As Consumer Sentiment Revives... Card Companies Expanding Marketing Efforts

Private Consumption Up 1.1% in Q1 This Year
As Consumption Recovers,
Card Companies Expand Marketing with Partners

Photo by Yonhap News

[Asia Economy Reporter Ki Ha-young] As consumer sentiment suppressed by COVID-19 revives, credit card companies' marketing activities are also gaining momentum again. This marks a change from last year when social distancing measures had caused a downturn. However, some predict that expanding marketing efforts to offline channels will not be easy due to recent years' regulatory recommendations to restrain marketing and the sharp increase in confirmed cases.

According to the industry on the 29th, as consumer sentiment recovers, credit card companies are expanding their marketing efforts. Each card company is collaborating with various partners to launch diverse promotions. Hyundai Card recently planned an event offering charter flight boarding opportunities for members of the Korean Air Card to celebrate the first anniversary of its launch. Shinhan Card is running room events at Lotte Hotel & Resort. Samsung Card also introduced special promotions for hotel rooms at The Plaza and Conrad Seoul.

An industry insider said, "Compared to last year when marketing was subdued due to COVID-19, the atmosphere is becoming more active. We are planning various marketing campaigns not only online but also with partners such as department stores and convenience stores."

Various consumption indicators also show a favorable trend. According to the Bank of Korea, private consumption in the first quarter of this year increased by 1.1% due to higher spending on passenger cars, home appliances, and food products. This recovery is clear compared to the third quarter (0.0%) and fourth quarter (-1.5%) of last year.

Card approval amounts have also increased for two consecutive months. According to the Ministry of Economy and Finance's April issue of 'Recent Economic Trends (Green Book),' domestic card approval amounts in March rose by 20.3% compared to a year earlier. This growth rate was the highest since January 2017, when comparable data began. In particular, department store sales surged by 62.7%, marking the highest increase since the government started monitoring with the Green Book in 2005. This broke the record for two consecutive months following last month's 39.5% increase.

The Consumer Sentiment Index has also risen for four consecutive months. According to the Bank of Korea's April Consumer Survey results, the Consumer Confidence Sentiment Index (CCSI) in April was 102.2, up 1.7 points from the previous month. It has exceeded 100 for two consecutive months following last month.

With Family Month approaching next month, events are expected to become even more diverse. May is considered a major marketing season following the Lunar New Year and Chuseok holidays, as demand for gifts rises for occasions such as Children's Day and Parents' Day. For credit card companies, this is an opportunity to increase card payment amounts.

However, there is also a cautious view that it is too early to see a full recovery in consumption. Another industry insider said, "The number of confirmed cases is approaching 800 again, and demand for overseas travel has not yet recovered. Like last year, events related to online shopping and overseas direct purchases will be active, but expanding marketing to offline channels will be difficult."