Perils of Afterpay’s ‘in-app’ advertising
OPINION: I reluctantly joined the ‘‘buy now, pay later’’ trend by signing up to an Afterpay account, but I’m not interested in buying stuff on credit.
I wanted to experience buy now, pay later ‘‘in-app’’ advertising, which is an envygenerating system designed to get people borrowing and spending more.
When you are young, a bit of hire purchase, as it used to be known, is hard to avoid but over a lifetime it’s detrimental to financial wellbeing, so it’s best to switch to saving for things as early in life as possible.
I bought a CD player and a new bed in the very early 1990s on hire purchase while living in Wellington.
In those days of yore, if you wanted to hire purchase something, you filled in a paper form in the store. They didn’t ask for an email, or mobile number. In 1992, there were only 72,000 mobile phone connections.
There was a lot of ‘‘friction’’ in retail back then. Friction is a word for how hard it is to make a purchase. The less friction, the easier a purchase is to make.
Buy now, pay later loans remove the friction of not having money in your transaction account to buy a thing, although research from Australia shows for a substantial minority of borrowers, the friction just moves to another part of their life, like making it hard to buy all the food they need.
Buy now, pay later lenders are not in partnership with ordinary people. They are in partnership with retailers. The more users spend, the more Afterpay earns.
Afterpay boasts that its ‘‘partners’’ see a 20 per cent increase in sales, an average order value increase of 40 per cent, as well as a stream of new customers. That’s friction removal in action.
It is wonderfully easy to get a buy now, pay later account. I installed the app and I had a $600 credit limit in minutes.
And immediately, the in-app advertising envy machine began encouraging me to spend.
I was surprised at the adverts that came up. Perhaps Afterpay had yet to get to know me, but the adverts it presented to me were not very relevant.
Mitre 10 was pertinent, but I’m not sure why when I clicked the invitation to ‘‘start shopping’’, three of the first four adverts were for Sax Hair Design, the About Face facials clinic, or women’s fashion boutique Ruby.
Afterpay’s in-app advertising is relatively new, with its latest annual report numbering it among ‘‘new’’ revenue streams.
Advertisers don’t pay for misdirected adverts, so I expect if I do not delete the account, the advertising would in time get more me-focused.
Afterpay’s app was so advertheavy, it felt more like a shopping app than a loan account management app.
One of the greatest frictions that limits people’s spending is not being aware of all the cool stuff they can buy. Afterpay’s app has multiple levels of assault on that ignorance.
Users are encouraged to sign up to targeted advertising, geolocation, and notifications to keep them abreast of spending opportunities.
There are special offers every time you use the app. Users can check to see which are the most popular retailers with Afterpay.
The focus of buy now, pay later lenders is gendered, heavily targeting younger woman, who prefer it to using credit card debt, which comes with annual fees, high interest rates, and debts that can hang around for years.
But that old-fashioned plastic credit card brought only a freefloating temptation to spend money the holder didn’t have.
The Afterpay app is designed to keep people in a state of hyperawareness of spending opportunities to pursue the imagined lifestyles of the pouting fashionistas of the in-app adverts.