American Express CEO on attracting Millennials and GenZ cardholders
Yahoo Finance's Brian Sozzi and Stephen Squeri, American Express CEO, discuss the increase in younger American Express cardholders and the company's outlook for growth.
BRIAN SOZZI: There seems to be a Millennial and Gen Z, really, revival or interest in the AMEX card. Why is that the case?
STEPHEN SQUERI: Yeah, so look, just to talk about that revival. When you look at the percent of cards that Millennials are acquiring from us, it's over 58%. Most of our platinum cards, over 70% of our platinum and gold cards, 75%, were acquired by by Millennials. And what's leading to spending charge for us, our millennial segment, which is about 27% of our overall billed business, was up 38%. Q3 21 over Q3, 19. so why?
The reality is that we've expanded our value propositions. Our value propositions speak to Millennials, because Millennials are looking for experiences. They're looking for access. They're looking to live their lives. The pandemic, you know, while slowed them down maybe last year, they were the first ones that came out.
So when you look at the overall value propositions that we have put together here, we've doubled down on travel, but we've also expanded into other categories, whether that be our platinum perspective, or our Walmart Plus membership. We look at other credits in terms of streaming and wireless. I think, that Millennials just want to be on the go.
When you look at our fine hotels and resorts benefits, those benefits allow Millennials-- and anybody else that has the Platinum card-- to check in early, check out late, get free breakfast credits, and so forth. So the Platinum card is speaking to an active lifestyle.
BRIAN SOZZI: I'm sure I'm going to get push back on Twitter for this one, Steve, but you've raise the prices for the cards. $695 now is that annual fee. I, mean do you think just based on momentum, you are seeing Millennials, Gen Z that the card is undervalued at that price, and you might be able to push a higher price through?
STEPHEN SQUERI: Yeah, well. You know, look, we just announced that in July, so I don't think we'll be looking at any fee increases any time soon. But we price for value. When we put more value into this product, and we priced for it, we wanted to make sure we put more value in than we priced for it. We expanded the value, as I said, we doubled down. We doubled down on our travel benefits.
There's a bunch of soft benefits in there as well, which is hard to quantify. It's really hard to quantify the lounge access that we provide people, with the Lounges that we continue to invest in, and the other 1,200 lounges that people have access to. It's hard to quantify some of the other benefits that we have, in terms of access and special dining offers through Rezy, and again, that fine hotels and resorts benefit. So we feel it's fairly priced.
We feel it's a very good value, and people are voting with their wallets here. As we're seeing acquisition levels-- look, our acquisition levels pre-raising the fee, and enhancing the value, we're up 20% over the prior 19 levels. We're now up over 60% on platinum acquisition with the new enhanced product.
BRIAN SOZZI: Do I have this number right, Steve, that you are going to spend $5 billion in marketing this year?
STEPHEN SQUERI: That is correct. And the way we spend that money, that's a combination of not only some of the brand advertising that you'd see, which is not a large part of our budget, but we did value injection early on, in terms of adding extra value into our products. But we also spend in customer marketing, and we spend in, obviously, card acquisition.
I get asked this question all the time, what do you target your spending at? Well, we don't target our spending at any particular number. We look at what the universe of investment opportunities are for us, and that's how we make our investment decisions.
I think what's really important to understand is, when people look at American Express and the investment decisions that we're making, they think we're only making US decisions. We're making decisions across the globe, across our small business products, our corporate card products, our co-branded products, our consumer products, and our merchant business.
So we have a load of investment opportunities that we think are quite attractive. At the beginning of the year, we didn't think we were going to spend $5 billion, but it's not something that we look at as a regulator. What we look at is, are we going to drive growth, and are we going to drive future value for our shareholders.