Mastercard Incorporated · NYSE:MA
Mastercard — Morgan Stanley Investor Conference 2006
20 slides from Mastercard's conference presentation, Nov 8, 2006
Slide 1: Marketing Efficiency and Effectiveness at MasterCard
Lawrence Flanagan, Chief Marketing Officer November 8, 2006 Marketing Efficiency and Effectiveness at MasterCard Morgan Stanley Investor Conference
Slide 2: Safe Harbor Language Regarding Forward-Looking Statements
Safe Harbor Language Regarding Forward-Looking Statements Statements in this presentation that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statemen
Slide 3: At the Heart of the Dynamic Global Payments Industry
At the Heart of the Dynamic Global Payments Industry Our customers Acquiring Bank Issuing Bank Franchisor Advisor Processor Merchant Cardholder Our customers’ customers November 8, 2006 3
Slide 4: MasterCard's Marketing Investment
MasterCard’s Marketing Investment • 210 countries • Multiple audiences • Multiple messages • Fully integrated marketing programs It’s not just “Priceless” TV commercials in the U.S. November 8, 2006 4
Slide 5: Gross Dollar Volume (GDV) Dependent Upon Several Factors
Gross Dollar Volume (GDV) Dependent Upon Several Factors TABLE STAKES GDV MAXIMIZERS Get Issued by Customer Get into Get [Issuance] GDV Cardholder Cardholder Wallets to use card Get [Activation] [Usage] accepted by merchants [Acceptance] Each of these actions must occur to generate even $1 of GDV No
Slide 6: Table Stakes and Return Maximizers
Table Stakes and Return Maximizers ROI Illustrative Table Stakes Return Maximizer Issuance & Activation & Acceptance Usage Remain in the Game INVESTMENT November 8, 2006 6
Slide 7: Table Stake: Powerful, Global Brand
Table Stake: Powerful, Global Brand ROI Table Stakes Return Maximizer Issuance & Acceptance Activation & Usage 80%+ of key customers state Remain in the Game that brand building is critical INVESTMENT to their overall strategic relationship with MasterCard November 8, 2006 7
Slide 8: Table Stake: Powerful, Global Brand - Customer Verbatims
Table Stake: Powerful, Global Brand Customer Verbatims: • …ability to portray and support the brand is of the utmost importance • Brand platform…[is] fundamental… for the relationship to exist: Not optional • Brand recall…favorable acceptance.. facilitates … business objectives • Brand is important
Slide 9: Consumer Misperceptions of MasterCard Are Crucial
Consumer Misperceptions of MasterCard Are Crucial 70% 87% 90% think we set think we are think we are interest rates responsible for responsible for dispute protecting resolution personal information Source: MasterCard (includes MasterCard, Visa, American Express) November 8, 2006 9
Slide 10: Table Stake: Acceptance Network
Table Stake: Acceptance Network • MasterCard has unsurpassed acceptance of over 24 million locations ROI • To ensure GDV growth, we must invest – as our competitors are doing – in new acceptance locations in Table Stakes Return Maximizer Issuance & Acceptance Activation & new categories & emerging U
Slide 11: Supporting Customer Efforts to Drive Activation, Usage & Retention
Supporting Customer Efforts to Drive Activation, Usage & Retention • Customer Marketing • Portfolio Analytics ROI • Consumer Intelligence • Market Intelligence • Co-branding Table Stakes Return Maximizer Issuance & Acceptance Activation & Usage • Sponsorships Remain in the Game • Promotions INVESTME
Slide 12: Market-Focused Strategy
Market-Focused Strategy Large Growth Smaller Core Opportunity High Yield Markets Markets Markets Win Through Continue to Grow Customer Partnerships Invest to Lead Structurally Customer Minimal Challenged Support Investment Markets Markets Markets Invest for Strengthen the Base Strategic Support Main
Slide 13: Measuring ROI
Measuring ROI Measure marketing effectiveness to drive GDV by solving the multiple regression equation… Baseline Promotions Distribution Demand • Summer Enhancements • Long term • Holiday • Direct Mail equity • Acceptance • Economic venues GDV = ƒ conditions Advertising • TV Sponsorships • Print • B
Slide 14: Sample Output #1: Sources of Volume
Sample Output #1: Sources of Volume Economic Factors + 3.8% Marketing “Pull” Drivers + 6.9% e Customer “Push” Drivers r ativ + 4.8% ust Ill Competitive Marketing - 5.6% Other + 0.1% Total GDV Chg. vs. Prev. Period +10.0% November 8, 2006 14
Slide 15: Sample Output #2: Short-Term Tactical Mix Returns
Sample Output #2: Short-Term Tactical Mix Returns $1 of marketing investment returns: Short-Term Revenue Short-Term Revenue Return to MasterCard Return to Customers Total Advertising $1.39 TV Advertising $2.62 Magazine Advertising $1.05 Newspaper Advertising $1.09 Online Advertising $3.09 Radio Adve
Slide 16: Sample Output #3: Investment Simulation
Sample Output #3: Investment Simulation Sensitivity Analysis: Effect of Marketing Investment on GDV Change in Marketing Investment (15%) (10%) (5%) +5% +10% +15% Market 1 (22%) (17%) (12%) +10% +16% +20% Market 2 (16%) (11%) strative +8% Illu(6%) +12% +16% Market 3 (19%) (14%) (9%) +9% +13% +18% Mar
Slide 17: Leverageable, Global Brand
Leverageable, Global Brand • “Football Fever” ran in over 30 countries • Total production costs were just over $2 million • Had individual commercials been produced for these countries, the investment would have exceeded $20 million A truly global brand further enhances our ability to invest efficie
Slide 18: U.S. Advertising Awareness Index
U.S. Advertising Awareness Index 5.0 4.8 4.5 4.0 4.0 3.5 3.0 3.0 Norm Amex 2.5 2.1 Visa 2.0 MC 1.5 1.0 0.5 0.0 Norm Amex Visa MC Source: Millward Brown continuous tracker results 2005 continental United States November 8, 2006 18
Slide 19: Marketing Efficiency & Effectiveness
Marketing Efficiency & Effectiveness Spending X Effectiveness = IMPACT Be most efficient by: Be most effective by: • Market Cluster • Brand positioning Framework that resonates most • Use learnings from with your target ROI Modeling audience • Spread production • Use measurement dollars globally too
Slide 20: MasterCard
MasterCard Worldwide The Heart of Commerce”