American Express 2014 Annual Report Download - page 13

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AMERICAN EXPRESS COMPANY | ANNUAL REPORT 2014 12
As a result, we decided last year to accelerate contract renewal
discussions with several co-brand partners well before they expired.
I’m delighted to say that we were able to renew several key co-brand
relationships with broad ties to American Express programs — including
our longstanding partnerships with Delta, Starwood, and Cathay Pacific.
In each case, we feel very good about the value propositions that we will be
oering our mutual customers, the economics of these relationships, and
our ability to grow the customer base for these products.
Our decision to accelerate discussions with co-brand partners provided
us with greater clarity about the lineup of programs we would focus on
going forward, as well as those that would be ending (Costco U.S., Costco
Canada and JetBlue). Knowing this, in turn, gives us more flexibility
to pursue emerging opportunities throughout our business. These
opportunities include:
• Consumer and Small Business Payments – growing profitable
spending through our proprietary charge and lending, co-brand and
network products.
• B2B Payments – increasing our penetration among small, midsize and
large corporate clients.
• Geographies – expanding our international footprint in mature and
developing markets.
• Newer Businesses – growing reloadable prepaid products and
other alternatives to cash and checks, loyalty coalitions, and
marketing services.
All of this helps explain the outcome of our negotiations with Costco. It
is better to see the relationship end than to renew it under terms that
would hinder us for many years to come. Despite the significant impact on
our near-term results, we were convinced that it was the right outcome,
especially when we have more attractive growth opportunities to fund
elsewhere in our business.
We intend to invest aggressively in 2015 on a range of business-building
initiatives. Spending fewer marketing dollars would help bolster our results
for now, however it would also be short-sighted and inconsistent with our
approach of managing the business for moderate to long-term growth.