Oct 3, 2007

2007 Promo Industry Trends Report: which categories have the greatest potential to help justify interchange fees?

PROMO Magazine has published its latest industry trends report. The survey reveals a blurring of advertising and promotions budgets, meaning that “promotion can no longer be viewed as below the line-a term that used to be an insult on Madison Avenue.” One survey respondent wrote, “Advertising’s down, promotion’s up...it’s getting hectic as they overlap.”

42% of marketers surveyed intended to increase consumer promotion spending this year. Only 7.2% expected to reduce it. Another interesting statistic: over a third of respondents are doing more cross-promotions with outside partners.

Several promotional marketing categories are of special interest to banks looking at tapping into new budget categories to justify interchange fees. In-store advertising alone is a $42 billion industry in the US, around the same amount as total interchange fees paid by merchants last year to accept Visa, MasterCard, American Express and Discover cards. Spending on loyalty programs is still at $2 billion, like last year. That’s the same as sampling ($2 billion) and just a little more than games ($1.8 billion). Direct marketing still tops the charts at $53 billion.

Building promotional marketing features into the payment transaction can go a long way towards justifying interchange fees, even if only a small portion of these budgets get linked to receipt promotions triggered through the use of payment cards. Unfortunately, payment marketing people for the most part only focus on loyalty when they should also be talking about other tactics as well, such as games, sampling, coupons, etc.

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