Visa is Ad Age's top financial interactive marketer. The San Francisco-based consumer payment system, an association of 21,000 member financial institutions worldwide, spends $25 million to $30 million annually on advertising to support its e-commerce initiatives. In fiscal year 1999, ending Sept. 30, Visa says it expects to spend $10 million on online ads alone.
Investing significant dollars in e-commerce promotion only makes sense for the association, which -- with more than 620 million Visa-branded credit and debit cards generating $1.2 trillion every year -- sees the Internet as the ideal platform to expand credit-card use. Unlike traditional channels, the Internet restricts cash and check payments, credit cards' long-standing competitors. For Visa, that translates into a shot at even greater ubiquity.
VISA PROMOTES BRAND
Visa USA's board members don't make money -- their member banks do, by issuing credit cards and getting people to use them. Visa's job is to promote the brand as a secure, efficient payment option. With consumer e-commerce revenue growing from roughly $7 billion last year to $12 billion this year, according to Jupiter Communications, Visa's branding efforts have expanded to the Web. Through partnerships with online merchants, portals and technology developers, Visa has stamped its name all over cyberspace, especially in places where people shop, such as on Yahoo! and Travelocity.
"Visa's strength over the last 10 or 12 years has been in the consistency of how they advertise the credit-card brand," says David Gagie, a consultant with Auriemma Consulting Co., a Westbury, N.Y., management consultancy.
"They have consistently invested more in brand advertising than other credit-card companies. They have carried that consistency to the Web," Mr. Gagie said.
As a result, Visa's brand recognition is higher than any other card right now, he adds. "When shopping online, if we are the brand that is top in consumers' minds, Visa will be the card they pick to shop with," says Gerry Sweeney, VP-marketing services.
One of Visa's goals in e-commerce area is ensuring that the Visa card is the preferred method of payment on the Internet, says Joe Vause, VP of e-commerce for Visa.
"We leverage every resource at our disposal, including online and offline marketing, payment product development, security and technology, with the focus on raising consumers' confidence in shopping in the [Internet] channel," he says.
Visa splits its e-commerce initiative into five categories, Mr. Vause says. The first is leveraging the brand through advertising and promotions in print, TV and online campaigns. Visa's agency of record, BBDO Worldwide, New York, has created print and TV ads that drive people to Web sites where they can use the Visa card for online purchases.
A TV campaign that ran during last year's holiday season, for example, promoted eToys, an online toy retailer and one of Visa's partners. Print ads have promoted ticket booking service Travelocity and one of Visa's portal partners, Yahoo!.
"Visa really wants to develop this [online] channel for commerce," says Liz Silver, senior VP-advertising. "So for us to be talking about e-commerce in traditional media is the best way for us to mainstream e-commerce. . . . Doing a TV commercial about that for 40 million people," she says, is a good way to achieve that.
ADS RARE ON NON-PARTNER SITES
Visa also advertises online with banners, although it rarely buys banner space on Web sites with which it does not partner.
BBDO does Visa's online media planning and buying. US Web/CKS, Santa Clara, Calif., develops creative for online ads.
Visa's advertising efforts help it to maximize the credit card's acceptance and use, the second category of its e-commerce initiative, Mr. Vause says. "We want to ensure that we give consumers more places and reasons to do more shopping in this arena," he says.
In all, Visa currently has partnerships with about 40 online merchants, including Fashionmall.com, GeoCities, iVillage and NBC Interactive; and five portal sites, including HotBot, Lycos and Sidewalk.com. Forging such alliances, the third component of Visa's e-commerce effort, enables the company to offer cardholders added benefits, such as discounts on particular products purchased from partner sites with a Visa card.
INCENTIVES GET PEOPLE TO CHARGE
"Visa wants to provide incentives for consumers to use the card to make purchases online," says Mr. Sweeney. "We are providing immediate discounts or savings at the point of sale, special introductory offers and sweepstakes."
Visa chooses its online merchant and portal partners based on reach and the amount of revenue they generate, Ms. Silver says.
Reel.com, an Emeryville, Calif.-based online retailer of videocassettes, DVDs and laser discs, struck a partnership with Visa at the end of last year. Under the deal, Reel.com promotes Visa on its site, naming it the preferred credit card for online purchases of Reel.com products. In return, Reel.com benefits from the integrity of the Visa brand.
"The brand provides us with validation of who we are," says Erik Hom, director of business development at Reel.com. "We can utilize [Visa's] brand equity for security and validity. And we can reach people who have trust in the Visa brand name."
Reel.com partnered with Visa over other credit-card companies because Visa is the most Web savvy and understands needs of both the merchant and the consumer, Mr. Hom says. Visa also advertises online to support groups it sponsors, including the NFL and Nascar.
"Our online strategy includes building rich content on our site and sponsoring relevant content on a related site," Ms. Silver says.
The fourth component of Visa's e-commerce initiative is developing new payment products. "Today, and in the next few years, we believe card payment will be the primary payment mechanism on the Internet," Mr. Vause says. "But we continue to expand our thinking about the suite of payment products that might be required down the road." For example, Visa has been experimenting with smart cards and micropayment transactions, he says.
The last important area of Visa's e-commerce endeavors has been security. To get people to use the card to make online purchases, the company has prioritized assuring cardholders that an online transaction is safe and private.
"Visa has a long tradition of managing a payment system so that all parties are protected when using this form of payment, and we are extending that to the virtual world," Mr. Vause says.
Visa put in place several tools to manage online transactions, including cardholder and merchant certificates, or electronic IDs; address verification; and security protocols such as Secure Electronic Transaction. SET began development four years ago for American Express Co., MasterCard International, Visa and other credit-card companies. Since then the companies have developed more robust security protocol designed for online card payment and now are developing SET 2.0. SET enables consumers and merchants to exchange digital certificates to verify that both parties have a valid account with a financial institution.
"The U.S. marketplace is performing very well from a security standpoint," Mr. Vause says. "But when the business requires a higher level of security, we will