Branding is becoming crucially important in the $1.3 trillion credit-card market as the bank-card association leaders, Visa USA and MasterCard International, face new marketing heat from American Express Co. and Morgan Stanley Dean Witter & Co.'s Discover Card.
One of biggest successes has been AmEx's computer chip-equipped Blue card targeted to Internet shoppers. Launched in September 1999 with a $50 million campaign, Blue is held by up to 2 million customers, representing $1.8 billion in balances transferred to AmEx from other cards, experts estimate.
The card, targeted to younger consumers, comes with a smart-card reader allowing more secure online transactions. But Blue is a bigger departure for AmEx in other ways: It carries no annual fee and is a revolving credit card, unlike classic AmEx cards.
Visa USA, leader in both cards and ad spending, continues its strategy of concentrating on a few, big sponsorships on which it layers various promotional efforts. Visa USA, still getting mileage from its 15-year-old "Everywhere You Want to Be" theme, is exclusive credit-card sponsor of the National Football League and this month's Olympic Games.
While MasterCard has snared awards for its current "Priceless" campaign, it also has become a target of jokes and parodies -- including one last month by Green Party presidential hopeful Ralph Nader. Nonetheless, the ad takeoffs have kept the campaign front-and-center in popular culture.
"One of the reasons we always thought Visa succeeded was it found an ad theme that worked and stuck with it. Now MasterCard has found something effective, and longevity is a good thing for them with this campaign, as well," says David Gagie, a credit card consultant with Auriemma Consulting.
Targeting upscale consumers is a hot growth segment for all credit-card issuers. Visa USA spent about $9 million last year promoting its premium-level Signature card, introduced in late 1998, and offering consumers enhanced travel perks and richer usage rewards.
Leading bank-card issuers, including Bank One Corp.'s First USA with its Titanium card and MBNA Corp. with its Platinum Plus product, have edged into the upscale credit-card category, targeting higher-income consumers through direct mail.
AmEx, the longtime leader in the upscale sector with its $300-a-year Platinum card, last year introduced the Centurion card, boasting a $1,000 annual fee and services even loftier than Visa's top-level perks. Centurion is available by invitation only.
Discover Card also got into the act in 1999, introducing its first-ever Platinum Discover card, backed by a $40 million network and spot TV campaign.
But after weathering declining market share in 1998 and early 1999, Discover underwent a management shakeup, parted ways after a dozen years with its agency and introduced a new awareness campaign themed: "There's always something more to Discover."
Banks issuing credit cards have had mixed results. Bank One's First USA unit stumbled badly in 1999 with record losses and defections from its affinity-heavy programs, casting a shadow on that sector.
Capital One Financial Corp., a fast-growing bank issuer, hired its first major agency for an image campaign with national TV, and Citibank this year replaced its agency of three years.
Despite overall growth in charge volume, the pressure is on Visa and MasterCard to hold their ground. A U.S. government antitrust lawsuit against the two credit-card associations has concluded its witness phase and goes to a federal judge in Manhattan for a decision in October. The suit could reverse the policy held by these card associations that prohibits bank issuers doing business with them to issue cards for American Express, Discover and Diners Club.
"Advertising has become very important to the card associations," says Philip R. Grennan III, a partner at credit-card consultancy Business Dynamics. "Visa's advertising theme has become part of its brand name, and now MasterCard has a campaign people are interested in -- they keep watching for the next chapter."