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Affinity cards post mixed results - credit cards attached to magazine subscriptions - News Analysis

At a time when universities, professional football teams, and companies like AT&T and Ford are attaching their names to credit cards, it's no surprise publishers are joining this co-branding craze. Hemmings Motor News, The New Republic and Financial World have all begun programs in recent years; Car and Driver launched its card this fall.

Boosters say the cards promote identification with the magazine, which can pay off in higher renewal rates and subscription prices. Publishers use them as added value for advertisers by putting promotions in with monthly bills. And since the magazines get a cut of the annual fees and purchases charged to the card (usually under 1 percent), the programs represent a new revenue stream.

The costs are minimal. Publishers must provide ad pages to promote the card, but the issuing banks pay the lion's share--if not all--of the direct-mail and telemarketing efforts. Management time for tasks such as reviewing the telemarketer's script and bookkeeping is the largest obligation.

Yet even with negligible out-of-pocket costs, publishers have mixed emotions about the cards. While titles like Financial World and National Review profess satisfaction with their programs, others, such as The New Republic and Harper's, are disappointed by the tepid response--Sports Illustrated even canceled its program. And with the General Motors and Fords getting into the co-branding business--and offering discounts on merchandise like cars--magazines face a more crowded playing field than they did just a few years ago.

AT&T initiated the mad rush when it launched the Universal card in 1991; now more than 17 million people use its cards. GM, Ford and American Airlines followed, and even Apple is expected to announce a card program with Citibank. Competing against companies like General Electric, magazines have little to offer in incentives.

"Any magazine thinking of doing this is going to have a tough row to hoe because you have to have a very enticing reason |for consumers~ to take a card they have to pay for," says National Review associate publisher Jack Fowler. The magazine of conservative opinion attributes the success of its five-year-old card--which has 5,100 cardholders generating from $100,000 to $200,000 for the magazine each year--to its editorial relationship with its readers.

A committed readership may not be enough. Both The New Republic and Harper's consider their subscribers to be affluent, with a deep attachment to the magazine--a profile that seemed perfect for credit cards that funneled their proceeds to charity. But only 1,000 people have taken TNR cards since the program started in March 1991. TNR will let it lapse when the contract with Maryland Bank of North America runs out next spring. (Harper's would not disclose the number of cardholders obtained since its program was launched in early 1992, but its total take is less than TNR's.)

Car and Driver hopes to avoid this pothole by making its credit card an integral part of the Performance Club, launched last month. (See "Membership clubs gain favor with consumer titles," FOLIO:, November 15, 1993, page 19.)

Taking the plunge

Magazines interested in launching an affinity card are well advised to investigate the card-issuing bank. Not all offer amenities 24-hour service and fraud protection. Others may not be committed to their credit-card operations, as Sports Illustrated discovered when the bank handling its card sold off that division. SI killed its card soon after. "It's just like any licensing agreement: You have to make sure the licensee doesn't damage the equity of the trademark," says Charles Lillis, vice president of franchise marketing and development of Hachette Filipacchi Magazines.

Publishers must also be wary of alienating subscribers. If a reader's application is rejected, the subscriber may blame the magazine. Promotional copy must make it perfectly clear that the program is run by the bank.

And publishers should be sensitive about angering advertisers as well. "Big, formidable |companies~ have gotten into the field, and you don't want to compete against your advertisers," says SI general manager Alvaro Saralegui. He suggests clearing it with clients before embarking on such a route.

COPYRIGHT 1993 Copyright by Media Central Inc., A PRIMEDIA Company. All rights reserved.
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