NEW YORK: A Carnival Cruise ship is warmed by the sun and caressed by the winds, and it holds its own hidden treasures and exotic festivals, said the silken voiced announcer in a credit-card commercial a few years ago. But to savor it, get out your Visa card. Because this floating island ``doesn't take American Express.''
At least, it didn't at that moment. Visa USA Inc's long-running series of commercials tweaking its rival is credited with helping make Visa the most-used card in the US. The commercials, which spotlight out-of-the-way merchants that take Visa -- but not American Express -- have also been great for businesses featured in the ads, which get priceless wide-spread TV exposure at no cost. Many say they are grateful to Visa.
But business is business. Some of the featured partners, Carnival Cruise Lines among them, did take American Express until just before they appeared in Visa's commercials -- and, after reaping the publicity at Visa's expense, quietly resumed taking American Express. Othersdidn't even go that far. ``We never really stopped taking Amex'' fully, says Les Otten, chairman of American Skiing Co, a resort operator based in Newry, Maine.
To David House, head of American Express Co's merchant-services division, this boils down to ``misleading advertising.'' Given the amount of free exposure that participating merchants get, he charges that ``Visa bribed them" to shun the green card and be in the ads.
"Bribing is not at all the case," responds Lorne Fisher, a Visa spokesman. "We don't persuade or encourage them to stop taking Amex." He says it's just that "they understand that if they want to be part of the ad, that is the criterion."
Visa says the vast majority of the 140 businesses featured over the years never did accept the American Express card. As for the fact that some started taking it later, he says that "those are normal business practices in relationships like this."
Indeed. Consider American Skiing. Visa hooked up with the company in 1996 in quest of thefree-spending skiing crowd. It spent several million dollars on air time in 1997 and early 1998 spotlighting Mount Snow, Sugarloaf and four other New England resorts the company runs.
"Take out your Visa card," the commercials said, "because none of the ticket windows at these six mountains take American Express."
True. But their lodges did, their restaurants did and so did their sales of lift-and-lodging packages. The only part of the operation that didn't was the slope-side kiosks that skiers glide up to buy a lift ticket.
Actually, these took American Express, too, until just before the commercials started running.
And during the commercials' run, the ticket-window exclusion proved so unpopular that by December of last year -- only eight months after the commercials stopped -- American Express was accepted there, too.
Skiers wanted to use their American Express cards to build up frequent-flier points or other reward points, says Christopher Brink, an American Skiing executive. "Some people arevery, very vehement about American Express, and we decided to go back."
What American Skiing had agreed to was typical: a two-year deal with Visa during which it wouldn't accept American Express. As soon as the two years were up, American Skiing was fully back in the American Express fold.
Wolfgang Puck, the noted West Coast restaurateur, had a similar experience. He stopped accepting American Express to star in a Visa commercial featuring his Granita restaurant in Malibu, California, in 1994. He resumed taking the card about two years later. "If you have two tables every day who cry that you don't take American Express and that they can't come here anymore, we feel bad about it," he says.
Some businesses will take their chances on irking customers in return for all that free publicity -- and aren't shy about letting Visa know they are available. When the Tickle Me Elmo doll was still hot, online merchant eToys Inc. of Santa Monica, California, sent a Visa ad executive a doll that, when squeezed, said:"Ooh, it's eToys, 'caus Elmo loves them and they don't take American Express. Ooh, that tickles."
American Express fights back
It worked. Visa featured eToys in a commercial last Christmas, though of course without the now-passe Elmo.
In the case of Carnival Cruise Lines, Visa's offer to star in a 1992 commercial was too good to pass up, says Bob Dickinson, president of the Miami-based line. "They offered us a significant multimillion dollar TV campaign," he says. Best of all, it would come across to viewers as an outside endorsement of the cruise line.
To qualify for the Visa commercials, Carnival stopped letting people book a cruise with their American Express card. But that didn't mean they should leave home without it. Aboard ship, they could still use the American Express card to visit the spa or buy something in the gift shop -- even while the Visa commercials were running.
Carnival found that dropping the card for bookings cost it "preferred treatment" status at American Express'stravel division. Carnival wasn't happy about that, and partly in order to regain its standing, Dickinson says, about a year after the commercials stopped "we got back into bed with American Express."
As the case shows, Visa ads aren't taken lightly by American Express (whose chairman, Harvey Golub, is a director of this newspaper's publisher, Dow Jones & Co.). After all, the commercials hit hard. During the 14 years they have run, Visa's share of the US general-purpose card market has risen to above 50 per cent from 42 per cent, while American Express's share has slipped to 18 per cent from 25 per cent, according to the Nilson Report, an industry newsletter.
One way American Express responded was by reducing its fees to vendors, which used to be about twice those charged by Visa. The company also has blasted Visa in newspaper ads (after Puck's restaurants defected) and in the courtroom (getting Visa to modify an ad about Telluride ski resort, since some places there still took AmericanExpress).
Loyalty to Visa
In its wooing of merchants, American Express displays particular fervour in going after those that have shown up in Visa ads -- places like Sonnenalp Resort in Vail, Colorado, which was featured in a 1991 commercial.
"The phone started ringing almost immediately, and the American Express rep kept coming by and presenting the case why we should have them," says Johannes Faessler, Sonnenalp's owner. After a couple of years, he started taking the card again.
Still, there are plenty of businesses featured in Visa ads that vow they will never accept American Express. "I feel so loyal toward Visa, I just wouldn't do that," says Darry Jackson of Bill Jackson Inc., an outdoor-sports store near St. Petersburg, Florida, featured by Visa 13 years ago.George Gruhn feels that way, too. His vintage-guitar shop in Nashville, Tennessee, won a lot of new business after Visa featured it in 1992. Even making the commercial "was a blast," he says. "I'm nothing but grateful."
Forworriers at American Express, though, Gruhn Guitars could be a reason to take heart: Maybe the Visa ads aren't totally bad news.In the years that have passed since his Visa commercial, Gruhn has noticed a curious memory warp among customers who say they clearly remember the commercial: "Fully half of the people that comment on it say what a wonderful American Express ad it was."
The Asian Wall Street Journal
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.