"Marketing for Family Month Missing"... Credit Card Companies Holding Back Due to COVID-19

May Boom Lost Due to COVID-19
Marketing Minimized Amid Profitability Decline

[Asia Economy Reporter Ki Ha-young] Due to the impact of the novel coronavirus infection (COVID-19), the marketing competition among credit card companies targeting the peak season of May, the Family Month, has disappeared. As the COVID-19 response policy shifted from 'social distancing' to 'distancing in daily life,' companies are cautiously watching each other before expanding marketing efforts.

According to the industry on the 29th, this year's Family Month events by credit card companies have significantly decreased compared to previous years. Normally, various events targeting consumers purchasing gifts at large marts and department stores, as well as competitions for airline tickets and hotel discounts aimed at overseas travel demand, would follow one after another, but only minimal marketing has been launched. An industry official said, "This year, due to the implementation of strong social distancing measures because of COVID-19, we are only proceeding with the usual marketing activities carried out every year," adding, "Another reason is the reduction of unnecessary marketing from the cost-cutting perspective due to deteriorating profitability."

Marketing expenses of credit card companies have increased every year. According to the Financial Supervisory Service, last year's marketing expenses increased by 518.3 billion KRW (7.7%). The growth rate of credit card companies' marketing expense ratio steadily increased at 10.8% in 2016, 13.7% in 2017, and 10.3% in 2018.

In particular, May is considered a major marketing season in the credit card industry following the Lunar New Year and Chuseok holidays. This is because demand for preparing gifts for occasions such as Children's Day and Parents' Day is high, making it a time when wallets open. For credit card companies, it is an opportunity to increase card payment amounts.

However, it is not a situation where marketing can be abandoned recklessly. Due to the impact of COVID-19, consumer sentiment has shrunk, leading to a decrease in card payment amounts. When card payment amounts decrease, sales and other areas inevitably suffer. According to the analysis of card approval performance for the first quarter of this year released by the Credit Finance Research Institute, card approval amounts last month decreased by 4.3% compared to the previous year. This is the lowest monthly growth rate since the 2008 financial crisis. After increasing by 5.8% in January and 6.5% in February, it turned to a decline in March.

Accordingly, signs of marketing resumption are also being detected. Lotte Card will start an event from the 30th where customers using Lotte Card at Lotte Department Store, Lotte Super Mall, and others will receive gift certificates. A representative example is giving gift certificates worth about 10% for purchases over 200,000 KRW during the Lotte Department Store Cosmetic Fair period. Additionally, an event for overseas direct purchase customers will be held throughout May.

Another industry official said, "Due to the decrease in card payment amounts caused by COVID-19, there is concern about sales decline, so marketing cannot be avoided," adding, "We are watching the situation of the government's ongoing distancing in daily life policy and are cautiously considering whether to expand marketing."

This content was produced with the assistance of AI translation services.