Dilbert and BabyCenter? SF Business Times article below
May 24, 1999
NextCard's new charge
How about Dilbert -- in plastic?
Clifford Carlsen Business Times Staff Writer
Online consumer finance pioneer NextCard Inc. has zeroed in
on heavy-spending techno-sophisticates and new parents, inking
deals for cartoon character Dilbert and online children's goods
retailer BabyCenter.com to endorse its credit cards.
Separate licensing deals with United Media and BabyCenter are
the first volley in an aggressive campaign to link the expanding
Internet-based bank with popular consumer icons. The deals
will also lead to marketing tie-ins and affinity programs to attract
consumers and increase the visibility of the NextCard brand.
In less than two years of operation, NextCard has generated
more than $125 million in credit card loans, making it the
fastest-growing credit card issuer in the country. The company's
Internet-based system of immediate application processing and
card customization has established it as the leader in online
consumer credit. A huge chunk of its recent $120 million initial
public offering will finance expansion of its marketing efforts.
Unlike typical bank issuers that remain largely invisible behind
the Visa or MasterCard name, NextCard is trying to use its
partnerships to build a brand that consumers will identify with
the Internet and other breakthroughs in electronic banking. One
way the deep-pocketed company expects to do this is by
spending money to promote its brand through alliances and
high-profile marketing programs.
"We will be launching co-branded products with both of these
deals, targeting unique affinity groups," said Rich Goebel,
NextCard's director of business development. "This is part of a
larger effort of target marketing, to leverage our name with other
well-known brands."
Affinity and reward programs make up about 33 percent of all
credit card accounts, said Greg Weed, director of card services
for the credit card industry research firm PSI Global in Tampa,
Fla. They are generally used to provide a branded identity for a
card, independent of the issuing bank.
Reward and affinity card users tend to carry higher balances
when they do not pay off their bills monthly, making their
accounts more profitable, Weed added. And even those that do
not carry a balance tend to spend more, boosting merchant fee
revenue.
Goebel would not disclose details of the deals, but credit card
affinity agreements usually entail an initial licensing fee, and
royalties based on usage.
NextCard will be the first credit card licensee ever for United
Media, which also owns the rights to "Peanuts" and other
leading cartoons. NextCard hopes the association will attract
technology-savvy users, with a tongue-in-cheek approach to
corporate life.
"The product will be aimed specifically at a Dilbert audience,
and will give us an opportunity to be a little anti-corporate,"
Goebel said. "We can poke some fun at credit cards as a
necessary evil."
BabyCenter cards will display photos of users' babies, and will
offer discounts and features customized to new parents.
According to Nielsen ratings, NextCard is already the
third-largest Internet advertiser after Amazon.com and
Microsoft, posting some 50 million ads a day. Dilbert and
BabyCenter products will become part of that advertising blitz,
and the company's offering prospectus stated that it will spend
heavily to establish brand recognition with Internet users.
NextCard spent $4.3 million on marketing and advertising in
1998, and expects to increase that significantly to further
expand Internet-based campaigns.
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