American Express 2014 Annual Report Download - page 12

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11 AMERICAN EXPRESS COMPANY | ANNUAL REPORT 2014
Although we worked aggressively to renew the relationship, we were unable
to reach terms that would have made economic sense for our company
and for our shareholders. Instead, we are going to focus on opportunities
in other parts of our business where we see significant potential for growth
and more attractive returns over time.
Given this news, I think it’s important for me to further describe how we
view the co-brand space in general and how these products fit into our
broader growth opportunities.
Co-brand partnerships will continue to be important for us, although they
represent only a portion of our diversified product set. In fact, more than
70 percent of the purchase volume from the cards we issue takes place on
non-co-brand cards.
When it comes to co-brands, we’ve always been a disciplined buyer. From
the start, we’ve sought relationships that can bring value to both our Card
Members and partners, grow our portfolio over time, and earn economic
returns that rival opportunities in other parts of our business. Using these
criteria, we have built a successful co-brand business.
As competition for co-brands has steadily increased over the years, so
too has the cost to renew these relationships. We’ve seen this dynamic
play out at dierent times in our industry when multi-year contracts have
come up for renewal. This caused us to take a fresh look at our existing
co-brand relationships.
Eligible U.S. Card Members enrolled in
the Membership Rewards program can
seamlessly use points in real time for food
and beverages at participating McDonald’s
restaurants. In addition, American Express
donated $1 to Ronald McDonald House
Charities each time a Card Member
redeemed points.
The company continued to find new ways for Card Members to use their Membership
Rewards points by introducing strategic partnerships with Uber and McDonald’s.
In a first-of-its-kind technology integration
into the Uber iOS and Android apps, U.S.
Card Members enrolled in the Membership
Rewards program can choose to earn 2x
points or use points for Uber rides.