For the right product and audience, introducing a gift incentive can have a significant effect not only on your own performance and efficiency, but it can also negatively affect your competition’s performance too. This uplift can counteract or negate any initial upfront costs incurred by introducing or increasing the value of your gift.
The level of uplift
In the last few years, introducing gifts has become increasingly popular and we’ve seen an immediate uplift in results across a number of markets.
Example results include:
- Core KPIs improved by at least 50% over key periods when we increased a gift offer by 25%
- Conversions/sales increased by more than double vs. the previous year’s figures
This level of increase in performance provides an opportunity to push ad spend further, not only on core channels but also by testing new channels outside of your key mix.
In one case we were able to spend an additional 30% across core channels whilst being able to maintain the same if not stronger levels of efficiencies.
For another, we were able to remove the gift card on stronger performing channels on TV and just focus the testing on improving performance through digital which had a higher cost per acquisition.
How it can affect competition
In multiple cases, we have seen direct competitors introduce their own gift card within two months of our client launching theirs; prior to this they had never promoted a gift card on offline channels. However, by maintaining a stronger offer, we avoided losing share to these advertisers.
For the competitors who didn’t introduce gift cards, we saw spend levels decrease by up to 40% year-on-year (YoY) over the following three months across all channels, likely due to a decrease in performance and share.
All Response Media viewpoint
Although the initial cost for a gift may be off-putting to clients, it’s clear that a well thought-out and relevant offering can not only drive an increased response for your target audience but also increase your market share versus competitors.
It is worth noting though, that the right gift needs a value that appeals to customers but is also relevant to the product’s value. For example, offering a free laptop worth £500 when you sell £5 products wouldn’t make sense, but a £50 gift card for a £1,000 product would.
Moving forward from an initial testing phase, gifts can also help to expand and grow active channels whilst also opening additional channels to drive further volume as well as improving efficiency.
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