American Express Teams Up With Facebook To Help Small Businesses

American Express’s (NYSE:AXP) American Express OPEN division has launched the second annual “Big Break for Small Business”, in collaboration with Facebook (NASDAQ:FB). ^[1] The contest is designed to help small business grow by using the social networking giant’s online platform to interact with customers.

All participants will receive $50 in Facebook advertising credits and American Express Cardmember merchants will receive $100 in Facebook credits to participate. Five winners selected after the contest will receive in-depth marketing and strategy sessions from American Express OPEN and Facebook experts as well as $25,000 in cash to implement their marketing strategies.

See our complete analysis of AmEx’s stock here

More Business Equals More Customers

The contest is the perfect opportunity for American Express to increase merchant acceptance of its cards. Participants will be encouraged to enter as ten runners-up will be given $2,500 in Facebook advertising credits to target customer. Although the company is behind competitors MasterCard (NYSE:MA) and Visa (NYSE:V), in terms of market share in the U.S., its spend-centric strategy holds it in good shape. (See American Express Is Good For $60 Despite The Macro Uncertainty)

American Express issues its own cards and generally targets affluent customers, whilst charging higher fees from merchants. Its strategy has been quite successful as it observed an industry low delinquency rate of 1.2%, last month.

As Facebook’s popularity surges, merchants will have the opportunity to connect with their customers and address feedback and other discussion issues which might not have been possible earlier. This is also the perfect platform for MasterCard to expand its customer base, in collaboration with the social platform. We maintain a positive outlook on Amex’s card business, which reported a 10% growth in billings last month.

We expect transaction volumes to increase, as illustrated in the chart below, through the Trefis forecast period, particularly as the Visa-MasterCard duopoly in the U.S. is disrupted by the Durbin amendment to the Dodd-Frank bill. For more details, please refer to our article, “Visa’s Charged Up For $126 Despite Debit Fees Taking Some Lumps”

We currently estimate a price of $60, concurrent with the current market price. You can gauge the impact of a change in our forecast by modifying the charts above.

Submit a Post at Trefis Powered by Data and Interactive Charts | Understand What Drives a Stock at Trefis

1. American Express OPEN and Facebook® Give Small Businesses and Their Communities a “Big Break”, Press Release, 19^th June, 2012 [↩]