Case Study: MasterCard

Based in Purchase, New York, MasterCard is a global payment services company that, thanks in large part to its brilliant use of sports marketing, is one of the most recognized and respected brands in the world. The company manages the relationships between cardholders, businesses, and organizations that accept the card, and financial institutions.

More than 1.7 billion MasterCard (and its affiliate cards) logos are present on credit, charge, and debit cards in circulation today, with more than 28 million businesses accepting it as a payment option.

MasterCard began in the late 1940s when some American banks started giving customers paper that was as good as cash and could used to make purchases with local merchants. Within a couple of years, a New York bank started issuing actual credit cards. After other major city banks followed suit, the Interbank Card Association which eventually became MasterCard formed in 1966 to organize payment across the country. Now, nearly 40 years later, MasterCard has more than 30 worldwide offices.

By the late 1980s, MasterCard recognized that it needed to review and refine its corporate strategy if it was to increase its market share. It had to narrow its focus and decide which geographic areas the company would target. MasterCard also had to differentiate itself from other credit card issuers in what had become a fiercely competitive segment of the financial services industry.

Once MasterCard's marketing executives identified the company's desired target markets, it had to communicate a marketing message that would allow it to successfully compete within these markets.

Company executives then determined that an appropriate way to do so was to allocate tremendous human and financial resources to sports marketing, a strategy that it believed would send the right message about its evolving image and the financial services it offered. At the same time and to this day MasterCard's archrival, Visa, has been omnipresent throughout the world of sports, providing an added dimension to both companies' strategic marketing efforts.

Aligning with the sports world works for companies offering financial services because doing so gives the credit card brands an opportunity to strengthen their relationships with existing customers. Using sports as a marketing vehicle typically in the form of sponsorship and promotion also provides these companies an opportunity to access new customers, as well as provide incentives for new businesses to accept their card.

Like their global counterparts, local companies and organizations must similarly understand that a disciplined process is called for even if the decision at hand is whether to donate to the refurbishment of the local park or volunteering your employees' time to help register kids for the local roller hockey league.

MasterCard: Use of Sports

MasterCard has prominently utilized sports sponsorships to increase its domestic and global reach. Company executives say they believe that their use of sports can influence large, dedicated sports fan bases in major markets around the world. Its sponsorships currently include World Cup Soccer, MLB, the NHL, the Canadian Hockey League, the Professional Golf Association (PGA) Tour, and the Jordan Grand Prix Formula One auto-racing event.

In 2001, the company spent $52.8 million in sports sponsorships, which made MasterCard the 16th largest sports spending company according to Nielsen Media Research. But Bob Cramer, MasterCard's vice president of global sponsorships and event marketing, maintains that "it's not just about writing the big checks. You don't want to sell caviar to NASCAR fans, because they probably won't consume it."

Companies that sponsor sports routinely spend three to five times the cost of their "official" sponsorship to adequately promote and market their relationship with the sports property, whether an event, league, team, or even an individual athlete.

Consequently, when major corporations such as Coca-Cola become official Olympic sponsors at a cost of about $55 million, it is not unusual for them to spend another $200 million supporting their connection to the Games. In addition to attempting to capitalize on global sports marketing platforms such as the Olympics, companies also spend money to fend off competing brands that do their best to ambush their rival's official relationship by confusing the public with "Olympic" images associated with their product or service.

MasterCard officials say they believe that for the company to sponsor a team, event, or sports organization, the property in question must enable the company to simultaneously allow it to reinforce its brand image and awareness, deliver increased card usage, and provide value to its cardholders.

Many companies that rely on sports marketing prefer to sponsor events rather than use other, more risky forms such as retaining athletes as spokespeople. One prominent sports management executive went so far as to remind marketers that events cannot break a leg or sprain an ankle, nor do they fail drug tests or lose six-love, six-love.

For companies lacking MasterCard's resources, these events can include sponsoring a single hole at a local golf tournament, the proceeds of which benefit the local children's hospital, or even by making a modest cash contribution to help facilitate sports at the neighborhood YMCA. By doing so in a targeted and well-considered fashion that includes delicately balancing philanthropy with target marketing, small organizations can attain the same three objectives relied on by MasterCard.

MasterCard executives say they believe that its sports sponsorships provide the company with an important source of brand differentiation and help the company position itself in an industry where many consumers view the various credit card alternatives as interchangeable. Not only has MasterCard bought into the merits of sports marketing, but it has devoted the necessary time and energy to leverage the resources it allocates. This has enabled the company to reach and often surpass its quantifiable marketing objectives. Most notably, MasterCard has done this through soccer's World Cup and the company's "Priceless" advertising campaign.

World Cup Soccer

By the 1990s the payment service industry was reaching the saturation point in the United States. Therefore, MasterCard and its primary competitors, Visa and American Express, allocated more time and resources to extending their global reach.

For MasterCard this meant the company needed to develop, extend, and manage a worldwide image. It also had to accomplish this while repositioning itself from a domestic credit card company to a global financial payments organization.

To accomplish this, MasterCard sought to sponsor a global property that would allow it to differentiate itself from the competition by linking the consumers' affinity to the event to the MasterCard brand.

It selected World Cup soccer. The company's primary objective in sponsoring the 1990 and 1994 World Cups was to increase the brand's awareness on a worldwide basis. MasterCard's decision to market itself abroad is not unlike small companies who hope to get the word out in neighboring communities or regions by sponsoring youth soccer, Little League, or even a 10K run that benefits a local charity. Like MasterCard, small businesses must support their sponsorship of these events by glad-handing parents or working the water station at mile three.

MasterCard not only has the money and resources to use large global sporting events to reach its international consumer base, but also has the integrated strategy and corporate vision to support its high-profile sports marketing endeavors. Companies, regardless of size, that lack an understanding about how to properly segment and then exploit target audiences through an integrated marketing campaign are opening themselves up to failure.

The World Cup, which is played over a four-week period, includes teams from 32 countries. The 1998 World Cup was played in France and delivered a cumulative viewing audience of 37 billion across 200 countries and, in 2002, that number was believed to surpass 40 billion. To put this number in perspective, the World Cup was viewed by approximately 50 times the cumulative number of worldwide viewers (800 million) tuned in to watch that year's Super Bowl.

In addition to the event's unparalleled reach, soccer's popularity in numerous strategically important MasterCard markets also contributed to the company's sponsorship decision.

These two important pieces of information led MasterCard to pay approximately $25 million to become an official event sponsor during each World Cup. Beyond this initial investment, MasterCard spent tens of millions of dollars supporting its sponsorship in an effort to primarily build brand awareness among the billions watching on TV. In fact, in 1998, MasterCard was the only on-field sponsor with corporate signage behind the goals.

Following each World Cup, MasterCard quantifies what the sponsorship has meant to the company. The 1998 World Cup in France reportedly doubled card spending outside the U.S. while also increasing the company's brand equity. In addition to having extensive invenue signage and running numerous TV commercials throughout the tournament, MasterCard differentiated itself by utilizing the services of Pele, soccer's greatest icon who helped Brazil win three World Cups. MasterCard, which has used this global sports icon as an endorser for more than a decade, also issued a commemorative collector's card featuring soccer's greatest legend.

MasterCard's favorable results made its decision to sponsor the 2002 World Cup, jointly played in the vital MasterCard markets of Japan and Korea, an easy one. There was much to be gained because Japan and Korea were clearly the most untapped World Cup host cities since MasterCard began its association with the event (1990 in Italy, 1994 in United States, 1998 in France). In fact, MasterCard believed that less than 1 percent of the Southeast Asian population used credit cards in 2002.

Total spending by MasterCard users leading up to the World Cup in the Asia-Pacific region reportedly grew by 20 percent in 2001, despite the fact that the company was challenged due to an unwillingness among the majority of Japanese banks to accept overseas bank cards. MasterCard understood this marketing challenge and hoped to leverage its sports marketing activities to overcome it.

Although most companies can never expect to leverage a sports marketing event like the World Cup to drive business, the same principles and processes used by MasterCard are utilized by small businesses everyday. Local nurseries, after analyzing their town and the potential customers that live there, might determine that sponsoring a local Little League team is its version of the World Cup. Or, perhaps, it's the dry cleaner inserting a coupon in the tournament program distributed at a local bowling alley. Sports marketing tenets are universal for both the MasterCard's and the "Joe's Burgers" of the world, but their application and implementation no doubt requires refinement on the local level.

MasterCard carefully analyzed the merits of becoming a World Cup sponsor. It followed this analysis by devising a strategy that had clearly defined and measurable goals and objectives. The company implemented its marketing programs using tactics that it believed would help it penetrate already segmented markets. The results of MasterCard's systematically planning its work and working its plan were impressive.

The same cannot be said for a high-profile sports marketing campaign undertaken by Progressive Auto Insurance. Utilizing 30,000 sales agents, Progressive is a company that sells its service in the U.S. and Canada. It spent a reported $3 million to become the official sponsor of the 1999 Super Bowl halftime show. As part of its sponsorship, Progressive had its name mentioned throughout the broadcast and supplemented this exposure by purchasing an ad during the telecast as well. The company also had its name at the base of the stage as Stevie Wonder and Gloria Estefan sang during the game's intermission.

Progressive's CEO, Peter Lewis, later admitted that he learned a lot from his company's haphazard foray into sports marketing. And, in a 1999 briefing to investors, Progressive executives said "inexperience" and "hubris" led the company to "incur significant losses without achieving proportionate benefits."

What did Lewis learn? He learned that his sponsorship didn't increase interest in, or sales of, his insurance products because viewers weren't thinking about buying auto insurance during the halftime show. Having learned an important lesson about target marketing from this high-profile mistake, Progressive now sponsors traffic updates on local newscasts, a much more appropriate medium through which potential consumers can make a connection to the company and its products. Some local businesses, when they see that their advertising efforts aren't working, reduce the amount they are spending. However, as Progressive has demonstrated, it's not only about the total dollars allocated; it is as much about where those advertising dollars are spent.

Although the Miller Lite, Coca-Cola, Apple, and Gatorade commercials helped build their brand names, it's a sustained integrated sales and marketing effort that made these companies what they are today.

Relying on a single great ad or one big event to increase sales, seemingly the strategy of Progressive, seldom works. The greatness of Apple's 1984 commercial certainly didn't allow the company to hold off the Microsofts and the Gateways of the world. However, it bears mention that had Apple not leveraged its 1984 commercial and continued to correctly segment its customers and promote its brand appropriately, the benefits from having run the ad would have quickly diminished.

A "Priceless" Sports Marketing Campaign

After successfully segmenting markets, MasterCard created, relied on, and then extended a particularly compelling advertising campaign its extraordinarily successful "Priceless" campaign: "There are some things money can't buy. For everything else, there's MasterCard." The brilliance in this tagline lies in its exceedingly basic message, a message that sports fans, a great number of whom are credit card users, can readily relate to.

McCann-Erickson developed and subsequently launched what has since been dubbed MasterCard's "Priceless" campaign in 1997. Within four years, the advertising campaign has aired in over 80 countries in 36 languages.

Although credit card companies might measure their own financial success based on the amount its customers charge to their cards, MasterCard's ad campaign suggested that the best moments are not in fact those that can be easily purchased. In addition, the company found that its ads were more likely to be absorbed if they came off as genuine, purposeful, and resourceful, and resonated with both casual and avid fans.

The first ad showed a father and son at a baseball game. The father uses his MasterCard to pay for tangible items, such as two tickets ($28), two hot dogs, two popcorns, and two sodas ($18), and one autographed baseball ($45). The conversation between the son and the father, MasterCard implies, is priceless.

These spots were followed by an ad where the "priceless" experience was taking a Little League team to its first big league game and another capitalized on the priceless experience of witnessing the 1998 home run derby between Mark McGwire and Sammy Sosa.

Yet another commercial opens with a mother using a camcorder to show her husband and two children leaving for a game. After calculating the cost of the camcorder, the videotape, and the required battery, the conversation ultimately recorded on the videotape between the children and Hall of Famers Hank Aaron and Willie Mays is deemed "priceless" by comparison.

Although these baseball-themed campaigns were very successful, companies associated with another event sports or otherwise have to be prepared for fallout should something detrimental occur.

In essence, the sponsoring company can be deemed an accomplice if there is a "marketing" crime. MasterCard experienced this firsthand when its sponsorship of MLB's All-Century team turned sour in 1999. Less than three years later, with the company still having a major investment in the sport, it was forced to contemplate scaling back its $100 million promotion when considering a potential work stoppage in MLB.

During the pregame show for Game 2 of the 1999 World Series, the top 25 players from the past 100 years were revealed. The players, which were selected as part of a promotion overseen by MasterCard, included Pete Rose. However, when NBC's Jim Gray grilled Rose about the documented reports of his gambling in his first sanctioned appearance at a major league ballpark since Rose's lifetime ban from baseball in 1989, the situation turned ugly.

When Rose wouldn't admit to betting on baseball, Gray continued to prod question after question, to the point where viewers felt awkward and put off by the reporter's approach. The situation and the handling of it by Gray quickly got back to MasterCard.

Five thousand fans contacted MasterCard to register their disgust and the company felt it was necessary to issue a press release urging NBC and Gray to apologize.

The point here is that even though an event cannot break a leg, sprain an ankle, fail a drug test, or lose six-love, six-love, it does not mean that a brand cannot and will not be harmed by developments seemingly beyond its control. This is why the use of sports or any medium that is susceptible to "human error" must be entered into with great care and managed to the satisfaction of (potential) customers and shareholders.

Approximately three years later, MasterCard found itself in another precarious situation. Throughout the 2002 season, the company allowed fans to rank their most memorable moments in baseball history from a list of 30, with the intention of unveiling the list during the World Series. In addition, one lucky voter and fan would win a trip for 10 to the 2002 World Series.

The launching of this campaign was marred by the ill-fated All-Star Game in Milwaukee. The infamous game, which ended in a 7 7 tie after the 11th inning due to both teams running out of players, overshadowed anything and everything else associated with this annual baseball showcase. The rollout of MasterCard's campaign which included the company's retaining Barry Bonds as an endorser was further jeopardized as a result of an anticipated player strike in September, a mere month before the most memorable list was to be unveiled.

Although a strike was averted at the last minute, thanks to the agreement on a new four-year collective bargaining agreement between the players and the owners, MasterCard had already begun to scale back its promotion by canceling some scheduled press interviews with Hall of Famers. Additionally, the company had to devise a full contingency plan in the event the World Series would not be played. Ultimately, the company's promotional campaign concluded with Cal Ripken's consecutive games played streak being voted by fans as the sport's most enduring moment.

For most companies involved in sports marketing these risks translate to affiliating themselves with community-focused and supported events that lack significant risk but yield much needed exposure.

In MasterCard's case, this much-heralded exposure led to something else: litigation.

Protecting "Priceless" Messages

Imitation is widely considered the most sincere form of flattery. However, after several years of running its "Priceless" campaign, MasterCard finally became fed up with both the magnitude of, and tone used in, a variety of spoofs.

In an effort to protect the campaign's brand name, as well as its own, MasterCard began to take legal action against those using the "Priceless" format without the company's permission and using the campaign's trademark tagline for commercial gain without the company's consent or license.

The company did so by initiating litigation to halt the spoofs by emphatically stating that the success of the "Priceless" campaign required the company to insulate its campaign and tagline from those who sought to use it for their own promotional purposes.

MasterCard officials recognized that being hypersensitive to protecting the images and messages contained in the "Priceless" campaign was essential to protecting the integrity of the entire marketing program. MasterCard does this on a global basis; small businesses must similarly do so on a relative scale.

For example, that local coffee shop that builds traffic by marketing its frequent diner program must be equally sensitive to the management of its marketing message. In fact, it might be even more important for small, family-run businesses to protect their marketing message especially when the family name is on the door. Similarly, small businesses must be careful not to intentionally copy, as a major lawsuit by a corporate behemoth could easily put them out of business.

Knock-off "Priceless" campaigns appeared everywhere and were used by adult and humor-oriented Web sites, as well as prominent politicians. MasterCard claimed that the spoofs, many of which were in poor taste, hurt its brand name, causing it significant harm in the hearts and minds of consumers.

For instance, one knock-off spoof made light of the high school massacre in Columbine, Colorado, and another slightly less grave but just as politically incorrect high school spoof addressed the trials and tribulations of the high school sports scene. In this knock-off, prominent mention was made about how a football team's cheerleader, impregnated by the star quarterback, could use the card to pay for an abortion.

MasterCard even sued the Green Party's presidential candidate Ralph Nader for $5 million, alleging "unfair competition" and "deceptive trade practices" resulting from Nader's parody of the "Priceless" campaign, one aimed at his political adversaries George W. Bush and Al Gore.

MasterCard's legal counsel sent a letter to the Nader campaign explaining that the company had no involvement in the presidential aspirations of Nader. MasterCard was also concerned that its card-members could be left with the mistaken impression that MasterCard was involved with or endorsing the Nader candidacy. In September 2000, Nader prevailed after a federal judge ruled that MasterCard failed to show how it harmed them.

Many felt that the company was being hypersensitive about the spoofs and that the company should "lighten up" or "get a sense of humor." For MasterCard, however, that was hardly the point.

Seldom has a company struck such a strong marketing chord with a message aimed at such highly segmented markets. MasterCard's ability to effectively target market customers with a creative campaign mimicked worldwide speaks to the company's extraordinary marketing efforts.

The company's intense policing of its "Priceless" campaign vividly demonstrates that companies that have developed unique and invaluable marketing themes must devote resources to ensuring their integrity. Companies, including Cyveillance Technology and Delahaye Medialink, now provide corporations with the tools necessary to track their brand names and logos should they appear on unauthorized Web sites.

These developments reinforce the fact that once a stellar brandd is established, in this case an ad campaign, it must occasionally be micromanaged to ensure its continued success and build shareholder value.

The Complete Marketing Package

MasterCard has matched its uncanny ability to create a great emotion-based ad campaign with its ability to devise a fully integrated marketing program to ensure its continued success.

From a sports marketing perspective, this included the company's $81 million, five-year renewal of its MLB sponsorship. Rather than simply airing its "Priceless" ads on Fox and ESPN during games, MasterCard is supporting the campaign by attaching itself to MLB's international and online marketing initiatives, as well as the All-Star Game and World Series, none of which comes without measured risk.

Organizations can put themselves in a position to successfully use sports marketing to help build shareholder value provided they confirm that the use of sports is consistent with their mission and goals and that they have the resources necessary to implement and service the sports marketing programs.

Regardless of a company's size, stature, or resources, great effort must be taken to segment markets prior to attempting to reach them with a well-constructed marketing message. This segmentation can be done based on geography, demographics, usage patterns, lifestyles, product benefits, or any other constructive criteria.

MasterCard has used the World Cup and World Series as successful marketing platforms; small mom-and-pop businesses might be well advised to use youth soccer and 10K fun runs.

Companies must also determine that targeted audiences represent viable market segments that allow them to forecast product demand, determine precisely how many resources need to be allocated to accessing a particular market, and ensure a sufficient return on their marketing investment.

Reaching customers through the broad use of marketing has never been easy but, thanks to the sports marketing lessons provided by MasterCard, it has become a little easier to understand.