MC: Lack of Attack Ads Doesn't Mean Collusion

August 14, 2000, 1:00 a.m. EDT 3 Min Read

In the second day of its defense, MasterCard International argued Friday that its advertising practices, which never tout MasterCard's advantages over Visa, are consistent with its contention that the two compete.

The Justice Department has claimed throughout the trial that the absence of competition between Visa and MasterCard is evident in their advertising. Ads in Visa's "It's Everywhere You Want to Be" campaign, for example, often openly mock American Express but do not acknowledge MasterCard.

Nor does the "Priceless" campaign explicitly pit the MasterCard brand against any competitor. Lawrence P. Flanagan, the company's senior vice president of North American marketing, testified Friday that it is not in MasterCard's best interest to stack itself up against Visa.

"It would not be a successful strategy for us because consumers see equal acceptance between MasterCard and Visa," he said. "Competitive advertising has become somewhat passe; there is a great potential to confuse consumers."

Mr. Flanagan said that, though MasterCard does not compare itself to Visa in its general branding campaign, it does do so on a "tactical basis."

MasterCard lawyer Kenneth Gallo then displayed an ad that ran recently in government publications featuring an oblique reference to Visa. The ad's tag line, which was aimed at winning the government's purchasing card business in its recent request for proposals, is, "The card [Visa] doesn't want you to know about." The word "Visa" is blacked out, but the allusion to Visa is obvious.

MasterCard was "trying to gain attention" by making the ad resemble a confidential government document that had been censored, Mr. Flanagan said.

In cross-examination, Justice Department attorney Scott Scheele sought to prove that the government ad was created in response to the antitrust trial. Mr. Scheele made much of the fact that it ran this year after Mr. Flanagan's deposition was taken.

MasterCard also defended an old advertising campaign that has sparked contention throughout the trial. Its tag line originally said, "No card is more accepted, not Visa, not American Express." When it made its case this summer, the Justice Department pointed to documents showing that the tag was changed to "No card is more accepted on the planet" because some board members and executives, the government argued, did not want to compare MasterCard's acceptance to Visa's.

Though Mr. Flanagan was not involved in that campaign, he said MasterCard changed the ad because "it would potentially cause more confusion."

"When you start mentioning other brands, consumers get confused over who the ad is about," he said.

Mr. Flanagan said that since he joined MasterCard in 1996 no one on the MasterCard board has ever told him he could not mention Visa in an advertising campaign.

Furthermore, he said, MasterCard cannot fairly say it has wider acceptance than Visa. It does, however, have a higher acceptance rate than American Express.

Later in Mr. Flanagan's testimony, Mr. Scheele pointed to a document that MasterCard had presented to five advertising agencies that were vying for its business in 1997, when it was embarking on what became the highly successful "Priceless" campaign. The document listed things that the campaign should not do, and one was comparing MasterCard with Visa. There was no such restriction concerning American Express and Discover.

Mr. Flanagan said there were several reasons for this.

"One was, we didn't think a competitive campaign was the route we wanted to go down; we didn't want negative advertising," he said. "Also, there wasn't so much to differentiate us from" Visa.

Moreover, MasterCard wanted to run the campaign in many markets, including some in which the law prohibits comparative advertising and others in which Visa is not MasterCard's main competitor, Mr. Flanagan said.

"We said, 'We've got to diminish Visa, but we have to do it in a sophisticated way.' "

From Our Archive: