Sponsorships Remain a Constant Amid Changes to Credit Card Business
Total Page:16
File Type:pdf, Size:1020Kb
IEG SPONSORSHIP REPORT November 15, 2010 800/834-4850 | www.IEGSR.com WHO DOES WHAT Sponsorships Remain A Constant Amid Changes To Credit Card Business Payment systems and issuers rely on sponsorship for positioning, promotional platforms and experiential benefits. Tighter credit and increased government scrutiny have not slowed down sponsorship activity on behalf of credit card issuers and payment systems. Indeed, those that issue credit cards and/or own payment systems brands have signed a number of new deals over the past year with global sports properties, local festivals and just about everything in between. Perhaps most notably, Discover Financial Services, Inc. (“Discover Signs Six Flags Deal; Wants More Opportunities To Reward Customers.” 6/28/10) has launched a seven-figure sponsorship campaign on behalf of its eponymous card that includes title of the Orange Bowl and cosponsorship of the U.S. Credit Card Brand Sponsorships By Number of Deals NHL in the U.S. Other 5% In addition, Visa Inc. this year signed new deals with four Festivals 7% NFL teams and renewed its NFL partnership through 2014. It also renewed its worldwide TOP sponsorship with the IOC Entertainment 9% through 2020. Sports 52% Although the primary reason credit card issuers and Causes 13% processors use sponsorship has changed little over the past two decades—to acquire customers and incent transactions— economic conditions and other market factors have influenced Arts 14% how they approach and use the medium. “With new government regulations, economic uncertainty and © 2010, IEG, LLC. Source: IEG Research evolving business models, things have changed a great deal in the category,” said John Brody, principal, global sales and business development with Wasserman Media Group, who previously worked with MasterCard Inc. and credit card issuers during his 12-year stint with Major League Baseball. One development that has made an impact on how MasterCard and Visa use sponsorship is their transition from association- based organizations into publicly traded companies. Visa went public in 2008 and MasterCard in 2006. © 2010 IEG, LLC. All rights reserved. 1 IEG SPONSORSHIP REPORT Although both companies have long prided themselves on their in-depth approach to sponsorship measurement, the transition into shareholder-owned entities has made the need for sustainable ROI greater than ever. “Becoming a publicly traded company only increased our focus on the quantitative side of ROI,” said Michael Lynch, Visa’s head of global sponsorship management. “If a sponsorship is not generating a positive return, we are no longer doing it,” he said, noting the company dropped the IRC Rugby World Cup based on lackluster ROI. Visa’s changed corporate status also has impacted how the company activates ties. For the first time in its history, the company this year activated its two key international properties—the Olympics and FIFA World Cup—with global ad campaigns. The global platform followed the consolidation of Visa’s six worldwide regional offices into a centralized marketing structure, Lynch said, noting that Visa previously funded regional sponsorships and other brand market activity out of those offices. The two campaigns were each tailored to local markets, he added. “Since we have gone public, we have tried to consolidate our sponsorship efforts and use laser focus on properties where we can generate the most positive return.” Another trending issue for credit card marketers: the growing use of sponsorship to access perks that can be shared with cardholders and used to enhance positioning. “High-end experiential opportunities and the aspiration of using specific credit card products have become more important,” said Tom Shepard, principal of Shepard Consulting and a former Visa sponsorship executive. “That may include getting a table at a certain restaurant or winning a trip to the Super Bowl.” The Ins And Outs Of The Credit Card Category The category is largely comprised of two sectors: payment systems (MasterCard, Visa) and credit card issuers (American Express, Discover, financial institutions, etc.) While every company in the category uses sponsorship to gain acceptance and spur usage, their approach varies based on which sector they are in. Below, IEG SR breaks down the sponsorship objectives, activation strategies and trends among payment systems and credit card issuers. Payment systems. MasterCard and Visa largely use sponsorship to reach three audiences: financial institutions that issue their cards, merchants that accept them and consumers who use them. For example, Visa this year is activating its 15-year-old NFL partnership with an integrated marketing campaign to engage all three distinct audiences. That effort centers on the Super Bowl Trip for Life sweepstakes, around which Visa cardholders are automatically entered into the promotion each time they use a Visa-branded product. Visa is activating the campaign with more than 600 financial institutions, each of which is helping market the promotion. The institutions also have the chance to take part in tailored promotional opportunities such as the chance to participate in the official Super Bowl coin toss. The campaign is further supported by four national merchants: Chevron Corp., Doubletree Corp., Southwest Airlines Co. and United Airlines. One growing trend: broader exclusivity. While Visa and MasterCard have historically looked for exclusivity in the payment systems category, they are increasingly adding the financial services category to the mix. For example, Visa purchased © 2010 IEG, LLC. All rights reserved. 2 IEG SPONSORSHIP REPORT exclusivity in the payment systems and financial services categories for its FIFA global partnership. “The financial services category gives us a little more flexibility when activating our partnerships,” Lynch said. “A debit product is connected to a checking account, and checking accounts have historically been in the retail bank category. This gives more value to financial institutions and more flexibility to market our investment.” Credit card issuers. While Visa and MasterCard use sponsorship to engage multiple audiences, Amex, Discover and financial institution issuers typically focus on one target: cardholders. Those companies typically use sponsorship to gain a point of differentiation by accessing special perks they can pass through to consumers. For example, Discover is using its new NHL partnership to gain a number of experiential opportunities to pass along. They include the chance to mingle with players at the NHL Awards in Las Vegas, gain discounts on Shop.NHL.com and the opportunity to purchase autographed merchandise. Those efforts follow in the footsteps of American Express, which has long used sponsorship to access special viewing areas, exclusive content and other privileges it can share with its cardmembers. In addition to existing products, issuers are increasingly using sponsorship to promote new products. For example, AmEx this year signed new deals with the Austin City Limits Music Festival, Voodoo Music Festival and several other music festivals to promote its new Zync credit card (“American Express Taps Music Sponsorships For New Card,” 7/16/10), a product aimed at consumers in their 20s and 30s. On the bank issuer front, JPMorgan Chase & Co. is using sponsorship as a key component in the relaunch of its Chase Freedom (“New Sponsorships Coming From Chase Freedom Card,” 8/27/10) charge card. The bank this year sponsored several music festivals on behalf of the card—including the Bonnaroo Music & Arts Festival in Tennessee and Outside Lands in San Francisco—and plans to sign additional deals. Both companies are using sponsorship to offer cardholder perks. For example, AmEx leveraged the music festivals to offer Zync cardholders access to tickets before the general public, while JPMorgan Chase activated Outside Lands by hosting private concerts for customers. Sponsorship Activity By The Four Largest U.S. Credit Card Brands American Express Co. 200 Vesey St. New York, NY 10285 Contact: Jessica Igoe, vice president of global sponsorship and event marketing 212/640-2000 Sponsorship/Activation Strategy: AmEx (“No Credit Crunch For American Express Sponsorships,” 1/26/09) sponsors music, sports and entertainment properties to strengthen brand loyalty by offering cardholders special access to unique and memorable experiences. For example, the company has leveraged Mercedes-Benz Fashion Week in New York City by hosting customers in a skybox overlooking the runway, while activation around the Tribeca Film Festival has included cardmember discussion panels featuring thought leaders from the independent film community. “Ultimately it’s about understanding the areas that our cardmembers are passionate about, and enhancing the customer experience,” said Sarah Meron, director of corporate affairs & communications. Amex in 2010 expanded its presence in the music, fashion and film spaces, including a partnership with YouTube and Vevo, around which it streams live concerts; a tie with Vogue and the magazine’s Fashion’s Night Out event, and becoming a founding partner of Tribeca Film, a distributor of independent movies. © 2010 IEG, LLC. All rights reserved. 3 IEG SPONSORSHIP REPORT Current Deals: Presenting: River to River Festival, New York City. Cosponsor: Academy Awards; Apollo Theater, New York City; Aspen Skiing Co.; Atlanta Tennis Championships ATP World Tour stop; Best Buy Theater, New York City; Celebrate Brooklyn! Performing Arts Festival; Conan