This article appears in the December issue of Cards&Payments.
Barclaycard U.S., the Barclays PLC unit that specializes in issuing cards for affinity and cobrand partners, including U.S. Airways, Barnes & Noble and L.L. Bean, long has relied on those brands to get the cards into consumers' wallets. But now, after a year of internal development, Barclaycard U.S. is trying to make more consumers aware of its name.
But it will do so "in a really subtle way," says Michelle Bottomley, the unit's chief marketing officer.
The subtle steps have included creating a Barclaycard U.S. Web site that advertises all of its partner cards, substituting the brand name for the legal name "Barclays Bank Delaware" on the back of its cards and at the bottom of cardholder statements, and adding the card unit's name to the electronic display on Barclays' office tower in New York's Times Square.
Now might seem to be exactly the wrong time for a credit card company to make its name more prominent, given the reputational negatives of the banking industry in general and the card sector in particular.
As with other issuers, Barclaycard U.S. has responded to higher credit losses and continuing regulatory reform by lowering credit limits and raising interest rates.
But the issuer has little choice about promoting its brand now, in part because such actions already are making consumers very aware of the issuer behind their L.L. Bean or Virgin America cards, Bottomley says.
"Whether we like it or not, we have a brand here. Only too often customers will get in touch with us if they have an issuer question, and that can be a negative association," says Bottomley, who was the chief operating officer at the New York unit of the Ogilvy & Mather Worldwide advertising firm before joining Barclaycard in August of last year.
"We hope that as our cardholders and our customers start to see us as a trustmark on the back of the card they begin to look for us, almost as the 'Intel Inside' of the partnership," she says. "Over time, the consumer looks for those ingredients to be in the product as a sign of quality, and we would hope that consumers would come to look for us as backing some of their favorite brands."
Still, don't look for ubiquitous advertising campaigns with jaunty jingles, at least not yet.
"We're not doing any television advertising or any mass communications about the brand," Bottomley says.
Such a careful approach to increasing brand awareness is difficult to pull off, but if done correctly "a very subtle but powerful viral buzz … can be very effective," says Joseph I. Rosenbaum, a partner and the co-chairman of Reed Smith LLP's global advertising, technology and media law practice and a former senior counsel at American Express Co.
"There are some industries where your very sustainability depends on trust, and the banking industry is one of those," he says. "Having a subtle marketing campaign can be very effective if it makes people feel that you have the right combination of product features and functionality and a trusted name."
That subtlety does not always work, he acknowledges, citing some recent Super Bowl commercials that relied on elaborate viral-marketing and social-networking schemes to engage consumers.
"There have been some high-profile, extraordinary advertising campaigns that have bombed, have just been horrible," Rosenbaum says.
Barclays bought the independent credit card lender Juniper Financial Corp. in 2004 and renamed it after Barclaycard, the company's United Kingdom-based card unit. The U.S.-based unit has doubled in size since early 2007 and now reports 6.7 million accounts with $10.9 billion in outstanding loans.
During the first half of 2009, it charged off receivables at an annual rate of 9.8%. The roughly $2.5 trillion-asset parent company does not break out profitability for its U.S. card unit.
Last year, "the U.S. business significantly exceeded the 2008 profitability goal set out for the business when Barclaycard purchased it in late 2004," a spokesperson said by e-mail. He did not provide detail on the U.S. unit's performance this year.
Changing the name on the cards provides "a level of transparency that didn't exist before," Bottomley says. "Now we're saying 'we're Barclaycard, a member of the Barclays group,' and over time we're going to add more value to what that means."
Another motivation is "to create other positive moments for the customer as part of what we deliver for the partner," such as the Web site launched in October that touts all the various partners' cards, she says.
Barclaycard U.S. also is planning on revamping its servicing site for all of its cardholders later this year, a spokesperson says.
Adding the Barclaycard name to the Times Square display took advantage of "free real estate," Bottomley says. Barclays acquired the building last year along with the bankrupt Lehman Brothers' capital-markets businesses. It had been Lehman's headquarters and now is the U.S. headquarters for the company's investment-banking arm, Barclays Capital Inc.
This promotion of the Barclaycard brand in the United States does not signal broader ambitions for the company to branch out from its cobranded card businesses.
"Not right now," Bottomley said when asked if Barclaycard plans to issue cards solely under its own brand. "We're very focused on building out our partner portfolio."
She repeatedly likened Barclaycard's ideal brand identity to that of the Intel chips inside many personal computers and laptops.
"We're an ingredient in what that partner is providing, and there are positives and negatives that come along with being that ingredient," she says. "I'm sure not every Intel chip works perfectly in an IBM laptop, but Intel stands for a level of quality" in the overall product.
But branding experts say that strategy is easier said than done.
"Everybody wants to be the 'powered by' brand. It works for Intel, but it doesn't work for a lot of people who try it," says Jim Alcott, a partner in the marketing agency Alcott Whitney.
"It is a worthy endeavor, but the 'powered by' is tough to pull off. … I'm not sure that credit [cardholders] care that it's Barclays or MBNA or Citigroup unless it's a really different experience."
Barclaycard's relative lack of brand recognition in the U.S. could work to its advantage, Reed Smith's Rosenbaum says.
In light of the regulatory and reputational issues that most credit card companies are facing, "you can look at it as, 'What a silly time to enter the market'" or as "what a brilliant time to enter the market, when consumers can find some comfort with a recognized brand name" without some of the baggage facing better-known card companies here, he says. CP
(Maria Aspan is a reporter with American Banker.)