Co-branded Cards in Europe and the US 2006

Publication Date	January 2007
Publisher	Datamonitor
Product Type	Report
Pages	70
ISBN Number	not applicable
Product Code	DAT04299

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Summary

Introduction

Co-branding is an increasingly popular option for both card issuers and merchants across Europe and the US. This report provides an overview of the market, examining how the partnerships work, the potential benefits and costs for both parties and trends. It also provides a detailed review of many programs in the market and concludes with a discussion on the future of co-branding.

Scope

Introduces and discusses different models of co-branding partnerships, explaining the key motivations for entering into co-branding agreements.
Examines recent trends in co-branding in Europe and the US.
Several co-branding arrangements are examined in detail, segmented by the construct of the loyalty proposition.
Provides our Cards and Payments team's view on the outlook for the co-branding by region.

Highlights

Through a co-branding relationship, customer acquisition costs can be as little as 15 per cent of what they would be through direct mail or other means. Issuing banks are also increasingly benefiting from the cross-selling opportunities that stem from these relationships.

Despite the obvious advantages of entering into a co-branding agreement, there are many pitfalls that should be avoided by both parties. From the issuer's perspective these include the risk of losing revenue from its existing customers as they switch to the new program. Both parties face reputational risk in the event of a failed program.

As a result of the success of co-branding partnerships in established areas such as airlines and hotels, issuers are now looking to different sectors to gain customers. These opportunities include web based retailers as well as other retail sectors.

Reasons to Purchase

Discover what makes for a successful co-branding relationship, and the risks associated with them.
Compare the product offerings of the most interesting and innovative co-branded products on the market.
Learn Datamonitor's' Cards and Payments Team's assessment of future opportunities in co-branding in Europe and the US.

Content

Introduction
- Who is the target reader?
- Scope of the briefing
- How to use this briefing
Market Context
- Introduction
- Co-branding was first introduced in the US in the 1980s
- Co-branding brings together the strength of an issuer and merchant partner
- Co-branded cards are issued in partnership between an issuer and merchant
- These partnerships leverage the assets and resources of each player to create a strong value proposition, frequently including a loyalty offering
- Co-branded card programs are formed through either straight partnerships, self issuance or the conversion of a private label portfolio
- Co-branding offers significant benefits to both parties
- Issuers benefit from higher spending levels, access to a customer base, lower acquisition costs, cross-selling opportunities and added value in a competitive market
- The primary benefits for merchants are additional revenue and sales
- The potential costs for both partners are considerable
Trends In Co-Branding
- Due to a combination of competition and the potential benefits, co-branding is growing in importance
- Intense competition in many markets has forced issuers to look more closely at co-branding partnerships
- The proportion of co-branded cards in the market place has grown
- Co-branding is now prevalent in many merchant sectors, leading issuers to look beyond this "traditional" list
- Relationships between card issuers and their partners have evolved
Product Focus
- Club models
- Basic Club models are the simplest form of loyalty program
- Advanced Club Programs give cardholders a greater range of benefits
- Points based models
- Basic points based programs
- Advanced points programs
- Multi-retailer programs
Future Focus
- The market outlook varies by region
- Co-branding will provide an opportunity for growth in slow growing markets
- Co-branding will allow issuers to increase market share in growing markets
- However, co-branding will not be the answer for all issuers and merchants
Appendix
- Research methodology
- Future Readings
- Datamonitor's custom research capabilities
- Cards & Payments Team contact details
- How to contact experts in your industry
- Tell us what you think! At Datamonitor, your opinions count. Complete this short survey to help us continue to improve our service and provide the best in business information. Click here http://www.datamonitor.com/other/surveyredirect.asp?surveyid=
List Of Tables
- Table 1: Presidents Choice points awarded by PC Financial Services, 2006
- Table 2: President's Choice, cinema redemptions, 2006
- Table 3: Datamonitor's forecast for pay later card numbers across five markets, 2005 - 2010
- Table 4: The number of co-branded revolving cards in the UK, 2001-2005
- Table 5: The proportion of co-branded revolving credit cards in the UK, 2001-2005
- Table 6: The number of co-branded and private label payment cards in the UK, 2001-2005
- Table 7: Current relevant Datamonitor publications, 2006
- Table 8: Future relevant Datamonitor publications, 2007
List Of Figures
- Figure 1: Defining card partnership models, 2006
- Figure 2: Combining brand and expertise in a co-branding relationship, 2006
- Figure 3: The average co-branded card has twice the average annual spend levels, USA 2004
- Figure 4: Payment cards offering rewards have increased in popularity, USA, 2004-2005
- Figure 5: The proportion of co-branded cards being issued has grown, USA, 2003 - 2005
- Figure 6: The proportion of co-branded cards in the market place has more than doubled, UK, 2001 - 2005
- Figure 7: In the UK, co-branded cards have tripled in number, whilst private label cards have declined, 2001 - 2005
- Figure 8: The Travelocity credit card rewards consumers for staying loyal to the brand.
- Figure 9: Datamonitor's classification of co-branded card loyalty programs
- Figure 10: The Jeep MasterCard, essential statistics, 2006
- Figure 11: The Carrefour Carte Pass  essential statistics, 2006
- Figure 12: The Porsche Card  essential statistics, 2006
- Figure 13: The Champions League Card, essential statistics 2006
- Figure 14: Toys "R" Us Visa card  essential statistics, 2006
- Figure 15: Amazon.co.uk MasterCard  essential statistics, 2006
- Figure 16: President's Choice MasterCard, essential statistics, 2006
- Figure 17: Tesco Clubcard credit card, essential statistics, 2006
- Figure 18: Nectar Credit Card, essential statistics 2006
- Figure 19: Nectar Card holder can redeem their points for a variety of goods online
- Figure 20: The Web.de Barclaycard, Essential statistics, 2006
- Figure 21: Datamonitor's core consulting capabilities