With members of Visa USA and MasterCard International now free to issue American Express and Discover cards, marketing is taking on increased importance in the card industry. While issuers are rolling out new varieties of television and print ads, the leading card sponsors are feeling growing pressure to use their own innovative campaigns to differentiate their brands and maintain brand identity.
  Indeed, when the U.S. Supreme Court last October let stand lower-court rulings against MasterCard and Visa policies that banned their members from issuing AmEx and Discover cards, it did not take long for issuers to react. By November, Wilmington, Del.-based MBNA America had announced plans to issue AmEx cards. A month later New York-based Citigroup expressed similar intentions.
  MBNA currently is issuing AmEx cards, but Citi had yet to offer an AmEx card as Credit Card Management went to press. The two issuers are aligned more with MasterCard than Visa, though both card associations are adjusting their marketing to address the changing market.
  Discover Financial Services, issuer of the Discover card, also is gaining issuer interest. The Riverwoods, Ill.-based company has signed up GE Consumer Finance-Americas, a unit of General Electric Co. based in Stamford, Conn., to issue the new Wal-Mart Discover Card. GE already was issuing Wal-Mart's store card.
  In some cases, the changing card market is placing increased emphasis on brand, as opposed to product, marketing. It was no coincidence that in November AmEx, a New York-based company that historically advertised individual products such as its Blue card, Green card or Delta SkyMiles card, launched its first campaign to promote the brand in general. The multimedia onslaught, with TV commercials, print ads and its own Web site, supports AmEx's new issuing partners as well as proprietary AmEx cards, says an AmEx spokesperson.
  "We're showing the connection between American Express and the cardmembers, no matter what card they may carry," she says. The campaign, called "My Life, My Card," makes that connection by indicating that the card occupies a place in the lives of pro surfer Laird Hamilton, comedian Ellen DeGeneres and actor Robert De Niro.
  The campaign's mylifemycard.com Web site also offers details on some of the first MBNA-issued AmEx cards. MBNA, the company known for cobranded rewards cards, has lined up cobrand partners for its AmEx cards that range from the American Quarter Horse Association to Boston College. Generally, spending on the cards benefits the partner institution.
  Rough Ride?
  Not all of MBNA's AmEx efforts have gone smoothly. A flap arose early on when the issuer began switching some of its established cardholders to AmEx cards without their permission. Some of the recipients likened the practice to "slamming" by long-distance telephone companies, and they complained because some merchants who had been honoring their old MBNA cards did not accept the AmEx cards. MBNA vowed to stop, a move both Visa and MasterCard surely would welcome.
  Now, if MBNA floods the U.S. mail with offers for the new cards, consumers who previously never received a direct-mail offer from AmEx will get their first chance to carry a card that many have considered elite, says Gail Sneed, market development director for financial services at Fenton, Mo.-based Maritz Loyalty Marketing. AmEx then will face the challenge of maintaining a top-shelf image while simultaneously courting the mass market, she says.
  In the meantime, the front of each new MBNA American Express Card prominently bears the AmEx logo in a blue box. The MBNA name is not so boldly promoted, however, a fact Sneed finds intriguing because MBNA recently aired its first-ever television commercial in an attempt to stop taking a backseat to cobranding partners by establishing the company's own name as a brand.
  The 30-second TV spot, featuring Rock and Roll Hall of Famer Gladys Knight in the middle of a rugby match, was an attempt to illustrate the breadth of the MBNA cobranded offerings. The ad, first shown during the Super Bowl Feb. 6, got mixed reviews. Some critics complained they had difficulty deciphering the message.
  The other new AmEx issuer, Citibank, has earned name recognition through years of heavy advertising, much of it with the "Live Richly" theme introduced in 2001. The campaign has plastered humorous and sometimes wise snippets of advice on magazine pages and signboards throughout the country. "Thank-you rewards" have been much in evidence in recent ads.
  Lately, Citi also has been among the card marketers offering incentives to cardholders who use their plastic for "everyday spend," including such frequent purchases as groceries, gasoline and meals, says Sneed. She says the effort is an attempt to replace debit with credit card use and to convince big spenders to use their cards for smaller purchases, too.
  Citi also has pushed the security issue in its advertising, a tactic taken up by other marketers but one that some observers find risky. Scott Strumello, an analyst at Auriemma Consulting Group, Westbury, N.Y., compares the security theme with Marlboro talking about lung cancer.
  Whatever the impact, the ads have been memorable, observers say. One ad, which won an Emmy from the Academy of Television Arts and Sciences, shows a middle-aged man, the legitimate cardholder, speaking in the voice of a teen-age girl about what she had bought with his stolen credit card.
  The Justice Department litigation that gave rise to AmEx cards issued by Citi and MBNA also has precipitated another development that challenges Visa and MasterCard dominance. Discover's alliance with Wal-Mart is being billed as a boon for consumers who like to save money, promising up to 1% cash back on purchases and 3 cents per gallon off on gasoline at Wal-Mart pumps. Sneed says Wal-Mart, which is based in Bentonville, Ark., likes to save money itself and probably pushed for a financial arrangement that cuts processing fees to the bone.
  While Discover, GE and Wal-Mart, as well as Citi, MBNA and AmEx, sort out the fledgling relationships they have formed among themselves, other card brands are coping with the fallout from mergers. In one of the industry's biggest recent developments, the Bank One name is disappearing from the marketplace after the company's merger last July with J.P. Morgan Chase & Co.
  "We'll transition our cardmembers from Bank One-branded cards to Chase-branded cards over the course of the year," says Tom O'Donnell, now a Chase senior vice president who was with Bank One before the merger. The new company has 96 million cardholders and works with nearly 1,000 cobrand partners, he says. Chase will inform cardholders of the change at every opportunity, including card statements, various partner Web sites and when replacement cards are issued.
  Chase also announced in February that it will continue issuing both Visa and MasterCard credit cards, but will shift its entire signature-debit card portfolio to Visa check card. Chase has issued debit MasterCards, while Bank One supported Visa check card.
  Brand Shift
  In recent years, Chase and the old Bank One used some of the same strategies to acquire cardholders, says O'Donnell. Both cultivated a presence on the Web sites of cobrand partners that include United Airlines, Disney, Amazon and Starbucks. Ads on the companies' sites have invited customers to sign up for a card and get immediate acceptance and instant credit to make their first purchase-all in one visit. Incentives have included discounts, bonus loyalty points and free shipping.
  "The idea is to market the card in the situation that's most relevant to the consumer," says O'Donnell. "So we market the Amazon card when someone is making an Amazon transaction, leveraging those points of presence with consumers."
  Recent Bank One ads have included a spot with a woman operating a cash register and encountering the many colors and varieties of cards the issuer offered. The ad was intended to encourage viewers to consider the color and affinity they themselves would prefer, O'Donnell says. Another Bank One ad featured a woman who wanted card rewards that come with a bit of magic, exactly what the company had in mind with its Disney card, he says.
  Many observers see wisdom in linking a card to another company's established name, but one issuer in particular has pursued its own identity. Capital One launched the "What's in Your Wallet" television ads in 2000 and set about making its brand a household name. Today, 48 million consumers carry the company's card, says a Capital One spokesperson.
  Capital One ads currently in rotation feature comedian David Spade promoting the Go Miles product, which the company claims does not say "no" as often as other frequent-flier schemes when it comes to booking free travel. Last year, Capital One deviated from the "Wallet" format with a series of ads that asked sports fans to pick their favorite mascots, thus extending the time frame for the company's Super Bowl ad, the spokesperson says.
  Maritz's Sneed credits Capital One with attracting much attention recently with TV ads that promise to give an island to a sweepstakes winner ("Cap One's Island Makes Waves," November 2004). Targeted recipients were mailed four or five pieces with variations in themes and colors related to the contest. Sneed says her young children ran to the mailbox to get the mailings, eager to find out if sand would pour from the envelope the way it did on TV.
  Such strong efforts by issuers to build their brands have given MasterCard and Visa reason to contemplate the positioning of their own marketing efforts. "Our philosophy at Visa is that all of our marketing, not just advertising, is designed to be a foundational platform for the issuer to build their message on top of," says Nancy Friedman, Visa vice president of advertising. "We view our message as complementary. That's our role."
  In the past year, Visa has concentrated marketing on the Visa check card, Visa Signature Card, the youth-oriented "Ideas Happen" campaign and cards for small businesses, Friedman says.
  While check card ads continue to work the theme of convenience, Visa has expanded the message to include security, Friedman says. "It's a barrier that we have to get them over to feel confident about using their debit card by reassuring them that if it's ever stolen and used fraudulently, they would get all their money back and there's zero liability," she says.
  To that end, Visa kicked off a campaign featuring real estate developer Donald Trump and scored points during the Super Bowl with an ad that demonstrated debit cardholders do not need superheroes to protect them. Visa ads also are encouraging customers to use check cards to pay bills automatically.
  The Visa Signature Card has been around for seven years but remained a "stealth product" until the association launched a significant support effort that began in August with the Summer Olympics, says Friedman. The card, a competitor to the AmEx Gold Card, is marketed to consumers with annual incomes of $125,000 or more.
  Partner Picking
  The card carries no preset spending limit, and it is accepted by many merchants that will not take AmEx, Friedman says, adding that cardholders also can pick their own rewards partners. The campaign has helped increase spending on the card by 30% in the last year, she says.
  In Visa's "Ideas Happen" campaign, 12 young adults, about 18 to 24 years old, received prizes of $25,000 each to pursue goals in any of three areas: business, self-expression or community service. The winners, picked by experts and peers, attended meetings in Los Angeles with individuals who have experience that could help realize the goals.
  "Instead of telling young people what they should be interested in, this really flips it around and says, 'tell me what you're passionate about,'" says Friedman. The program was promoted on MTV and in youth-oriented magazines. Research showed that it improved the Visa image among young people, Friedman says.
  Small business also are getting some attention from Visa. A campaign launched in mid-February this year used integrated television and print ads to stress issuers' easy-to-read, all-in-one monthly statements as well as discounts on merchandise. The ads are stamped with the Visa personality but differ somewhat from the standard fare to fit the business audience, Friedman says.
  MasterCard also has been at work, focusing efforts on ads carrying the message that MasterCard issuers' cards represent the "better way to pay for everything that matters," a spokesperson says. The positioning is intended to transcend talk of features and benefits and instead expound upon spending to create meaningful experiences, the spokesperson says. At the same time, the company admits to pushing for "everyday" use of MasterCards to buy gas and groceries.
  For the Super Bowl, MasterCard and its agencies came up with a "Priceless" ad packed with cartoon images of product spokespersons, including Mr. Peanut, the Jolly Green Giant, the Pillsbury Dough Boy and Mr. Clean. Food purchases were used in the familiar "Priceless" way, citing "Broccoli, $1.79," for example. Gathering the characters around the dinner table was deemed "Priceless." The idea was to suggest using MasterCard to buy groceries.
  The "Priceless" theme, which is the heart of MasterCard's marketing, may be the world's biggest single advertising campaign, with exposure in 49 languages in 101 countries, MasterCard says. MasterCard sued Ralph Nader when he borrowed the "Priceless" format in an ad aired during the 2000 presidential campaign, but the card association seems to have mellowed since then on unauthorized use.
  "We don't see these parodies as 'rip-offs,'" a spokesman says. "We see them as facilitators of brand buzz."
  Buzz will be welcomed as rivalry continues to heat up in the world of cards, the spokesman says. "The major trend we see is that competition is converging at virtually every level," he says.

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