American Express Co. wants to get closer to its legion of 2 million friends on Facebook.
On Tuesday, the card issuer will launch a web application that tracks the profile of its cardholders on the social networking site — their likes and interests and those of their friends — and offers customized deals based on those preferences.
The application, called "Link, Like, Love," builds on a similar service Amex launched last month on Foursquare, a program it piloted at the South by Southwest festival in March.
Cardholders gain access to the deals through an application on Amex's Facebook page, which then directs them to a secure page on Amex's website where they can register their cards and select deals tailored specifically for them. Cardholders can choose, say, $5 off a purchase of $30 or more at Whole Foods Market, and use their Amex card at that merchant to receive the discount.
There's no need to pre-purchase a service or print out a coupon. Instead, consumers receive the deal as a credit on their statement.
Starting with 100 national merchants, including Dunkin' Donuts, Outback Steakhouse, Westin Hotels & Resorts, and H&M — representing thousands of different offers in total — Amex plans in the coming months to also offer cardholders membership rewards and early access to tickets for special events that the company sponsors, such as the U.S. Open and New York Fashion Week.
The application was built on a "smart offer" technology that Amex developed to produce coupon-less offers as it works to grow its customer base and spending on its credit and charge cards through new digital services. Because consumers are directed to American Express's website to enter their card information, their personal information is kept secure and card numbers are not shared with Facebook.
"Our vision is to bring our business to where our customers are, and they're on Facebook," said Edward Gilligan, vice chairman of the New York company in an interview Monday. "The reason we did this is to bring new value to cardmembers and to help merchants grow their business."
What distinguishes the application from other rewards programs is that it's not based on consumers' spending habits, but rather their interests in certain retailers, musical groups, movies and other "likes," as well as the interests of their friends.
Ron Shevlin, a senior analyst at Aite Group, is skeptical of using a consumer's social media profile as an indicator of future spending habits.
"We all buy a very incredible range of products and I don't necessarily tell Facebook I like toilet paper, but man, I buy toilet paper," he said. "The offers are going to be driven by likes and dislikes. I'm not impressed that that is going to improve relevancy at all if they're not going to tie it back and analyze the actual purchase behavior."
Shevlin does see a benefit, though, in streamlining the coupon-issuing process by eliminating the need for a printout.
"One of the big issues or challenges you have in driving a lot of coupon success is somebody has to clip a coupon and redeem it. I don't care how great a deal it is that extra bit of work for consumers reduces the redemption rate somewhat," he said.
"The improvement in the redemption model is a big deal," Shevlin added. "Making that level of convenience for consumers is important."
Concurrently, Amex is launching a special application for small business owners that will enable them to create special deals and discounts for consumers that can be made available to Amex customers based on their preferences.
The "Go Social" marketing tool is designed to help merchants leverage social media and build online marketing campaigns. The application enables merchants to create coupon-less offers for cardholders who use Facebook Places, Foursquare and other location-based social networks.
Through Amex, merchants can easily upload their information to the location-based networks. When a cardholder "checks in" to a particular place on Facebook, for example, registered businesses in their vicinity will pop up on the screen, and the consumer will be alerted to any merchants in the area that might be offering discounts.
Merchants are "overwhelmed by everything going on in the digital world," Gilligan said. "We're enabling you to set up your business in the virtual world."
When asked whether some merchants might want to avoid encouraging the use of a credit card that carries a high interchange rate, Gilligan said that interchange is secondary to merchants' No.1 challenge, which is attracting new customers.
"We're meeting the biggest need, which is helping businesses grow," he said.
Brian Riley, a senior research director at TowerGroup, said the service "kind of swims upstream on the current trend of bankcard interchange." American Express is "really going to have to justify itself to the merchant space," he said. What's the value add of the incremental interchange cost? They're offering a premium service on a commoditized transaction."
Part of that premium is the ability to track the success of the discount campaign, Amex says.
Ultimately, Amex should get props for being a frontrunner in the use of social media, analysts said.
"They're really doing a pretty good job of experimenting with social media stuff," Shevlin said. "They're testing the waters they're seeing what works and what doesn't work."
In March, Amex unveiled Serve, a "digital wallet" service that allows consumers to fund a prepaid account using their existing bank accounts as well as credit cards. In April, it announced it was expanding the capabilities of Serve through a partnership with the mobile payments processor Payfone Inc., which would allow customers to pay for purchases at online merchants using their cell phone numbers. Sprint announced Monday that the Serve application will be made available to customers using select Android smartphones.
