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What If This Column Were Written Specifically For You?

For a company that gives away its service, Facebook has recently been valued at least $50 billion (or more than the assets any single credit union has amassed in the past century) as it prepares for a potential IPO. This may offer insight into the historical mistake credit unions have made, most having their genesis in a cigar box, when it should have been a dorm room.

The company has led the way in championing the concept of "social networking," and many credit unions have attempted to jump aboard even if their entire business plan seems to be "don't want to get left behind." But as this issue of Credit Union Journal reports, having a Facebook profile page on which you tell all your BFFs about your latest marketing promotion isn't the aspect of the technology to which you should really be paying attention.

Facebook isn't like many of those 1990s dot.com bubble companies where valuations were based on an inverse set of P&L principles and it was all about the burn rate. Unlike those headstones of cyberspace, Facebook has a little something all the non-dot.com companies like to call "revenue," and in this case it's significant. If you have a Facebook page, you are part of this revenue stream even if it's largely invisible to you-which is just the way the company "likes" it.

Facebook's has Friended technologies that allow it to make a lot from a little. Refining the already highly lucrative model used by Google, Facebook doesn't deliver eyeballs as much as it delivers profiles-and not the profile you intentionally provided. Everything you post, look at and "like," where you shop, link to, etc., is captured by Facebook to create a profile of you that it sells to advertisers.

Now, at least one credit union is using the same technology target its online advertising to an audience of one member at a time.

For most credit unions and banks, targeting advertising has been limited to the "seasons" of various promotions--every Spring and Fall come new/used auto loan campaigns; if it's the beginning of the year, it's bill consolidation promo time.

Philadelphia department store giant John Wanamaker is often credited with saying in the 1880s that he knew half his ad budget was wasted, he just didn't know which half. That thinking has remained a staple of marketing and advertising to this day. Until, perhaps, now.

Some CUs have used MCIFs to further refine their offers, but marketing dollars are still spent using the shotgun approach.

But what if an offer could be made one member at a time, offering them what they are looking for when they are looking for it? It's the Holy e-Grail of marketing and promotion, and as Virginia CU details in the story here, it may have found it. Pay attention, and get ready in 2011 and the coming years for a host of solutions offering your credit union the same capabilities.

But all that should come with a reminder, too, of one of the biggest drivers of failure in those aforementioned MCIFs, the last "next big thing" to have happened in marketing. The technology is just part of the solution, and the solution is no "solution." It must be deployed in concert with personnel that understands how to leverage it, and it must be part of the broader marketing plan.

If not, well, you know what they say about half your marketing dollars...

• The National Credit Union Foundation is reminding that there are just a few weeks left to buy tickets for the 23rd Annual Herb Wegner Memorial Awards Dinner, scheduled for Feb. 28 at the Grand Hyatt Washington Hotel. These are the most prestigious honors presented in the credit union community-with the exception of this column's Frankie Awards, of course-and each year's winners offer a reminder that there is still extraordinary work being done by many people.

To the organizers' credit, too, the dinner and the presentation of the awards is no longer the Fidel Castro speech-length, grab-a-Snickers-and-find-a-comfortable-seat-because-we're-going-to-be-here-a-while event it used to be, either. It moves along quickly.

This year's honorees are Rudy Hanley of Schools First FCU, Dan Mica, the former CEO of CUNA, and the National Youth Involvement Board. You can get details at www.ncuf.coop.

• NCUA's new financial literacy requirements for board members raise some interesting questions. Like how tough will they really be? What are the real implications for those who fail? And will it really matter?

Directors are now on the clock and have six months to understand the basics of a credit union income statement and balance sheet. The new rules are in response to failures among natural-person CUs, but were those really the result of not grasping what the numbers really mean? True, the knowledge can't hurt, but directors really need to understand risk, concentration, expense ratios and the old observation that goes something like, "What goes up..."

And even if they have the knowledge, they still need the courage and fortitude to question management, and to keep asking questions if they don't like the answers-or even more importantly, don't understand them.

Besides, an understanding of the basics of an income statement and balance sheet is no panacea; all those corporates that failed had CEOs on their board, and the issue there wasn't a lack of familiarity with the financials.

Frank J. Diekmann can be reached at fdiekmann@cujournal.com.

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