Will Michael Phelps Earn His Keep With Visa?

I wish I were Michael Phelps. I bet you do, too. He's fast. He's covered in gold. And he's about to become filthy, filthy rich.

Most people don't expect to see a swimmer show up on MTV Cribs, but the endorsement deals that Phelps is rumored to be staring at are just silly. Some have thrown around $40 million to $50 million a year. A few have mentioned $100 million as a nice round number for what he could earn from sponsors.

Some endorsements could make a lot of sense -- Nike (NYSE: NKE  ) , Speedo (a division of Warnaco (NYSE: WRC  ) ), Coca-Cola (NYSE: KO  ) , McDonald's (NYSE: MCD  ) -- those are all names where slapping a famous face on a product can instantly lead to explosive sales. Speedo, for example, expects to sell $5.5 million of those swim pants that Phelps wears (although I'm guessing most people will just give them a test run in the bathtub, then hang them up for good).

One big Phelps sponsor I can't seem to understand is Visa (NYSE: V  ) . We don't know just how much the credit-card king plans on paying him, but I'd assume it's not chump change. But is a Phelps endorsement worth the money? I can't see how it would be. I just can't see how promoting a face -- even someone as colossal as Phelps -- will end up being financially worthwhile for a credit-card company.

Visa and rival MasterCard (NYSE: MA  ) undoubtedly compete for market share, but how much do people really care what moniker sits at the bottom of their card? Not many, I'd assume. When signing up for credit cards, most people care about things like interest rates and rewards, not whose processing system the card uses. Visa touts its cards as the only ones accepted at the Olympics, but most people know that if a merchant accepts Visa, it generally also accepts MasterCard. The two companies are virtually ubiquitous.

Even if people do swarm to Visa in a Phelps frenzy, how much money would be brought in? Well, Visa currently has around 1.6 billion cards in circulation. It's expected to earn around $1.7 billion this year, or around $1 per card. Again, it's uncertain how much Visa intends on paying Phelps, but you can see that it would take an awfully large surge in customers to cover however many millions he gets.

No question about it, Visa has brand recognition. It's probably one of the most recognizable logos in the world. But at some point, leveraging a brand name in a market where customers probably aren't brand-sensitive seems fruitless.

Related Foolishness:

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article, but has the doggy paddle down pat. Coca-Cola is a Motley Fool Inside Value recommendation. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 21, 2008, at 1:48 PM, economist444 wrote:

    Very ignorant article. I suggest reading up on marketing and advertising strategies before posting an article like this. You say, "how much do people really care what moniker sits at the bottom of their card? Not many, I'd assume." well we know what they say about people who assume. It is a good thing Visa's only customer is not Morgan Housel, otherwise they would be screwed. Fortuntely for them, and for other corporations, people do actually make purchasing decisions based on a sports icon. You claim that it is a good idea for Coca Cola to use Michael Phelps but not for Visa. Yet your same logic for why it would be a bad idea for Visa can be used with Coca-Cola. It would probably sound something like this, "I cant imagine somebody buying a soda just because of a face on it". Absolutely terrible article and it shows your lack of intelligence on marketing.

  • Report this Comment On August 21, 2008, at 2:22 PM, Marketing101 wrote:

    Morgan Housel's right. I couldn't care less who's on my Visa. I do, however, think Lynda Carter should be a front runner in this too, you know. Shouldn't she be thrown in this red, white and blue mix? :)

  • Report this Comment On August 23, 2008, at 12:39 PM, Lisalbo wrote:

    First of all, wasn't VISA the "only" card accepted at the Olympic games?

    Back in the day (70's), American Express did a very good job using celebrity or at least known faces, and this marketing went on for many many years, so they must have found it to be fruitful!!

    In a world where MC and Visa can no longer be associated with each other as the cards against Amex, I think this was a very very good strategy on Visa's part!

  • Report this Comment On August 25, 2008, at 11:04 AM, elo8 wrote:

    I think that a personal brand like Phelps associated with Visa would affect people at least on a subconscious level. But if I were making the decisions at Visa, I don't think I would choose to invest in this - for the reasons you mention. Although I think associating product brands with powerful personal brands always brings great value, I don't think this is the Ideal way to invest marketing dollars. It makes more sense to choose something (or someone) with a more obvious link to the product itself.

    Then again, with Am Ex having surged ahead in the past few years (not sure..but I know that I used to think of them as second to Visa, whereas now it's the card that I and other people I know use the most--and is increasingly accepted--often exclusively), maybe countering their celebrity ads with Phelps Visa ads would be a smart response.

    Dr. Tantillo ('the marketing doctor') has a branding blog ( http://blog.marketingdoctor.tv ) and did a recent post on the Michael Phelps brand, discussing the challenges Phelps will have in leveraging his brand for promotions (lack in popularity of swimming as a sport in the U.S., the fact that his brand is closely tied to the Olympics, which is episodic..) and also pointing out ways Phelps will be able to succeed despite these challenges.

    http://blog.marketingdoctor.tv/2008/08/20/brand-advisory.asp...

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