Master Card Has Become More Efficient In Promotions Over The Past Few Years But Can It Sustain The Trend?

One of the ways in which payment companies like Master Card (NYSE: MA) increase their revenue is by bringing in more co-branding partners into their network. These are businesses that offer discounts on their goods and services to customers who pay with credit or debit cards issued by their co-branding partner card company. Over time a payment company needs to make its spending on such marketing and promotion activities more cost efficient in order to increase profitability. Over the 2011-2015 period, the company has grown its sales much faster than the growth in its sales and marketing expenses. However, given Master Card’s relatively smaller scale than competitors such as Visa, we expect the company to spend more on marketing and promotions going forward as it tries to enlarge its network of partners and increase the number of customers using Master Card issued cards in circulation. As a result, we expect its marketing efficiency to decline as the growth rates of revenues and sales and marketing expense converge.

Have more questions about MasterCard? See the links below:

• How Much Did MasterCard’s Revenue & Gross Profit Grow In The Last Five Years?
• How Much Can MasterCard’s Revenue Grow In The Next Five Years?
• What Is MasterCard’s Fundamental Value Based On Expected 2016 Results?
• How Has MasterCard’s Revenue Composition Changed In The Last Five Years?

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