AmEx Tests New Ways to Transact in Social Media

Features Such as 'Link Like Love' Are Drawing Consumer Attention, Recasting 162-year-old Financial Institution as Tech-Savvy Brand

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Next to the 1 World Trade Center construction site, the American Express Tower occupies the street that its stables were on in the 19th century, when the company was a freight-forwarding operation.

John Hayes
John Hayes
Today, on the building's posh 50th floor, Chief Marketing Officer John Hayes is describing what sounds more like a tech business than a financial institution.

A 17-year veteran of AmEx and newly appointed board member for Silicon Valley stalwart Yahoo, Mr. Hayes outlines how his company is using Facebook, Foursquare and Twitter. While adland has obsessed over what brands should say on these social-media outlets, Mr. Hayes and his team are testing ways to transact there.

AmEx is touting Sync -- a service that translates social-media activity into savings for cardholders -- in TV commercials featuring comedian Aziz Ansari. The spots highlight the "Link Like Love" feature on Facebook, which offers discounts based on what users of the network like.

The TV blitz followed Sync's high-profile debut at the South by Southwest Interactive festival in Austin, Texas, this past March. While the event has catapulted such startups as Twitter and Foursquare into popularity, some argue that AmEx stole the show this year when it introduced Sync paperless coupons, which are loaded onto credit cards when cardholders tweet certain hashtags.

AmEx's first foray into this kind of social-media tool was a partnership with Foursquare that let cardholders sync accounts to the mobile app to save money at Austin-area businesses when they checked in during the 2011 SXSW. AmEx then opened the Foursquare program to small businesses in other markets to help attract new customers with location-based offers.

Social media is also a cornerstone in AmEx's Small Business Saturday , the 2-year-old event that encourages people to shop at local businesses on the Saturday after Thanksgiving. And shop they do, thanks in part to AmEx's marketing clout. The company spent more than $2.2 billion on advertising in 2010, according to the Ad Age DataCenter.

Ad Age : Why has social media been so central to AmEx's marketing recently?

Mr. Hayes: Social platforms do so much more than communicate. If you go back through our marketing over the last couple of decades, we've built a lot of things that create experiences for people. Our belief is that marketing really needs to be more than just communication. With Twitter, it was about an experience: syncing your card, tweeting and saving money. On Facebook, "Link Like Love" is about experiences based on your "likes."

Ad Age : Have these social programs driven new card accounts more than past programs?

Mr. Hayes: We're not far enough along yet to know an exact answer. What we do know is , from a brand-perception standpoint, its having a meaningful impact. Just as the press said, "Wow, we didn't expect AmEx to take over South by Southwest this year," consumers are saying, "Wow, I didn't think you guys would be the first ones doing something rare on Facebook." It's served us from a perceptual standpoint, but I can't tell you if it's converting people into card members just yet.

Programs on Facebook and Twitter] have met our expectations, so we're pleased with the results we've seen so far. We also have merchants that we're starting to help move into [social media] during our Small Business Saturday . It's a brand-new space for them, too.

Ad Age :What were some of the tools for Small Business Saturday ?

Mr. Hayes: We gave [the businesses] the ability and analytics to track results, to see how many new customers [came from social marketing] or how many existing customers improved their behavior based on what was offered. We give merchants the ability to track all that because many aren't tracking that on their own.

Ad Age : American Express has been very forward-thinking in social. What are the key metrics you use to ensure it's paying off?

Mr. Hayes: First of all, digital is so much more measurable than the traditional space. The first step is to have clear metrics going in. Everything we do has very clear business goals. We believe what we're communicating right now is going to help perception of the brand, and there are perceptual measures we'll look at as early indicators. But ultimately we look at the business. If we can drive business to merchants and they become more successful, they want more and more to accept the card and have us as a partner -- those things drive business outcomes. You also get higher levels of spend from your customers. We're in a unique, very measurable business. When you use a card, we know.

Ad Age : Mobile is expected to be the next big disrupter for companies like yours. Tell me how AmEx has to act and speak differently in a world where small businesses can use startup services to power transactions?

Mr. Hayes: There's no question mobile is critical. It's changing the landscape, and we're looking forward to it. It's opening up new markets. That's what mobile is : opportunity. But I'm not focused just on the transactions. Transactions are important because you monetize them, but there's also the service experience. The challenge will be the relationship with the customer. Those who serve the customer best will own that relationship. That's how we believe we'll succeed through this mobile transformation.

Ad Age : AmEx reported it cut first-quarter marketing, promotion and cardholder-rewards costs by 14%. How do you do smarter marketing for less?

Mr. Hayes: The reduction you're noting was ... just one quarter. If you look at the long-term trend, you'll see we've been actually increasing marketing spend. But it is becoming more efficient to do marketing because two things are happening.

Targeting capabilities keep improving, even on traditional media. There are platforms that can allow us to identify card members vs. non-card members. If you're already a card member, we can tell you about something we can do for you, and if you're not we can talk about why you should be. The efficiency of that targeting is getting so much better every month that there's more [cost] efficiency.

The second thing is the cycle of time. You can do something today, learn within 48 hours, then modify it and be back out there in 24 hours with something more optimal. So we're able to create these small loops of optimization.

Ad Age : The economic climate has been tough for credit-card companies. How have you managed that ?

Mr. Hayes: American Express is one of the oldest and probably one of the best-defined brands in financial services. That serves us well through changing times. We're clear about what the brand stands for. Trust. Security. Deep, service-based relationships are what keep us constant even as our business changes.

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