'Use My Card, Please'

  So ubiquitous is the acceptance of MasterCard, Visa, American Express and Discover cards, it would be easy to take for granted merchant participation in the card programs. The card associations and closed-loop issuers, however, have no intention of letting their merchant partners become wallflowers, especially not in their advertising to prospective and current cardholders.
  Marketing strategy over the past half decade at least suggests that card activation, retention and reactivation have become more important to issuers as the market has declared saturated status. But marketing that captures the greater share of consumer spend requires more than self-promoting claims of greater wallet penetration, observers say. Card marketers should work with merchants to build spending.
  "The only place you get this card out of the wallet is where? At the merchant," says James Accomando, president of Fairfield, Conn.-based Accomando Consulting Inc. "That's where the proverbial rubber meets the road in the industry. That's where the bank makes the money."
  While some observers question the effectiveness of promoting a card brand by including merchants, card sponsors and some of their member issuers believe such collaboration helps. MasterCard International, for example, began circulating last July its first print ads that feature national merchants as part of the association's widely acclaimed "Priceless" campaign.
  The ads are designed to connect with consumers and provide value to MasterCard's merchant partners, which include Banana Republic, The Gap, Kmart, Travelocity, RadioShack, Shell Oil and Williams-Sonoma. The ads have appeared in a variety of publications, including Conde Nast Traveler, Golf Digest, Gourmet, Money, Sports Illustrated and Real Simple.
  "This new format promises to position our Priceless print advertising in a context which is all the more relevant to today's consumer," says Amy Fuller, MasterCard group head of brand development in the Americas. "In addition to heightened brand relevance among consumers, this new approach will more closely align MasterCard with leading merchant brand names."
  The Bed Bath & Beyond back-to-school promotion that MasterCard ran in the fall attempted to get new empty nesters to associate the retailer with taking care of their college co-eds. The merchant-related advertising said, "Hey Mom and Dad. Do you have a college student? You should come here," Accomando says. "What they're trying to make you think is when you think of college, you think of MasterCard."
  Ownership of the purchases surrounding a single life experience, especially one shown to have such a lasting impact on a consumer's financial relationships for decades to come, truly would be "priceless," Accomando adds. At the end of the day, he says, the bankcards, American Express and Discover can reach virtually all of the dollars.
  "They may not have Ted's Bait Shop in Baton Rouge, La., but likely not a lot of money is being made at Ted's Bait Shop," Accomando says. "Where 95 percent of the money is being made, they all have penetration."
  And few consumers have only a bankcard or only a Discover or AmEx card. Merchant-related advertising attempts to make one brand the choice for a category. "It is a smart move," Accomando says. "It's the 'take-the-card-out-of-the-wallet' move. It's what's going to differentiate the brands in consumer use."
  Though it may be gaining renewed emphasis, tying specific merchants to card brand marketing is not new. Visa USA's "It's everywhere you want to be" ad campaign in 1996 included a television ad that portrayed Visa acceptance at Rosalie's Restaurant in Marblehead, Mass.
  Indeed, Visa wanted to use the campaign to support the merchant-acceptance message, says Kellie Krug, Visa vice president of merchant marketing services. The now-legendary tagline supports all Visa stakeholders, she says, but it especially empowers merchants and consumers. That strengthens the association's relationships with its merchants and leaves consumers to think there is nothing Visa cannot do. In other words, Visa has its bases covered no matter what its advertising looks like.
  That said, the association more recently has focused on engaging its merchants in marketing efforts that encourage consumers not just to pay with Visa at the point of sale but through online automated bill payment services. Whereas MasterCard is targeting campus life in its marketing, Visa is looking to own grown-up responsibilities, which include paying telephone, utility and car insurance bills online to extend the value delivered to both consumers and merchants.
  'Collaborative Approach'
  "We take a very broad, collaborative approach" to merchant-related advertising, Krug says. And just as Visa's campaign tagline suggests nearly ubiquitous acceptance, Krug says all of the association's marketing efforts take into account the voice of the merchant. "Relationships with merchants are really important from a marketing perspective at Visa," she says.
  Merchant-related advertising brings benefits to the merchant partner, too. Visa offers retailers that accept its cards marketing opportunities they cannot score on their own, such as pass-through rights to Visa and the Olympics. Two thousand Visa merchants tapped into the association's sponsorship of the 2004 Olympic Games in Athens, says Krug.
  And every year in the fourth quarter, as the holidays approach, Visa sees a clamoring from merchants wanting visibility in its advertising, Krug claims. "The fourth quarter is a significant time for people to think about their card choices, and every merchant has seasonal issues," she says. Last year, Visa tied advertising to Disney's movie "National Treasure" and maximized online and offline merchant participation around the film.
  AmEx officials did not return calls seeking information about any merchant-related promotions the issuer has under way, and Discover Financial Services, issuer of the Discover card, has yet to include a merchant-related ad in its newest campaign "This Is Our Card," which launched in November. However, the Riverwoods, Ill.-based issuer has made its merchants a priority since the summer 2000 launch of its "Acceptance Awareness" integrated marketing campaign.
  "Discover as of yet hasn't done any advertising this year directly tied to merchants as it has in the past with print," says a Discover spokesperson. When the issuer's first marketing push for its merchants carpeted the market, Discover was signing more than 1,000 new merchants each day, with a new location accepting the Discover card every 60 seconds, she says. Merchant-related ads appeared outdoors in New York's Times Square and in print in Newsweek, People, Sports Illustrated and Time.
  Still, the current campaign includes signage at the point of sale that reinforces the merchant-acceptance message to a wide range of consumers. Moreover, the black-and-white creative appearing on billboards, TV ads and in-store plays up Discover's cash-back feature with regular consumers sharing how they use their cash-back funds.
  Running parallel to the ads is a 5 percent cash-back promotion that includes specific Discover merchants, including Ace Hardware, Lowe's, Menards, Pier 1 Imports, Restoration Hardware, Sherwin-Williams, Smith & Hawken, The Container Store and The Home Depot.
  While Discover is not using merchant-related mass-market and TV advertising with its latest campaign, the issuer continues to add value to its merchant partners, driving volume into specific merchants based on rich promotional offers tied to the cash-back bonus, says Scott Strumello, an associate at Auriemma Consulting in Westbury, N.Y. "They increase the perceived value of Discover cards for cardholders," he says.
  Though the card associations and closed-loop issuers may have specific ad campaigns involving merchants, there is a lot more merchant-related marketing that goes on below the surface, Strumello says. Discover merchants dabble in discounts to sell the brand as No. 1 for value, for example, while MasterCard merchants benefit from the new MasterValues, a retooled version of a former merchant-partner program in which merchants get incremental business for helping MasterCard build positive perception of its brand.
  "All network brands have some degree of those relationships. They help manage the brand," Strumello says. "They help target certain customers, especially for the merchants. They target specific behavior and purchases."
  But as widespread as merchant-related marketing has become within MasterCard, Visa, Discover and even AmEx, there are challenges. "[They] have a sort of fine line to walk," Strumello says. "Merchants are reluctant to participate unless they can see what they're getting out of it."
  If the credit card brand targets specific customer groups, whether consumers or corporate cardholders, "merchants are willing to deliver a richer reward of more investment dollars," Strumello says. "There is more benefit to all of the parties involved."
  With merchant-related advertising and marketing, associations and network brands can deliver value they can quantify, Strumello adds. They may not be able to do that with mass marketing because it is harder to quantify.
  Financial institutions also are working closely with merchants in their card-marketing campaigns. Spring House, Pa.-based Advanta Bank Corp., for example, issues only corporate cards, but the finite nature of the issuer's market has facilitated the attraction of partners for Advanta's merchant-related advertising. In February, Advanta's Web home page featured ads promoting a cardmember exclusive-a 30 percent discount at Overstock.com for purchases made with an Advanta small-business MasterCard.
  "Advanta has been including small-business savings opportunities in its advertising for many years," says a bank spokesperson. "In early 2004 we started offering services to our customers on terms that would not otherwise be available to them." The offers are made through the bank's normal marketing channels, which include direct mail, e-mail, Advanta.com and monthly statements.
  Advanta aligns itself with merchants that service and pamper small-business owners and their employees. "We negotiate with companies that treat small businesses in order to provide enhanced value to our cardholders and provide them with access to products and services that help them grow their business, save money and gain access to valuable information," the spokesperson says.
  Merchant-related advertising at Advanta, however, follows the lead of the bank's image advertising. All of the bank's marketing materials focus on the main product, which is the Advanta credit card for small businesses, the spokesperson says. "The additional services we offer to our customers enhance the value of this product," he says.
  Some observers question the brand efficacy of merchant-related credit card ads and the impact Discover, the card associations and their member financial institutions contribute to the marketing executions. "Mentioning a specific merchant doesn't, from a marketing point of view, accomplish anything," says Al Ries, chairman of the Ries & Ries brand consultancy of Roswell, Ga. "It is just burnishing the image of the merchant."
  Who Benefits?
  If the campaign "puffs up" the retailer, then it is something worth doing, Ries says, but merchant-related ads work only for the retailer. They do nothing for the consumer or to encourage the consumer to choose one card over another at the point of sale, he says.
  Advanta, though, will take what the bank can get, its spokesperson says. "These offers are useful to us in that they provide significant value to our customers," he says. "It is our hope that they also result in increased business to the company or merchant participating in the offer."
  Through relationships with companies such as Overstock.com, the bank can provide services to its customers on new terms. Although the financial arrangement differs with each relationship, Advanta's goal is the same each time, which is to provide significant value to small businesses, the spokesperson says.