American Express (AXP) has modified its iPhone app for cardholders to provide customized, geolocation-based marketing and is piloting the new service in two cities. The card company has upgraded its iOS app to perform a simultaneous read of a consumer's and a local retailer's historical profile to make recommendations — for instance, by telling a consumer who is choosing between two restaurants in a strange town which restaurant he or she is more likely to enjoy.

In pilots in New York and Los Angeles, Amex's app is recommending and ranking merchant offers based on a consumer's location, spending history and social network activity, as well as the merchant's historical and recent customers and transaction activity. Even variables such as time of day and the consumer's distance from home are taken into consideration.

Called My Offers, the app is an expansion of American Express Smart Offers, which drives American Express card sync programs with Facebook, Twitter and Foursquare. My Offers also leverages the firm's closed loop network to connect consumers and merchants through targeted loyalty offers.

"In the side-by-side restaurant example, we would see which restaurant attracts people from long distances, and which restaurant gets most of its business from local people," says Luke Gebb, a vice president at American Express. "Then we can look at the restaurants that you visit while at home, and come up with a recommendation."

To pull that customization off, the card firm will use its internally developed data engine to mine card, merchant and transaction data from its network. This data is added to social networking intelligence from American Express' third party programs: its Foursquare partnership provides discounts to cardholders when checking their mobile phone at participating stores and restaurants; and its Facebook program, "Link.Like.Love," allows consumers to link their cards to its Facebook page to choose their favorite deals. American Express is also tracking tweets and retweets by consumers on participating merchants to gain added fodder to drive recommendations.

All of this data is integrated and run through internal analytics models to create what American Express is calling a "similarity score" for merchants that is used to recommend merchants and loyalty offers to specific consumers. Consumers can use the mobile app to access a spending graph to locate merchants that best match that consumer's tendencies.

"There may be two businesses in the same town, but they are different merchants to us. Once we have those similarity scores across the network, we can see which merchants are providing offers and how those merchants match up with other merchants you have used to make similar purchases in the past," Gebb says.

To use My Offers, consumers download Amex's iPhone app, add My Offers, and click to see "offers available for you" ranked on relevance. Consumers can also sort and locate offers based on location and expiration date. My Offers includes a dashboard that lets consumers see offers they have added to their cards, how much they have saved or can save via those offers. To redeem the offer, consumers add it to an eligible American Express card, then use the card to make the qualifying purchase. The savings are delivered by a statement credit in about three days. To attract merchants, American Express has tied My Offers to its Go Social program, which helps merchants create social and mobile offers and receive detailed reporting on their offers.

Gebb didn't give a specific timetable for further rollout following the New York/Los Angeles test run, but says the vast amount of marketing that goes out over mobile channels necessitates a better way to reach consumers.

"We want to use data in a wise way to curate and cut through the clutter to prioritize our offers," Gebb says.

Other card firms and major card providers such as MasterCard and Visa did not comment on similar plans or products by Friday afternoon. Similar "relevant offer" programs come from Capital One, whose card program includes Capital One Deals. Capital One negotiates deals with merchants and electronically presents these deals to consumers based on relevance to that consumer, avoiding pre-selecting or coupons.

Other recent mobile loyalty programs have come from Mocapay, which entered a partnership with Yumilicious, a frozen yogurt chain, to extend loyalty programs to mobile devices. The yogurt retailers will target customers with promotions, specials and perk reminders during transactions. Mocapay, which sells the technology that underlays mobile marketing and loyalty programs, provides a Software-as-a-service (Saas) architecture, enabling Yumilicious to upgrade its point of sale equipment through software downloads instead of hardware replacement.

In a statement, Christian Le, CEO of Yumilicious, said the Mocapay platform provides another layer of customization by allowing tailored promotions via mobile.