A new report* from VRL
KnowledgeBank examines the latest trends and marketing techniques
being used to promote credit, debit and prepaid cards programmes
around the world. The following extract considers how card issuers
can improve their marketing efforts, from traditional mass media to
new media channels.
As global financial services ad spending continues to increase,
card marketers are employing a multichannel approach to engage with
customers and prospects. In 2006 MasterCard spent $1.0 billion on
advertising and marketing, up 4 percent compared with 2005.
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While television continues to receive the majority of ad
expenditure, internet spending continues to grow with marketers
encouraged by improved online response rates. Around the world,
financial services companies are expected to increase their online
spending by 33.3 percent to $2 billion in 2007, reaching $3.52
billion in 2010.
Looking at the competitive US market, American Express led card ad
spending in 2006 with $555.3 million in total advertising spend
($529.7 million offline; $25.6 million online), followed by Visa
with $380.6 million, Capital One with $318.1 million, MasterCard
with $315.6 million and Citigroup with $310.3 million.
Significantly, the top five US credit card marketers made
substantial changes in their online spending between March 2005 and
February 2006. Capital One increased online spending by some 3,861
percent, while American Express increased spending by a mere 30
percent.
These organisations have had much success so far with the online
channel, boasting a 98.3 percent average e-mail delivery rate, an
18.6 percent open rate and a 0.8 percent click-through rate.
Indeed, the internet has yielded a collection of new interactive
channels for marketers to reach their target audience, with blogs,
social networking websites, mobile phone ads and ‘advergaming’
among the latest methods employed by card marketers. This is
especially important as consumers are increasingly relying on the
internet for credit card account management services. By contrast,
growth remains sluggish in the use of direct mail.
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By GlobalDataOne attraction of the trend towards online marketing is the ability
to measure the success or failure of a campaign, since it is easier
to track their metrics than more traditional marketing channels
such as running television ads. Data analysis – such as customers’
purchase history and payment behaviour that provides clues about
the long-term viability of cardholders – is increasingly being used
by marketers to help identify the most profitable customers.
In a similar vein, marketers are also recognising how to use their
websites to effectively market to their customers. This strategy
has been enhanced enormously with the introduction of Web 2.0
technology and the explosion in the growth of social networking
website traffic, estimated to have increased by 774 percent between
2006 and 2007.
One of the most progressive marketers
Visa, for instance, has been one of the most progressive credit
card marketers, having already tested blogging, TiVo – a digital
video recorder powered by a membership service that automatically
finds and records consumers’ favourite shows – mobile marketing and
advergaming.
In the game series based on the hit CBS TV programme CSI, Visa’s
fraud-monitoring capabilities are highlighted when a suspicious
charge on a victim’s credit card leads to an investigation by the
CSI forensics team.
It also created blogs for 15 Olympic hopefuls for its 2006 Winter
Olympics marketing campaign, without major ad support. Just prior
to the event, the blogs were receiving upwards of 1,000 visitors
per day. American Express also tried TiVo branded tag or menu
ads.
MasterCard took experimental steps in social media when it launched
a campaign in early 2007 allowing consumers to write their own ad
copy for two pre-filmed TV spots.
Card marketers have also sought to improve the performance of their
marketing efforts by employing tactics successfully utilised by
other industries. Permission marketing, which gives consumers more
control in their relationship with merchants, is potentially a
strong strategy to employ.
Another modern channel, mobile marketing, has yielded impressive
results for marketers so far, and it is estimated that by 2008, 89
percent of brands will use text and multimedia messaging to
communicate with their customers. By 2012, more than half of major
brands are projected to spend between 5 and 25 percent of their
marketing budget on mobile marketing.
Visa tested mobile marketing in China in early 2007. The issuer
wanted to increase awareness of its brand in the country, and
familiarise Chinese consumers with the card’s main features and the
concept of financing. A series of simple wireless application
protocol sites with three versions were created to match three
different ads. Humour generated a viral effect.
To encourage recipients to download the Visa TV commercial, mobile
ads were served at specific time periods across popular portal
sites on the Madhouse Mobile Ad Network. Users were directed to the
Visa campaign site to browse or download the TV commercial by
clicking on Visa banner or text ads. A frequency cap was applied to
optimise the overall campaign.
During the campaign, Madhouse served 2.95 million impressions
resulting in a 4.2 percent click-through rate. Every one of two
click-throughs resulted in a download of the TV commercial.
A changing card market and privacy rules will, however, make
customers increasingly difficult to track. Legislation regarding
consumer privacy affects card marketers on a global scale, with all
EU countries enforcing a single set of data protection laws and a
European Directive on Privacy and Electronic Communications signed
in 2006.
*This article is an edited extract from a new VRL KnowledgeBank
report called Trends in Credit, Debit and Prepaid Direct Marketing.
Written by Josh Moritz and Peter Blau, the report is designed to
provide a single source reference on best cards marketing practice
and includes a number of case studies. For further information,
contact Xenia Dretaki at xenia.dretaki@vrlknowledgebank.com
or on +44 (0) 207 563 5603.
