Special Report: Credit Cards

BOSTON The good news for the networks is it is they, rather than cable, that continue to be the cornerstone of credit card marketing. And while TV spending is declining across the sector, individual companies are likely to increase their spending this year. Among them: American Express. The nation's oldest credit card company is trying to get younger users. In an effort to make itself look less like a card used by your parents, the company introduced a new tagline this month, "Are You a Cardmember?" AmEx hopes new TV spots featuring professional skateboarder/snowboarder Shaun White will bring in younger generations."In the last year, they've made a much more determined effort of positioning toward younger consumers," says Marianne Berry, a managing associate for the Auriemma Consulting Group, which specializes in the financial services sector.While AmEx may have good reason for increasing its ad spend, any action by one of the large card companies could drastically alter the total numbers. "There's such a small number of players that spending can be very volatile," explains Jon Swallen, vp, research at TNS Media Intelligence. "Last year, it was surging on spending by Citi, and before that it was because of Capital One."For the most part, that volatility is the result of banks that issue payment cards, rather than from credit card brands such as Amex, Visa, MasterCard and Discover. The major banks, including Citibank, Capital One, JPMorgan Chase and Bank of America, tend to increase their advertising spending around a particular product or a new marketing campaign. Overall TV spending by the banks has fallen for the past four years, from a high of $711 million in 2004 to $653 million last year, according to TNS. In particular, spending on prime-time network last year was off, amounting to $576.1 million, down considerably from $638.8 million in 2005, per Nielsen Monitor-Plus.Even Capital One, whose "What's in your wallet?" campaign made its brand famous, has cut way back. Last year, the bank spent just over $163 million on network and cable ads combined—nearly $90 million less than it spent a year before. The reason for the decline in investment is simple: The U.S. card market is saturated. According to the Federal Reserve Board, there are five credit cards per person in the U.S. Because of this, companies are focusing less on attracting new customers and more on branding efforts along the lines of "It's not Visa. It's Citibank Visa." Appeals like those are aimed at keeping a particular company's cards top of mind, so that consumers will be encouraged to reach for a particular card already in his or her wallet. But every year sees one or two exceptions, with companies that try to overcome the market-share stalemate by getting their names out there. This year, "the wild card is Citi," says Swallen, explaining, "They've made a big push with credit cards despite cutting [ad] spending in other areas."For Visa, MasterCard, AmEx and Discover, TV spending is much more cyclical. For example, there's always an uptick in spending in even-numbered years, when Visa leverages its position as an Olympic Games sponsor. Last year, the company spent more than $290 million on TV, according to TNS, a nearly $50 million increase over the year prior—nearly all of it on TV. Though 2007 is not an Olympics year, analysts expect to see some spending increase in the last quarter of this year, as the 2008 games in Beijing draw near. TV still gets the lion's share of card companies' marketing budgets, with most appeals centered around branding versus new products. When Visa rolled out its Signature card last year, aimed at high-income consumers, the media buy focused on print and Internet. Signature is only the latest credit card product to target specific demos, and only the latest example of banks favoring targeted media options over the mass of network TV.MasterCard has also increased its spend on the major networks, while cutting back on cable as a whole. The $212 million it spent on all TV in 2006 was only $9 million more than the previous year. Last year, it spent slightly more on network, and slightly less on cable compared to the year prior.The credit card companies are also spending more on targeted cable networks, with both Visa and MasterCard in the past year upping their investment in Spanish-language channels.

Brand Marketing

Special Report: Credit Cards

Constantine Von Hoffman

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Constantine Von Hoffman