Amex Rewards scrambles to overcome CAI loss

Reeling from the sudden termination of its contract with Canadian Airlines, Amex Bank of Canada is scrambling to add bonus deals and other incentives to its Membership Rewards Program to discourage American Express cardholders from abandoning the program and moving their...

Reeling from the sudden termination of its contract with Canadian Airlines, Amex Bank of Canada is scrambling to add bonus deals and other incentives to its Membership Rewards Program to discourage American Express cardholders from abandoning the program and moving their business to competing card-issuing organizations.

The threat of losing customers is a very real possibility for Amex now that cardholders can no longer redeem their Membership Rewards for flights on Canadian Airlines.

The problem arose April 24, when the Calgary-based air carrier unilaterally terminated its eight-year partnership with Amex after negotiations on the renewal of the contract – which was due to expire at the end of 2002 – broke down. The two sides had been in discussions since February.

For Membership Rewards program enrollees, the termination of the deal between Amex and Canadian means they can no longer transfer their earned points to travel on the airline.

In response, Amex has accelerated the planned rollout of several new options to the travel component of the program. For instance, members can redeem points for up to 50% off the purchase of air travel, package vacations, hotels and car rentals booked through an Amex Canada travel office. In addition, a 10% bonus will be added to membership points earned between May 1 and Dec. 31.

Whether the bonus offer will be enough to convince American Express cardholders to stay loyal is questionable. Frequent flyer guru Randy Peterson, for one, is doubtful.

Peterson, editor and publisher of Inside Flyer, a widely read frequent flyer newsletter based in Colorado Springs, Colo., says Amex will have a tough time explaining to its customers that although they are entitled to discounted air travel, they’ll now have to make an actual ticket purchase. "These people don’t want to buy things when they have free miles to use," he says.

"American Express has taken a big hit on the chin," he adds. "A lot of the people I’ve talked to are considering cancelling their American Express card."

Peterson thinks their loss could prove a gain for other credit card companies and financial institutions, including the Canadian Imperial Bank of Commerce, which is Air Canada’s exclusive partner on the Aeroplan frequent flyer program.

According to Ernie Johannson, vice-president of marketing for CIBC Visa, the bank is not currently planning any efforts to target Amex customers specifically. However, she adds: "We’re always looking to increase market share, which obviously means share-steal from competitors. That’s our normal growth strategy."

Amex spokesperson Audrey Adams White says the company is confident it can keep its customers from defecting. "The (customers) think it’s a lousy situation to be in right now, but they’re going to give us some time. We’ve always come through for our customers and I think they know that," she says.

Canadian Airlines, meanwhile, still has a partnership in place with Royal Bank Visa. "We looked at that agreement…and it’s one that will continue," says Renee Smith-Valade, media relations manager for Canadian Airlines, adding that the main reason behind the airline’s decision to sever ties with Amex was over the latter’s refusal to raise its financial commitment to the program.

Smith-Valade says that because of Canadian Airlines’ well-documented financial troubles, it was necessary to re-evaluate virtually every one of its supplier contracts on the basis of their economic viability. Pointing out that Amex was not paying enough to cover Canadian Airlines’ fixed costs for delivering the service, she adds, "This contract [with Amex Bank of Canada] is one of the reasons why we are in the financial situation we are in."

In Brief: The Garden picks CDs to take on daily creative leadership

Plus, Naked names two new leaders of its own and Digital Ethos comes to Canada.
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The Garden promotes two creative directors

ACDs Lindsay Eady and Francheska Galloway-Davis have taken over responsibility for day-to-day creative leadership at The Garden after being promoted to creative director roles.

The pair will also help develop the agency’s creative talent, formalizing mentorship and leadership activities they have been doing since joining the agency four and three years ago, respectively. In addition to creating the agency’s internship program, the pair have worked on campaigns for Coinsquare, FitTrack and “The Coke Challenge” campaign for DanceSafe.

Eady and Galloway-Davis will continue to report to The Garden’s co-founder and chief creative officer Shane Ogilvie, who is stepping back from daily creative duties to a more high-level strategic role, allowing him to focus on client relationships and business growth.

Naked Creative Consultancy names new creative and strategy leadership

Toronto’s Naked Creative Consultancy has hired Yasmin Sahni as its new creative director. She is taking over creative leadership from David Kenyon, who has been in the role for 10 years and is moving into a new role as director of strategy, leading the discipline at the agency.

Sahni is coming off of three years as VP and ECD at GTB’s Toronto office, where she managed all the retail, social and service creative for Ford Canada. She previously managed both Vice Media and Vice’s in-house ad agency Virtue.

Peter Shier, president of Naked, says Sahni’s hiring adds to its creative bench and capabilities, as well as a track record of mentorship, a priority for the company. Meanwhile, Kenyon’s move to the strategy side, he says, makes sense because of his deep knowledge of its clients, which have included Ancestry and The Globe and Mail.

Digital Ethos opens a Toronto office

U.K. digital agency Digital Ethos is pursuing new growth opportunities in North America by opening a new office in Toronto.

Though it didn’t disclose them, the agency has begun serving a number of North American clients, and CEO/founder Luke Tobin says the “time was right to invest in a more formal and actual presence in the area.” whose services include design, SEO, pay-per-click, social media, influencer and PR,

This year, the agency’s growth has also allowed it to open an office in Hamburg, Germany, though it also has remote staff working in countries around the world.

Moray Hickes was the company’s first North American hire as VP of sales, tasked with business development in the region.