those demographics and consumers earn the offer by completing transactions.

Studies have already shown this platform is positioned to be valuable for consumers and extremely profitable for banks and merchants. Aite Group, a research firm out of Boston projected revenues of $3.5 billion by 2015, with $1.7 going to the financial institutions. Large growth for a platform that would have only been mainstream for a couple of years.

Separating Social Actions and Purchasing Habits

So if the concept of merchant-rewards is becoming the trend, what makes American Express’ announcement special? Well, unlike these other platforms, American Express has decided to award consumers on their social actions and interests, instead of their purchase habits.

The power of rewarding consumers for social habits is larger brands can begin to offer deals to a target audience that may not actively shop with them. For example, a sports franchise giving an offer to someone who linked, shared or liked their team multiple times over a certain period, but hasn’t purchased any merchandise. Brands now have the ability to really grow their relationship beyond deals.

As a consumer you have to ask yourself, does your purchase habits represent who you are more than a social habit does? I personally think it depends on who you are.

Separation of Audiences

In the simplest form, these two types of merchant-rewards are positioned to create three key target demos.

The first is the older generation. 40+ We can assume they rarely perform any social networking actions like a check-in, due to the relative novelty of these technologies. Therefore this group will more likely prefer deals based on purchase habits.

The second is the younger generation, maybe 18 to 25 year-olds who actively perform social actions such as, check-ins and using the “like” button on a consistent basis. For this demo, being rewarded for social habits seems to be the winner.

In either case, it is the third, middle demographic of 25 to 40 year-olds who really win. This target is both accustomed to earning bank rewards and actively completing social actions on networks like Facebook.

For merchants it will also be interesting to see which audience they care about most. The group with a higher income today, more likely to convert based on purchase habits,  or a younger audience that defines themselves through their interests.

You have to wonder if American Express is banking on the latter and believe the standard banking form of merchant rewards will be obsolete within the decade as this younger generation becomes accustomed to earning rewards one way.

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