Visa Says Data Show that Brand Promotion Efforts Are Paying Off

Visa U.S.A. is trumpeting market research that links its investments in brand promotion to growth in market share.

By showing the research to board members and news organizations, Visa is trying to refute comments made after the resignations from its board of two top Citigroup Inc. executives.

Citigroup co-chairman John Reed reportedly objected to Visa's hefty marketing budget, saying it was of marginal benefit to his company.

After Mr. Reed and consumer banking co-chief Robert Lipp quit the Visa board, Citigroup said it intended to issue more MasterCards. Robert B. Willumstad, head of global consumer lending, has joined the board of MasterCard International.

Apparently in accordance with Citigroup's desires, MasterCard is streamlining its organization and has put an executive in charge of managing the relationship with Citibank.

Michael A. Beindorff, executive vice president of marketing and product management at Visa U.S.A., said the developments have led Visa to perceive "two diverging business models emerging in the card market: the efficient processor versus the strong brand model."

He said Visa exemplifies the second category. "We think that model is stronger than it has ever been," Mr. Beindorff said in an interview.

He said Mr. Reed and MasterCard prefer an "efficient network transaction processing model." Mr. Beindorff said Visa, as a "brand builder," does not view that as the better approach.

Visa executives have been putting out a message that their strategy enjoys strong support from other large member banks. Visa says pundits and media outlets exaggerated the significance of Citigroup's moves, which the association says did not signal broader dissension.

Visa's latest research shows its market share at 53% of card payments, versus 46% five years ago. Visa says the percentage of people who say in polls that Visa is the "best overall card" has climbed to 63%.

The company uses that figure as its branding benchmark. "Perception is running well ahead of market share," Mr. Beindorff said.

Visa represents more than half of card transactions, but the association accounts for only 33% of advertising dollars spent in the payment card category, Mr. Beindorff said. This is seen as a measure of how efficiently Visa spends its marketing dollars.

By comparison, he said, MasterCard has a 27% market share, supported by 22% of advertising dollars in the card category. American Express Co. has a 14% market share but spends 34% of the ad dollars in the category.

Mr. Beindorff said these comparisons help to validate Visa's strategy to its board members. Visa's investments in brand strength are likely to help boost the association's share of Internet, debit card, and commercial card payments, he said.

"Market share is at an all-time high, and our relationship with our board is good," Mr. Beindorff said. "We've barely scratched the surface in terms of our potential."

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