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Cards Seek More 'You' in Usage - credit card companies seek ways to increase customer usage - Brief Article - Statistical Data Included

Hilary Cassidy

The credit card industry notched respectable growth last year as the major players reported an average increase of 12% in charge volume. Visa raised brand awareness through its ongoing "Everywhere you want to be" campaign and by leveraging its Olympic sponsorship. MasterCard built on its "Priceless" efforts and its "best way to pay for everything that matters" positioning, while American Express found continued success with its Blue brand chip card. Discover introduced America to the has been hair band Danger Kitty and offered its services "For the slightly smarter consumer."

The hoped-for net result of all of this outreach: get consumers to use their charge cards more often.

"We are the biggest [credit card] brand in the world, but have only 11% of all personal consumption expenditures," said Becky Saeger, Visa's evp-brand marketing, pointing out that 48% of personal consumer expenditures are made via checks." Our competition is cash and checks. If there are 200 million people in the U.S. paying for something, I need to make sure they're pulling out a Visa card. [If] it's going to chips, no card at all, an online account--we've got to make sure that what we're doing is ultimately working toward a day when we control the transaction."

Chip cards are an area of intrigue in the category. The consensus among executives, though, is that while the cards have great potential in their ability to target particular segments, providing a means to retain and reward customers, they'll have limited functionality until they get applications at the point of purchase.

American Express has 2.2 million Blue users, but results of a study by Atlanta-based consultants Brittain Associates show that only 1% of consumers use the card with a reader; most treat it as a regular charge card, albeit appreciative of its extra layer of security for online shopping.

"It's a chicken-and-egg conversation," said Elisa Romm, vp-North American brandbuilding at MasterCard International. "I think the minute you can get chip functionality at the point of sale in the offline world, the consumer will understand the benefits. Once that happens, it will be like a stone rolling downhill."

Until then, card companies will look for ways to bring value-added applications to chip cards.

While the Internet is still of interest, the urgency of last year has faded somewhat with the dot-com implosion. "Internet is only 3% of gross dollar volume," said Romm. "We have to understand how e-commerce fits into customers' lives. For us to sell you Internet, Internet, Internet, that's not reflective of your life."

Countered Brittain Associates' chief Bruce Brittain: the Internet is a "$45 billion shopping mall online," and American Express and Discover, in particular, are making a push to be the online buyer's choice.

Ad spending in the category is projected to remain steady or increase over last year as companies continue their efforts to drive acquisition and usage. Sports will play a big part in global marketing over the next 12 months as MasterCard gets behind the 2002 World Cup, co-hosted by South Korea and Japan, and Visa gears up for the Winter Games in Salt Lake City.

"We know when consumers are aware of Olympic sponsorship they give significantly higher ratings to our brand across all key attributes," said Saeger.

For the 2000 Summer Games in Sydney Visa developed Olympic-related promotions that were utilized by 550 of its member banks.

Areas of concern in the coming months include worries over loyalties of customers who may feel disenfranchised and cut off from a trusted institution following the numerous recent bank mergers and the softening economy. While some analysts believe the industry is recession-proof, as consumers use cards when they are unable to access cash, it is unlikely the card companies will escape unscathed if the economy takes a turn for the worse.

"Any slowdown is reflected in credit card delinquencies and writeoffs because it is unsecured credit," said Brittain, noting that people pay their mortgages and electric bills before getting to credit card obligations. "People certainly do [use credit if they're short on cash] but that is betting on the future. If the economy doesn't bounce back, they're the ones who default."

In the card companies' favor is a new law, recently passed by Congress, making it harder for those declaring bankruptcy to avoid paying their credit card debts.

                              CREDIT CARDS
Brand                Company Name, Location
1. Visa              Visa USA, San Francisco
2. MasterCard        MasterCard Int'l., Purchase, NY
3. American Express  American Express, New York
4. Discover          Discover Francial Services, Riverwoods, IL
5. Diners Club       Dinners Club Int'l., Chicago
Brand                Lead Agency, Location              Total Sales
                                                        (millions)
1. Visa              BBDO, New York                       $810.0
2. MasterCard        McCann-Erickson, New York             423.0
3. American Express  Ogilvy & Mather, New York             221.7
4. Discover          Goodby Silverstein, San Francisco      90.1
5. Diners Club       Impinic, Chicago                       14.0
Brand                Media Spending  Quality  Salience  Equity
                       (millions)
1. Visa                  $319.9       6.84       90      61.6
2. MasterCard             215.8       6.51       83      54.0
3. American Express       207.8       6.00       61      36.6
4. Discover               127.2       5.72       63      36.0
5. Diners Club             11.1        N/A       N/A     N/A
Sources: Brandweek research (U.S. sales);
Competitive Media Reporting (media);
Total Research: QxS=E

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