Baiting the buy

Growing consumer sophistication means companies must adopt a subtle approach when using premium promotions. Free gifts do not necessarily build brand loyalty.

The role of premium promotions in the marketing mix has undergone some changes in recent years. Consumers are better educated than they once were about the value of the offers they receive and the trade-offs companies expect to get from them. The range of promotions has also grown significantly, eroding both the novelty and the incentive value of individual promotions for consumers. This prompts questions about whether promotions are still a valid method of brand building, with some saying that they could, in fact, damage brand values.

Promotional activity has become increasingly subtle and sophisticated to win over fickle consumers with the right offers. In the online environment, the US promotional and loyalty programme MyPoints recently launched its UK site. Members can collect points from online advertising partners, and can spend their rewards online or in-store through 50 consumer brand partners in the UK, including Virgin Group, Boots, Dixons Group, Argos and the Kingfisher Group.

Marketing director David Brosse explains: “The key differentiator for us is the fact that members don’t have to spend money to earn points. You can earn points simply by accepting an advertiser’s message by e-mail or by going to a site and clicking through to an advertiser’s own site. We also allow members to earn points by recommending friends to join or by completing surveys.”

This system is based firmly on permission-based marketing founded on the concept of true opt-in.

“When consumers register, they volunteer information about themselves and know that we are going to use it to target offers that they might be interested in. They are in control of their information. If they don’t want to receive offers through e-mail, they just turn it off. Not many people do that, however, because of the point-earning opportunities,” says Brosse.

This openness extends to encouraging members to review and update the information MyPoints holds on them.

“That keeps our information fresh and also helps our advertisers avoid wasting money.”

Making the initial entry barrier as easy to overcome as possible is crucial to the success of the scheme, says Brosse.

“We have a strategy of low-hanging fruit; bringing our points level as low as possible at first to allow the first redemption opportunity to happen. Once people have made their first redemption, they realise that they have had something for nothing; it isn’t just a discount. That creates happy members who are active members, and active members are responsive members.”

But not everyone views this online phenomenon through such rose-tinted spectacles. Brian Millar is fairly scathing about online promotions: “Dot-coms typically have a fast cash-burn attitude, and only have a certain amount of time to build up enough customers to get their next round of funding. The number of member-get-member promotions has made the Web a very mercenary environment where consumers take up offers and then move on. They don’t build a relationship with any particular brand.”

Millar is joint creative director of branding communications agency Myrtle, which has rather strangely set up its offices inside a shopping centre, claiming this will help it understand and interact with consumers.

Motivations

For Millar, one of the most important keys is understanding the motivation of consumers – particularly as promotions continue to increase at a rapid rate.

He says: “The easy way to be heard above the noise is just to increase the volume of what you are saying. A lot of promotions try to buy or shout their way into people’s lives. This just increases the noise. People start to shut down, and it is much easier to ignore everything rather than try to understand the offers that people are making.”

His study of consumers, presumably from his desk in the shopping centre, has convinced him that promotions involving free gifts invariably fail to promote brand loyalty. “Like buying your friends, it seldom works. As long as the incentives are being provided, a friend will remain loyal but will have no reason to do so when the money runs out.”

Despite the competition, imaginative multi-partner promotions still have the capacity to win a strong response from consumers. Music giant BMG Entertainment International UK & Ireland recently partnered with Kellogg and Childline. The aim is to promote Childline’s services on cereal boxes and through cutting edge dance music. The first stage of the year-long Helping Kids Grow campaign launched at the end of September with a free Enhanced CD (ECD) offer. The combined promotion started with a brainstorm a year ago to identify opportunities for the three organisations to work together, says BMG UK account manager Adam Bradley.

“Research conducted by Kellogg showed that music was very popular among its target audience. We could help them connect with this audience because we have a dialogue with about 3 million people on our database. They don’t mind talking to us because they like it when music lands on their doorstep,” he says, but adds, rather disconcertingly: “Communication about music is at least read before it is put in the bin.”

Holistic approach

BMG will follow up the promotion by including questions about it in one of its regular questionnaires to 1.7 million consumers. “I like to look at things holistically,” says Bradley. “We don’t go into a promotional deal just to supply music. We like to work with the brand to see how we can make it a sexier and a bigger proposition. I always put myself out of my role and think of how I would respond to a promo tion if I were a student. You instinctively know whether something grabs you or not.”

Premium promotions are too important to a brand’s reputation to tack on as afterthoughts, says Roger Jones, a director of Generator, a design and premium sourcing agency within the Dynamo marketing group.

“We are increasingly finding that brand managers are planning more strategically and are looking at the whole promotion. Historically, brand management often involved the premium sourcing company at a later stage in the promotional cycle. That is no longer the case.”

This approach helps preserve the integrity of the brand, says Jones. “If a standard line item bought off-the-page is used, the consumer is able to place a perceived value on that item because it is available elsewhere in the market. This may devalue the brand and also the promotion. If you go bespoke and design something specifically for the promotion, it gives it a greater perceived value,” he explains.

A dissenting voice, director of Tradewinds Merchandising Tim Salthouse, believes there is still plenty of mileage in the old-fashioned approach to free-gift promotions. The proviso, of course, is that the promotional product must be of high quality. “Consumer demands are not as easily satisfied as they were 20 years ago. We have found that the low-price, poor-quality premium has gone by the board, but the demand for quality items has not gone down at all,” he says.

New ideas

A recent Tradewinds promotion consisted of a beach towel distributed to readers of The Sun on holiday in Spain. In a promotion that could could only come from The Sun, the towels were meant to be symbolic of people’s delight at finding a spot on the beach ahead of the German tourists. Says Salthouse: “The promotion was new and fun.You need to bring new ideas to the table all the time.”

The question, then, seems not whether promotions still have value, but rather what particular promotions will suit sophisticated and demanding target markets. Whether people turn into loyal repeat customers or take the promotion and run will depend on how well marketers assess the promotional style that will work on the target in question.

Latest from Marketing Week

Tesco, M&S, Just Eat: 5 things that mattered this week and why

m&s

M&S chief outlines digital-first strategy after profits plummet Marks & Spencer (M&S) is gearing up for a digital-first future, after its revealed on Wednesday (23 May) that profits had dropped a massive 62.1% to £66.8m compared to the previous year. A day earlier, the struggling retailer confirmed it will close more than 100 stores over […]

NOT REGISTERED? IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now

THE BEST CONTENT

Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email customerservices@marketingweek.com

If you are looking for our Jobs site, please click here