At a beach resort here, bankers got a lesson about cobranding while President Clinton jogged along the water's edge.
Though he might not win many votes among the 150 participants at MasterCard's cobranding forum, held at the famed Del Coronado Hotel, Mr. Clinton created quite a sensation.
He arrived in the wee hours of Monday morning. Many of the bankers waited behind dozens of men in gray suits with earphones and walkie-talkies to catch a glimpse of him as camera crews roamed the hotel grounds.
Others were roused from sleep by a bomb squad with German shepherds, checking for explosives in any room near the President's.
Rita Champ, MasterCard's vice president of cobranded and affinity marketing, jokingly called the conference "a major event by evidence of the President's being here."
She then turned to the business at hand - convincing banks and the business sector that MasterCard is the brand of choice when creating a cobranded program.
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At its second Cobranding and Affinity Forum, the association sought to whip up an excitement that has been absent from the marketing tactic since the dazzling announcements of the early '90s, when AT&T, General Motors, and Shell Oil launched their programs.
"Partnership opportunities still exist," said speaker Stephen Drees, principal, Strategic Marketing Services, "but much of the low-hanging fruit is gone."
Alan J. Heuer, president of MasterCard's U.S. region, said members "are facing unprecedented challenges." But he added, "MasterCard is focusing on expanding new markets, leveraging existing markets, driving usage, and building brand awareness."
MasterCard's conference seemed to take a pragmatic approach to cobranding in the late '90s, with speakers indicating that value and reward have become the norm rather than a bonus.
Though the association presented its obligatory successes in cobranding - its sports sponsorships, its MasterValues programs, and other sales pitches - speeches painted a picture of the changing consumer landscape. Consumers are now more savvy, demanding the best deal at the best price, so that bankers need to respond to consumers through highly targeted marketing and better offers, said many lecturers.
"As customers reinvent themselves, products must be reinvented to meet new consumer needs," Mr. Drees said.
Though Timothy Malloy, MasterCard's senior vice president of cobranding, said "cobranding's best days are ahead," he pointed out that "me-too offers and tired marketing approaches will not take us to the next plateau."
Competitors "will continue to raise the bar in terms of marketing creativity and systems execution," Mr. Malloy warned.
"Even the old contrarians see what cobranding offers," he said. "Every Tom, Dick, and Harvey is entering our business."
Mr. Malloy noted that regional programs with narrower focuses can be "compelling, sustainable, and above all profitable." But to continue to attract customers, he said, multiple-branded cards may be the new paradigm.
"The next wave of success" will include single-branded programs as well as "coalition-brand programs" that could bring together manufacturers, service providers, entertainment venues, and distributors on one card, he said. He did not elaborate on how such a program would work.
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Alan Causey, who is executive vice president, social forecasting and analysis, at Ammirati & Puris/Lintas, gave a provocative presentation on human interaction and generational patterns. His speech was meant to help issuers and partners understand to whom they are marketing.
Mr. Causey said the baby boom generation will dominate consumer preferences and attitudes for years to come.
Generation X is a media invention, he said. Its members are basically following in the footsteps of the much larger boomer crowd, and marketing strategies can now address the two groups - 80 million people in all - as one.
He also spoke of the "New Delinquents, a generation waiting in the wings" that will come of age early in the next century; and of the "sex-war veterans," making much of the coming ascendancy of the female consumer.
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Attendees were treated to lunch in the courtyard of the landmark hotel, where a few hours earlier Mr. Clinton had shaken hands with some participants after his morning jog.
The Del, as the hotel is called by local people, has a reputation for attracting celebrities. "Some Like It Hot," the 1950s movie with Marilyn Monroe, Tony Curtis, and Jack Lemmon, was filmed at the rambling, red-and- white wooden resort.
More recently, the television program "BayWatch" was taped on the premises.
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In an interview at lunch, Mr. Heuer said that although "there are still lots of opportunities in cobranding, the next wave will be a little tougher." He said companies need to be more creative. He called the conference "an opportunity for dialogue."
Mr. Malloy, who joined the team only six months ago from the Asia- Pacific region, said he is the right person to help MasterCard expand its cobranding programs globally. Speaking to a small group at lunch, he said he would be looking for breakthrough ways of doing business - brainstorming, researching, and trying to continually come up with new ideas.
He said MasterCard would no longer offer financial incentives to win business. The strength of the brand, the sponsorships with such sporting events as Nascar, hockey, and World Cup soccer, should speak for itself. Rather, he said, the association would take the money and put it into "coalition program development."
MasterCard is researching new categories for cobranding, such as manufacturing, health care, and entertainment. Large health insurance companies, computer manufacturers, and cable television companies could create successful programs, Mr. Malloy said.
He said overall declining response rates to direct mail advertising would drive members to cobranding to gain customer loyalty.
Though the association is recording 20% annual growth in cobranding - 150 programs were launched in 1995 - there's "a feeling that we're in a lull. We need some breakthrough marketing ideas," he said.
Mr. Malloy acknowledged that some recent cobranded programs have been less than satisfactory to partners and members. The association will encourage members to "slow down and think a program through," he said.
"We're looking for real value deals. ... We don't need 50 more duds."
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Though many of the best programs have been exploited, some notable attendees interested in a cobranded program included Compaq, Mobil Oil, Lufthansa, the entertainment company BMG, Showtime, and Walt Disney Co.
A Disney representative said the company is investigating cobranding. Disney has its own private-label card for its retail stores and catalogue merchandise.
Many bankers, including some of MasterCard's biggest cobranding partners, such as Household International and MBNA Corp., attended the forum. Other banks present included First Chicago Corp., Key Bank Corp., First USA Inc., and Wachovia Corp.
One southern banker, who asked not to be named, said his bank is interested in the coalition card ideas and is already discussing it with partners.
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Some attendees criticized MasterCard for being skeptical about future cobranding opportunities. They contrasted Mr. Malloy's inexperience and the newness of the team to the track record of Francine Schall, who has been leading Visa's cobranding charge over the past several years.
Others said they appreciated the honesty of the approach and agreed that new ideas are needed to entice consumers, who often receive more offers than they can chose from.
On a MasterCard-sponsored dinner cruise aboard the SS Hornblower, a triple-decked yacht, Kimberly Chelpaty, Beneficial National Bank account executive, said MasterCard is "very aggressive with cobranding. They will always be in front." Beneficial launched the BJ's Warehouse MasterCard last year.
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Other speakers outlined opportunities available through cobranding corporate cards, such as travel and entertainment or purchasing cards.
MasterCard stressed the MasterValues program and described how to bring business to the point of sale by becoming a member of that scheme.
The point was driven home again and again that leveraging MasterCard's brand awareness could improve sales and gain the loyalty of customers.
"More partners are asking hard questions about cobranding," said Mr. Malloy. "How will it directly increase my sales and make customers loyal to me?"
Mr. Malloy said using data base marketing to track consumer transaction behavior "in ways directly relevant to brand manufacturers" would become a bargaining chip.
Cobranding can go beyond increasing sales, he said; it can also increase customer loyalty in a world where people jump from card to card to get the best deal. As response rates drop, acquisition costs rise, so more banks are focusing on keeping their customers happy.
"Retention, activation, and usage is where the focus is moving," said Mr. Heuer.
