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May 28, 2010

MasterCard and its data gold mine

In a sign that predictive online modelling is here to stay, MasterCard has teamed with an Internet company that specializes in personalised shopping to roll out a web shopping mall called MasterCard Marketplace which predicts what cardholders are likely to purchase and makes suggestions.

By Verdict Staff

In a move that has divided opinion, MasterCard has signed up with loyalty scheme Next Jump in an e-commerce venture that could unlock a treasure trove of customer data to online marketers. Charles Davis reports on how MasterCard plans to start sharing information on cardholders.


In a sign that predictive online modelling is here to stay, MasterCard has teamed with an Internet company that specializes in personalised shopping to roll out a web shopping mall called MasterCard Marketplace which predicts what cardholders are likely to purchase and makes suggestions.

The ambitious new venture employs technology from loyalty programme Next Jump, which draws on buying patterns across thousands of retailers andms of customers since a bigger sample size allows better analysis of buying trends. Knowing that data is out there – who is spending how much at which stores – allows MasterCard to predict which items appeal to which shoppers, turning browsers into buyers. Charlie Kim, Next Jump’s founder, says its strategy converts one in every 11 browsers into buyers – far above the online retail industry standard. Next Jump runs employee discount and reward programs for many big companies. For more than a decade, it has gathered mountains of data to help refine its algorithms for predicting what people are likely to buy.

The strategic agreement will allow the companies to work together to harness their combined assets in the payments technology, e-commerce and digital marketing sectors, and gives MasterCard access to Next Jump’s extensive aggregated e-commerce network.


Discount offers

MasterCard MarketPlace provides discount offers and free shipping options from a network of thousands of participating merchants across a wide range of categories including apparel, jewellery, electronics and children’s clothing. MasterCard cardholders can preview offers, join at no cost and set preferences for the types of merchant offers they want to receive. Cardholders can also choose to receive email notifications for offers from specific merchants as well as exclusive in-store shopping events at preferred merchants.

The platform offers consumers the ability to personalise their online shopping experience, by setting preferences and email notifications from specific merchants that they like and gaining access to exclusive in-store events at preferred merchants. The best customers are rewarded with lower prices and/or VIP access to newest, hard-to-get, sold-out products. Consumers that either spend more or have greater influence in getting others to shop are considered the best customers and are therefore rewarded accordingly.

“Our new alliance with Next Jump will allow MasterCard to make game-changing advances in the online channel, which is ripe for innovation in a way that allows consumers to have a simple, seamless, secure and valuable experience wherever they are in the world and through whatever device they access the internet,” said Josh Peirez, group executive of innovative platforms for MasterCard Worldwide. “The deal is a result of our approach to innovation that is based on deep analysis of the landscape looking at areas of opportunity and identifying leading technologies to help us best meet our customers’ evolving needs.”


Massive potential

Headquartered in New York City, with subsidiary offices in Cambridge, Massachusetts and London, Next Jump has created a powerful technology engine fuelled by data from more than 28,000 merchant partners, both retailers and manufacturers, with a potential reach of more than 100m users. Next Jump acquires its users through a B2B model, with over 90,000 corporations, affinity groups, and institutions including more than 85% of the Fortune 100 and nearly 60% of Fortune 500 companies.

“Next Jump has a unique model that benefits both merchants and consumers,” said Charlie Kim, founder and CEO of Next Jump.

“For merchants, Next Jump enables sales as a trusted partner – we never compete with them. Our technology allows merchants to re-direct ad spend towards better pricing in return for guaranteed sales. The merchant analytics from this model are incredibly impressive, allowing merchants to step up or down their participation in the program.”

The animating idea behind MasterCard Marketplace is that by better understanding consumer tastes, MasterCard could increase the likelihood that cardholders will make purchases and drive up transaction volume, an attractive proposition for issuers in light of regulations threatening banks’ card revenues.

MasterCard, which has signed a three-year partnership agreement with Next Jump, said the shopping portal is the first of several targeted marketing products it expects to roll out this year using Next Jump’s analytics technology. MasterCard and Next Jump are already working on a mobile-app version of the shopping portal.

To use the MasterCard MarketPlace, consumers must enroll their MasterCard debit, credit and prepaid cards. To highlight offers most relevant to specific cardholders, Next Jump collects information that pares down the brands, product categories and price points that interest them.

The site lets users specify their “likes” and “dislikes,” as well as how much money they are willing to spend for certain brands, said Charlie Kim, Next Jump’s founder and chief executive.

Participants can also opt in to receive alerts about special promotions. In addition to the personalisation engine, MasterCard MarketPlace has a recommendation engine that helps users see the most popular items and deals in their area.

The merchant analytics from Next Jump’s e-commerce model also permits merchants to redirect their advertisement expenditure towards better pricing in return for guaranteed sales.


Competitive advantage

The portal could provide a competitive advantage for MasterCard, which trails Visa in market share and even more pronouncedly in debit card share. An active web shopping service will drive traffic and greater revenue.

Other card providers and issuers have started created online shopping portals for their cardholders.

Visa last year rolled out Rightcliq by Visa, a shopping tool that helps connect consumers with retailers. American Express has a site called ‘Daily Wish’ that offers discounts on targeted products.

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