Chasing the pack

American Express, the iconic status symbol of the business-class executive, is relaunching its green charge card in an attempt to broaden the brand’s appeal. But can the company persuade enough consumers – and more crucially retailers – to say

American Express is forsaking the combined faces of Sophia Loren, Pavarotti, Lennox Lewis, Rocco Forte and Sir Alex Ferguson in its latest ad campaign. Those stars have all rented their mouths to Amex in a string of celebrity-based ads for the Green charge card, stretching back to the early Seventies.

This week, the charge and credit card operator rolls out a new campaign, but this one will be devoid of the rich and famous.

The campaign, created by the Ogilvy & Mather group, heralds the relaunch of the Green charge card – or as the company says, its “evolution” – with an updated look, a new set of benefits and an enlarged target market. The move follows the £8m relaunch of Amex’s Blue card (MW July 6), the credit card which is aimed at a younger market.

Head of advertising Katherine Whitton says Amex is no longer aimed solely at business people. It was these customers who most identified with the glamorous characters who once adorned Amex ads.

“We are widening the market – it has been associated with the corporate end of the market, but we are looking at the travel habits of consumers. It has more relevance not just to the frequent business travellers, but to all frequent travellers,” she says.

She adds that the Green Amex card has been seen as aimed at men, but the new campaign attempts to widen that appeal to include women, as well as non-business people.

She denies that the card is going “downmarket”, but accepts that it is being “repositioned” away from its exclusive, upmarket users.

“If you look at how the card was perceived in the past, it was a card that you took when you travelled. But you can use it in everyday spending, and we are looking at (promoting) its everyday use,” she adds.

Amex declines to give any figures on the take-up of its Green charge card in the UK, but industry observers claim it is “stagnant” compared with the booming credit card market and is in need of a relaunch.

Some observers have even questioned whether charge cards have much of a future, as credit card operators drive recruitment with ever decreasing repayment rates.

In 1999, there were 1.8 million charge cards in issue in the UK, with about 80 per cent of those under Amex, and the rest under Diners Club and a few run by banks, according to APACS. But in 1991, there were 1.5m – which equates to a take-up of just 40,000 extra cards a year.

Yet charge card spending has boomed, at £8bn last year compared with £2.7bn in 1991, when the UK economy was heading into the recession, and corporate travel and entertainment were among the first expenses to be cut back. Over the eight years, transactions have nearly doubled to 68 million in 1999 from 38 million in 1991.

This compares to £70bn spent through Visa and MasterCard in 1999, on 43 million cards, which is up from £29bn spent in 1991 on 26 million cards.

The charge cards may be growing slowly, but average spend is nearly £4,400 a year compared with £1,628 on credit cards. And charge cards have one benefit that the credit cards can never match – they have no spending limits.

This is a strong attraction for the upmarket, corporate users of the Amex Green card – the sort of people who are rich enough not to need credit. But even given the increasing inequality between rich and poor and the growing wealth of top earners, there just are not enough of them around for the charge card issuers.

Whitton claims that 50 per cent of credit card users do not make use of the revolving credit facility (which allows users to pay a minumum amount and carry over the balance), so they could be persuaded to take up a charge card, attracted by their increased benefits.

The celebrity endorsements have been dropped, according to Whitton, because they are no longer seen as appropriate for the people Amex is trying to attract for “New Green”, as she calls it.

“The celebrity route is aspirational, but people want to see the relevance to themselves, not someone else,” she says. “The card is what people want, rather than a status symbol. There are no plans to use celebrities in the future.”

Datamonitor estimates that there were a total of 2,040,000 Amex cards in issue in 1999, compared with 1.18 million in 1995. Of these, the Blue Amex credit card (launched in 1998 May) had attracted 470,000 customers since its launch. This sounds like a strong performance, although it pales in comparison with MBNA, which Datamonitor says recruited 2 million customers in its first 18 months.

But Datamonitor says the whole credit and charge card market has been growing at ten per cent a year, while Amex has only been growing by 7.5 per cent.

Professor Steve Worthington, lecturer in marketing at Staffordshire University, says Amex has been revitalised in the past five years by the arrival of chief executive Harvey Golub. But he warns that Amex’ core business is stagnating.

“The charge card is in decline, the prestige associated with Diners Card and Amex is jaded, and the acceptance is not good. People have got used to using revolving credit cards, and that’s where the market is going.

“Diners Club is locked into the charge card prestige. Amex is trying to shift the emphasis from charge cards to credit cards, from a mature business position to a younger person positioning,” he says.

Diners Club insists it is operating in a buoyant market and will further penetrate the corporate entertainment sector.

But Amex sees the launch of Blue and top of the range charge card Centurion, which was launched in June last year, as part of its “portfolio management”.

Some observers believe Amex will try to © move customers which have been recruited to its Blue card up to the Green and Gold charge cards as they get richer, and eventually to the Centurion. But Whitton says the differences between card holders are “more psychographic than demographic”.

And another observer adds: “The awareness is there, but they haven’t been doing much promotion. Amex needs to raise its profile, and communicate what the card is about – a lot of people are not aware of it or who should have it.”

The heavyweight relaunch campaign will feature an £8m spend on press and poster advertising and a direct mail campaign.

“New Green” has three key added benefits. The Annual Travel Bonus offers a £99 return ticket to anywhere in the Americas with Continental Airlines when a companion ticket is purchased on Continental.

Entertainment Advantage offers tickets, two for one offers and reductions on concert, theatre and sporting events.

And there is also “bump insurance”, which offers compensation for travellers who are bumped off their flights because of over-booking.

The new-look card retains existing benefits, such as Membership Rewards loyalty points and 24-hour customer service support and assistance for travellers in need.

The card itself has been modernised. Out go the neo-classical designs and US-dollar bill style graphics, which had remained virtually unchanged since 1963. In comes a modernised, realist look and a deep green colour scheme which echoes the ecological mood of the times.

The “live Green” strapline runs through all executions, which feature a series of supposedly “striking” photographs by photographer David Stewart.

But a new look and a handful of benefits does not guarantee Amex’s future success. There is also the question of what many see as its Achilles’ heel, a restricted merchant network – the outlets where it can be used. If the card really is to become accepted for “everyday use”, widespread acceptance is key.

Julie Cunningham, an analyst at Datamonitor, says: “The problem Amex faces is its merchant acceptance network – it does not have the network of MasterCard or Visa, because its charges are horrendous – they can be up to 50 per cent higher than Visa and MasterCard. It is shooting itself in the foot.

“Amex has been very much a travel and entertainment card with acceptance in restaurants, hotels and airports, which are all high profit areas. It has lower merchant acceptance in the UK than in European and US markets.”

She says Amex charges between 0.5 per cent and 1.5 per cent on transactions, although another source says these charges can go as high 2.5 per cent.

But an Amex spokesman says that it is a “myth of old” that Amex is not accepted in as many places as credit cards.

He says it is now accepted in Marks & Spencer, and all the main supermarkets. He adds that the retailers understand “the value of bringing our members to their establishments – ours spend more than others. The merchants know they are adding value.”

The company’s performance has been strong in recent years, buoyed by the booming US economy and strong consumer spending. In 1999, it had about 46 million cards in issue worldwide, up from 42.7 million in both 1998 and 1997. Its net revenues in 1999 were $19.5bn (£12.6bn) up 13 per cent on the previous year and up from $14bn (£9.3bn) in 1995.

As Cunningham says: “Amex is not doing terribly, but it has not kept up with market developments. It can continue doing well. It’s never going to be a blazing star like Capital One, but its got a solid business model and it is sorting its act out with Blue card.”

The Green card is still the cornerstone of the Amex brand and is one of the world’s most iconic symbols of the jet-set. Indeed, the way icons have survived since the Sixties is the subject of an exhibition at the Metropolitan Museum in New York which is coming to London’s Barbican, and will be sponsored by, you’ve guessed it, Amex.

The Green relaunch will demonstrate whether charge cards have a future with a wider group of consumers, or whether Amex will be remembered as an outdated remnant of Sixties-business traveller chic.

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Tom Fishburne is founder of Marketoon Studios. Follow his work at marketoonist.com or on Twitter @tomfishburne See more of the Marketoonist here

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