More Marketing, Measured Risk

Expanding Marketing, Unwavering Controls Do It For Me Economy  Lightbulb Moments FS Weekly Digest Edge Innovation   Expanding Marketing, Unwavering Controls Amex, Cap One, and a few others announced their earnings last week and I want to round out my 2024 Marketing Spend table. American Express spent over $6 Billion in marketing in 2024 and achieved 13 Million new card acquisitions for the year. We discussed last week, Chase spent ~$5 Billion and Cap One came in at $4.5 Billion for 2024. Chase also intends to go up by another $0.5 to $0.7 Billion in 2025, so $6 Billion from Amex, while a first, was expected and continues to deliver results.   Our FICO clients can view the “quality” of the accounts targeted and despite the mammoth spend on marketing the quality standards have not loosened and that confirms for me that we are not seeking “acquisition at any cost”. We continue to sweeten the pot (as our Offer Index shows) for the most creditworthy customer and try to win them in an extremely competitive marketplace.   Nick (Antonelli)’s point about not every issuer having the budget of Amex, Chase, or Cap One, rings true in my ears. While the larger issuers have the luxury of large marketing budgets, Bread has been (as well as many others) having success with much smaller marketing budgets as Digital Advertising has democratized an issuer’s ability to stretch a marketing dollar significantly. If anything, the larger budgets have to work overtime to still deliver on the ROI. (If you haven’t seen Andrew’s full interview with Nick, it’s a must-watch)   After Q1 2024 earnings in Trim the Fat, Not the Muscle I had done a back of the envelope calculation (massively flawed), showing roughly $435 per card acquisition for Amex and $455 for BofA. If I use the same massively flawed assumptions, Amex’s 13 million new card accounts at $6.04 Billion come in at $464 per card acquisition. What impresses me is that this $400-$450 per new card acquired has stayed consistent for almost a decade.