AmEx Adds Personalized Offers to iPhone App

Last year Facebook shuttered its deals business in an apparent forfeit of the market to Groupon among others. But since closing its first day of trading at $26.11 per share, Groupon’s stock has plummeted to $9.90 as of Friday’s close. And the rest of daily deal industry hasn’t fared any better; 798 deal sites didn’t survive the second half of 2011, according to Fast Company. So why is American Express doubling down on its deals business?

“Our goal is not to bombard customers but to give them relevant offers so that you’ll use the offer,” said Ed Gilligan, vice chairman of American Express. “It’ll be meaningful to you, and the merchants will see more business as a result.”

All daily deal providers claim, or at least should claim, to surface relevant offers for consumers, but AmEx’s cardmember data gives the company a leg up. “We know a lot about our cardmembers. We know who they are, where they spend. In effect what we have is a spend graph,” Gilligan said, likening the spend graph to Facebook’s social graph and Foursquare’s location graph.

To capitalize on its position, AmEx is launching a mobile offer engine at 6:00 p.m. EST on Monday which promises to leverage a cardmember’s spend graph with their location to recommend and rank merchant offers. The more than 3 million cardmembers who have downloaded Amex’s iPhone app are getting the first taste of the mobile offer engine in an update the company has just pushed out. Specifically that update adds a My Offers feature to the Amex app, providing cardmembers a real-time list of nearby deals based on their purchase history and location. If a cardmember wants to claim an offer, they just have to add it to their AmEx card within the app, then use that card when purchasing from the participating merchant either online or offline and AmEx will credit their account with the discount.

Amex is piloting the feature with deals for Los Angeles and New York City but is also including national offers from Dunkin’ Donuts, Baskin-Robbins and FedEx. Gilligan said Amex plans to roll out My Offers to more cities over the next year as well as on a global scale.

Adding offers to the iPhone app is the “logical extension” of three partnerships AmEx introduced over the past year-plus, said Gilligan. Last March Amex piloted its deals program through a partnership with Foursquare during SXSW that offered cardmembers’ discounts when checking into places like a restaurant or coffee shop. That summer Amex launched the “Link, Like, Love” app on Facebook that presented cardmembers with deals based on their Facebook likes and interests. Then this past March Amex began letting members sync their card with their Twitter accounts to tweet merchant-specific hashtags that will load a deal to the member’s enrolled Amex card. Offers from those programs will appear within the iPhone app.

While the a cardmember’s spend graph is arguably the most significant personalization signal, it’s not the only data point AmEx will consider in personalizing deals. Location and merchant data can be just as valuable, said Luke Gebb, the company’s vp of global network marketing. For example, a restaurant may be a couple towns over from where a cardmember’s located, but AmEx can see if most of that restaurant’s customers are out-of-towners and therefore score it higher in the cardmembers’ My Offers list despite the distance.

Using the spend graph in conjunction with the location of cardmembers’ iPhones to recommend deals should help Amex avoid criticism over deals not being relevant (something that has plagued many daily deal companies). Groupon, for one, has been besieged with complaints such as guys being presented with deals for Brazilian bikini waxes. In a letter to shareholders last week, Groupon CEO Andrew Mason said its emails have seen 50 percent higher purchase rates when offers are included based on its SmartDeals personalization algorithm, but conceded that the personalization process is still in its early stages.

But Amex isn’t relying solely on purchase history and location to ensure, say, a 23-year-old doesn’t receive offers for denture repair. As cardmembers peruse deals in the app, they can thumb-up or -down any offer if it’s not to their liking, informing which deals Amex will surface for that cardmember in the future.

Within the app cardmembers can view what offers they’ve loaded to their card(s), how much they’ve saved from offers used and what offers have expired. The company is working on a notification system that would alert members when an offer is close to expiring, Gebb said.

IPhone owners aren’t the only mobile cardmembers getting new features this week. Gebb said Amex will be introducing a geofenced SMS text message service for non-iPhone-owning cardmembers. Members who opt in to the service will get pinged when they walk in the vicinity of a merchant offering a deal. If the member wants the deal, he or she will reply to the text, make the corresponding purchase with their Amex card and receive a text confirming the discount. Amex is also looking at rolling out location-based alerts to iPhone users that could be triggered when a member swipes his or her card.

“So if you just had lunch, it may be that we notify you of a retail offer, or if you have a retail transaction, we notify you of coffee,” Gebb said.

Coupled with the mobile offer engine launch, Amex has improved the Go Social offer entry tool. In addition to viewing performance numbers like how many customers redeemed an offer and what was the size of the average purchase, merchants can now set objectives such as whether they want to target the offer to as many cardmembers as possible or limit it to members who haven’t purchased from the merchant in the past 12 months or those who are more regular customers.