Social Media Marketing Dubbed Just a Phase; Next Up: Transactions

Myriad payments companies this year created presence on such social media sites as Facebook and Twitter. But while it was important to roll with the times, the effort may not help to create long-term loyal customers.

One analyst sees social and mobile interaction that actually drives payments behavior as the fad with lasting impact.

"Social media's impact on acquisition and retention is overstated," says Ron Shevlin, senior analyst at Aite Group. "That's not to say there are not important pieces, but it has to become more integrated."

Payment companies should focus on social-media marketing by providing mobile applications consumers can use for price comparisons or to get deals on the spot while they are out shopping, he says.

American Express Co. may be the first payment company on the right track toward what Shevlin calls "transactional marketing," which involves promotions on social media that actually lead to consumers making purchases.

AmEx in March, for example, announced an agreement to test payment deals through a mobile initiative with Foursquare Labs Inc. at the South By Southwest music and technology conference.

The company also worked with Boston-based LevelUp Inc. in a pilot with Levi Strauss & Co. stores in three major U.S. cities during which cardholders received statement credits by using a smartphone application that supports discounts for shopping at the clothing retailer. LevelUp expanded its footprint to include four major U.S. cities in October.

Despite different expectations for next year, 2011 measured up to be a busy year for social media marketing efforts.

Discover, for example, played the social media card hard after it saw the viral popularity of its "Peggy" TV ad character take off on Facebook and Twitter.

JPMorgan Chase & Co. followed suit with its own social media character Ben Grant.

Visa Inc. used social media extensively for its sports-sponsorship marketing for the FIFA World Cup, and in May launched a Facebook marketing campaign to promote travel. The effort was part of a larger marketing campaign that uses television ads and social media, including a new photo and video application for Facebook called Memory Mapper, and a $100,000 "Trip of a Lifetime" sweepstakes.

MasterCard Inc. used its Facebook page to promote its products and services, including an applications tab to such MasterCard services as Priceless Picks, which provides recommendations on restaurants, retailers and travel locations. It also promoted contests, such as a ticket giveaway to see the Vancouver Canucks National Hockey League team for Vancouver cardholders and an Audi TT Coupe car to Sovereign Bank debit cardholders.