AMEX GOES ON ATTACK WITH TRUEGRACE

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American Express Co. is green with envy at bankcards, and the mighty marketer is preparing to fight back.

The company this week revamps Optima-a credit card now marketed mainly to AmEx charge card customers-as a standalone product, and begins an aggressive marketing strategy designed to steal business from Visa USA and MasterCard International.

AmEx will employ the combative tactics of Chairman-CEO Harvey Golub, bashing bankcards that claim to offer interest-free "grace periods" to customers but don't unless balances are paid off each month.

Adopting a new secondary brand name, True Grace, AmEx will promise no interest charges on any new purchases made during a monthly billing cycle regardless of whether past balances are paid off.

Home decorating guru Martha Stewart will pitch the product in a huge ad campaign.

The bold move is aimed squarely at capturing business from the 68% of credit card customers who don't pay their bills in full each month.

More than 90% of bankcards now feature 25- or 28-day grace periods, but those typically apply only to so-called non-revolvers. Others get charged interest on new purchases made in the current month as well as outstanding balances. Many cards also backdate interest to the date of a transaction, rather than the date the charge is posted to an account.

"The perception by most consumers is that they have a grace period when they don't," said Robert McKinley, president of RAM Research Corp., Frederick, Md. "That is really an area where the industry is vulnerable."

The new Optima True Grace card is said to carry a 25-day grace period for all purchases and an initial interest rate of 7.9%, which increases to 16.5% after six months. There would be no annual fee the card is used at least three times a year.

Currently, non-AmEx customers pay $25 a year and 14.25% interest on Optima; the average rate for all bankcards is 16.19%.

True Grace, considered AmEx's most important new marketing initiative in years, is designed to help win 5 million new customers, AmEx executives said.

The product rollout will be supported by a major network and spot TV campaign and newspaper ads from Ogilvy & Mather, New York. The first TV spot will appear after "Seinfeld" on NBC; newspaper ads will run the next day. There also will be a direct mail drive from Wunderman Cato Johnson.

"We're going to be advertising big for this," promised a cheery AmEx telephone representative last week. An AmEx spokeswoman declined comment on its plans in advance of a scheduled Sept. 8 announcement.

Ironically, AmEx only recently abandoned an effort starring Mr. Seinfeld that preached the virtues of paying off debt each month. Now, AmEx wants to play it both ways.

The marketer's share of the growing general-purpose card market continues to slide, from 19.4% in 1992 to 18.5% last year.

"They've been losing business to the bankcards, and they had to have something to defend their fortress while they shore up the charge card business," said one executive familiar with AmEx's plans.

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