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american express company
7
efforts and related cost reductions. These ben-
efits are based on a comparison to previously
anticipated expense levels for 2009. Obviously,
we will continue to keep a careful watch on
our expenses and take further actions should
conditions warrant.
Pricing: Other steps we took in response to
the rising cost of doing business included mak-
ing pricing adjustments to some of our prod-
ucts. For example, we raised interest rates on
some American Express cards and increased
the conversion rate for charges made in foreign
currencies. In this environment, it is much more
expensive for us to extend credit. The revenue we
gain from pricing changes is meant to mitigate
these costs.
investing selectively for growth
Despite the economic pressures we face, we know
it’s important to continue to invest in our future.
While we have to be much more selective in
choosing which initiatives to fund, we are still
making substantial investments in business-
building activities. Total spending on marketing,
rewards and cardmember services was about
$7.4 billion in 2008. This amount was somewhat
less than a year ago, but its substantial size dem-
onstrates that we are not merely playing defense.
We made a number of notable moves through-
out the year where we saw an opportunity to
gain competitive advantage, particularly in the
business-to-business arena and in key interna-
tional markets. Here are a few examples:
Acquiring GE’s corporate purchasing services
business, which expands our leadership in the
commercial card marketplace. We expect the
clients we added will generate significant addi-
tional charge volume in 2009 and have good
credit performance.
Making an equity investment in Concur
Technologies, a leader in expense management
software. Our relationship with Concur, which
also includes a marketing and distribution
partnership, will help extend the reach of our
commercial card and expense management
services to large and midsize companies.
Signing a new partnership agreement with
Delta Air Lines, the world’s largest carrier. The
american express and its partners are continually launching new card products and updating existing
offerings to meet changing customer needs. In 2008, we renewed our relationship with Delta Air Lines, including the
SkyMiles family of cards, and launched new co-brand products around the world, such as those with Cathay Pacific
Airways and one of Australia’s leading retailers, David Jones Limited. Global Network Services and Fidelity Investments
announced the launch of the Retirement Rewards Card, which gives cardmembers an innovative way to save
for retirement while purchasing everyday necessities. In all, GNS partners launched 130 card products in 2008.