Consumer evolution
Promotion participants are migrating to the Internet. But traditional marketing tactics are still what’s driving them there.
Perhaps a day will come when all interpersonal communication is conducted electronically, when the satisfaction of all human needs can be ordered or even delivered through airwaves, when the only opportunity a brand has to interact with potential customers is through a signal transmitter.
Don’t hold your breath – because we ain’t there yet.
The Internet, and whatever delivery channels will follow it, may very well be creating a new breed of consumer. What has emerged at this early stage in the medium’s development is a more promotion-conscious consumer who enjoys the Internet’s speed and ease of use, but still relies heavily on traditional forms of communication to learn about brand offers.
That’s the broad picture painted by Online and Offline Marketing Strategies, a consumer survey conducted for PROMO in cooperation with the Promotion Marketing Association by Greenwich, CT-based NFO Research. Using its proprietary database of 557,000 households, NFO fielded 1,000 surveys on the Internet to gauge the attitudes and behaviors of U.S. citizens at the forefront of the Electronic Age, the type of people who are completely comfortable logging on for work and play. And to compare this group with the typical consumer, NFO also went the old-fashioned route and conducted 1,000 identical surveys via the telephone.
As NFO has seen in numerous other studies, the current online population is different from the U.S. population as a whole. In general, it is younger, more educated, and more affluent. And it has different attitudes and behaviors when it comes to promotion.
The cyber-savvy group is growing at a rate of 1.5 percent to two percent every quarter. An estimated 60 percent of U.S. households currently have a computer, and 53 percent are tapped into the Net. The online population is not, as was once the case, dominated by males. There are now more women online than men, and female teens and seniors are among the fastest-growing demographic segments.
Researching and entertainment were the two primary reasons why both groups of respondents said they went online (outside of business needs and e-mail). Among the online set, 52 percent access the Internet specifically to look for special offers or other promotions. (Offline, the number was 22 percent.)
That statistic is perhaps the first indication that the Internet is engendering a new type of consumer. While newspaper readership surveys often find a large group who buy the Sunday newspaper primarily for coupons (grocery store shoppers view inserts more than any other section, per Perception Research Services), can you imagine more than half of TV viewers or magazine readers making that assertion?
The Internet’s ease of use, not to mention the preponderance of special offers – including scores of sweepstakes, coupons, and loyalty program aggregators – available on the Web is making it easier for consumers to actively find promotions in which to participate. Forty-eight percent of online respondents and even 16 percent of telephone respondents said they have logged onto the Internet for the express purpose of participating in a promotion. In addition, 46 percent of online respondents said they spent time “promotion surfing”: looking for special offers, contests, and sweepstakes to take advantage of. (So did 17 percent of telephone respondents.)
To qualify for the survey, respondents had to be 18 years or older (for legal reasons) and have participated in at least one promotion in the previous six months (for obvious reasons).
That ferreted out consumers who were either too young or too disinterested in promotion. In the latter category, about 15 percent of initial online contacts and 22 percent of telephone contacts said they never participated in promotions. About half of each group blamed their disinterest on a general lack of attraction to programs.
INTEGRATION IS KEY Fear not, promotion marketers. That still leaves the vast majority of U.S. consumers at least somewhat receptive to promotional offers. And again, they appear to be even more receptive while they’re online.
Internet-savvy consumers are by no means limiting themselves to the online arena: Only 16 percent of online respondents said they only participated online. And, in fact, 29 percent said they only participated offline, despite their virtual tendencies when it came to other activities. Meanwhile, only 15 percent of those surveyed by telephone participated at all online.
The upshot? The vast majority of those surveyed – 84 percent – is only participating in promotions offline.
Many marketers already understand this fact, or at least are coming to that conclusion. In a 1999 campaign that won several industry awards (November PROMO), Nabisco’s LifeSavers used Internet advertising as just one component in a multi-disciplined campaign that also featured heavy broadcast advertising, a huge FSI drop, and a massive in-store presence. DaimlerChrysler still relied heavily on direct-mail marketing to enlist attendees for its annual Camp Jeep event last year, but used a dedicated Web site to attract more than one-third of total sign-ups.
Perhaps even more telling were responses to the question, How do you usually hear about promotions? While the Internet itself was the most-mentioned medium in the online survey, it didn’t score that much higher than magazine/newspaper ads, which was the highest-rated medium among telephone respondents.
Asked which media drive them to Web sites, online respondents said they had visited URLs they learned about through e-mail (91%), followed closely by TV (89%), word of mouth (88%), and magazine/newspaper ads (87%). Internet banner ads came in fifth at 85 percent. Offline, respondents hit the Internet after learning about sites from magazine/newspaper ads (58%), from a friend (55%), on TV (48%), and from product packaging (47%).
Somewhat more divergent are the ways in which the two groups participate. For the online group, the Internet was easily the most-used device, with 48 percent of respondents calling it their preferred method; however, 36 percent of the group claimed that they still participate more in-store than online. (One major factor could be respondents’ heavy use of coupons which, whether they arrive online or in the newspaper, still get redeemed at the local store.)
On the telephone side, more than half of respondents selected the store as the primary point of entry, with the mail coming in a distant second.
These are the main reasons why marketers have been creating fully integrated campaigns that employ a variety of media to relay promotional messages, but are also using the Internet as the primary means of collecting responses and communicating with participants. Pepsi-Cola Co. reprised its PepsiStuff continuity program last summer with under-the-cap point awards on 1.5 billion packages distributed through nearly 80,000 retail outlets. The beverage maker this year added a URL to the proceedings in a deal with online portal Yahoo, thereby making it faster and easier for consumers to tally and submit the points they’ve collected. The effort attracted two million participants within the first two months.
Successful examples of the “Start Real, End Virtual” strategy abound. Kraft Foods ran a massive on-pack and on-air call-in campaign (June i-promote), and got nearly half of responses through the Web; Oldsmobile used TV and print advertising to promote a contest tied to Saturday Night Live, but got 85 percent of total responses online.
The reasons for this phenomena would appear to be simple: It’s easier and cheaper. No more tearing off or cutting out entry forms, no more three-by-five cards or stamps; entry is now just a click away.
MULTIPLE ENTRIES Ease of use is a major reason why Internet respondents participate more frequently in promotions. Sixty-one percent of the online group said they responded to a promotional offer at least once every two weeks; 47 percent of those surveyed by telephone said the same.
What’s more, nearly half of online respondents were involved on a weekly basis, compared with 31 percent of “traditional” consumers. That’s not surprising, since 56 percent of the Netters said they are members of an online coupon, sampling, or sweepstakes service (compared with 11 percent of the offline group). And more than 50 percent said they regularly visit promotion-based Web sites (compared with 20 percent of the offline set).
That lends credibility to the growing popularity of such promotion aggregators as Save.com, Planet U, and Smartsource.com in the coupon segment, Startsampling.com, Freesamples.com, and Freesampleclub.com in sampling, and Webstakes.com, Iwon.com, and Grab.com in sweepstakes. Whether these sites aid brand building or engender a society of offer-focused consumers is still up for debate. But there seems to be no question that these operations do draw traffic. And, as any good brand manager will tell you (although they might not all sincerely believe it), trial is the linchpin to increased sales.
The study found greater disparity between the online and offline populations when it came to favorite types of promotions. Both groups picked coupons as the tactic to which they were most likely to respond. But the folks online were more attracted to samples and sweepstakes than their offline counterparts, who showed a greater predilection for buy-one-get-one offers and cause-related programs.
Overall, consumers are more interested in saving money than they are in other kinds of offers. Coupons, buy-one-get-one deals, free samples, and rebates were the four promotion types most-often cited among both groups of respondents when asked to select the three offers they were most inclined to respond to. (Sampling was more popular among the onliners than with the traditional crowd – perhaps because they find the samples rather than the samples finding them.)
A general affinity for coupons was indicated when respondents were asked directly about their feelings for various promotional tactics. Nearly half of all respondents said they “enjoy” coupons, and few expressed the prejudices against clipping that have been associated with the tactic. Interestingly, nearly two-thirds of all respondents said they “enjoyed” free samples, although the tactic didn’t rate as high as coupons when it came to driving participation (perhaps because samples aren’t as readily available as coupons).
In much the same vein, cash was the overwhelming prize of choice for both groups, with 80 percent of online respondents and 76 percent of telephone respondents saying they prefer money to other types of incentives such as trips or tickets to events.
Some words to the wise, however: Cash has always been the prize consumers say they want most. And while the Who Wants to Be a Millionaire? phenomenon may have consumers clamoring for big payoffs even more than before, many experts believe it’s a gift that doesn’t keep on giving in terms of building brands. First, because cash prizes must usually come in significantly large amounts to make an impact (thereby increasing program costs), and second because they leave little room for establishing an emotional bond with consumers (thereby decreasing effectiveness).
SOURCES OF INSPIRATION Asked what made them participate in promotions, online consumers offered a variety of reasons and, in general, showed greater motivational behavior than their offline counterparts.
Tops among both groups was gaining discounts on products they normally buy. That news might not be welcomed by traditional promotion marketers, who have focused most of their energies on attracting new customers and gaining incremental sales rather than rewarding faithful buyers. But it may serve as vindication for the new marketing breed looking to promotion to build brand loyalty and establish long-term relationships with consumers.
In comparison, a desire to try the product associated with a promotion was cited by 46 percent of online respondents, but by only seven percent of the offline group. Then again, online respondents evinced more reasons for participating than offliners: Respondents were allowed to select as many choices as they wanted from a list of 15 factors, and the online group showed a greater propensity to select multiple reasons. Among the ones most mentioned were the opportunity to collect a specific prize, a free gift, and any prize. Also scoring highly among the online group was ease of entry and instant results – factors that, for better or worse, are often not possible in offline promotions.
Meanwhile, telephone respondents were more inclined to select only one or two reasons, which is why percentage rates were so much lower for the offline group. Only three factors were cited by more than 10 percent of the telephone subjects: to obtain discounts on favored products, to win any prize, and to earn a free gift.
IS IT WORKING? More good news for promotion marketers: Most respondents said their promotion participation has a positive impact on their impression of the brand involved. And the impact is significantly greater among the Internet citizens than it is among the general populace: 53 percent of online respondents said promotions affected their perception in a positive manner, versus 43 percent of offline respondents. On the flip side, half of those surveyed by telephone said their involvement had no effect on their feelings about the brand.
What’s more, most respondents said they were extremely or very likely to purchase the product introduced in the promotion. In this case, the propensity to buy was slightly greater among the offline population, with 65 percent saying they were at least “likely” to purchase the product, versus 62 percent of the offline group. However, more telephone respondents said they were very or extremely unlikely to purchase the product.
Asked about their last promotional experience, 53 percent of the offline group and 27 percent of the online group said they now buy the sponsoring product regularly; 23 percent offline and 48 percent online said they purchased it several times.
Only one percent of telephone respondents and nine percent of online respondents said they did not purchase the product related to the promotion, and only eight percent of each said they only bought it to participate in the promotion.
These numbers have to be considered extremely positive for the promotion industry as it moves beyond the notion of one-time sales lifts to adopt strategies for long-term customer retention. But they may also imply that the Internet is creating an atmosphere in which promotions are simply too easy to come by; where customer loyalty will be based primarily on the value of the offers being made.
That could be dangerous, especially considering online respondents already appear to be less brand-loyal than their traditional counterparts: 48 percent of the Internet crowd strongly agreed with the statement, “I like to purchase products or brands that I have used in the past,” compared with 65 percent offline. In similar fashion, only 12 percent of the online group said they often decide what products to buy based on the promotions offered; 20 percent of the offline crowd said they were swayed by promotions.
WHO NEEDS PRIVACY? One of the biggest controversies surrounding the Internet since its emergence has been the issue of privacy. Watchdog groups, industry associations, and government agencies have all been examining online marketing practices very carefully to keep unscrupulous practitioners from exploiting the medium to dupe unsuspecting consumers into giving up the store, so to speak. Concerns over privacy were a major reason why e-commerce didn’t really take off until the late 1990s.
While the debate may not be over, the issue may be heading toward moot status in the eyes of consumers, who generally have grown willing to divulge personal information – for the right price, at least. The vast majority (80% or more) of online respondents are more than happy to provide their name, e-mail address, gender, age, home address, and occupation in order to enter a promotion. More than half are also ready to supply purchase history and annual income. The group only balks when asked about phone numbers for work and home. (You’ve got their e-mail, so why bother them by phone?)
Most telephone respondents likewise are happy to part with name, gender, age, home address, and occupation. They are more willing to offer a home or work phone number, but less willing to give away their e-mail. (You’ve already got their phone number, so why bother them on the Internet?)
More than 64 percent of online respondents said they were at least somewhat willing to provide “most of my data” to participate in a promotion, as did 60 percent of offline respondents. The conclusion here: Don’t waste opportunities to obtain consumer data with your promotion, especially now that the Internet is making the process easier for both you and your customers.
Don’t abuse the privilege either. About 84 percent of online respondents and 63 percent of their offline peers said they had abandoned a promotion because it required them to give too much information. (PROMO pet peeve: Asking for salary level? Please.) And 78 percent and 53 percent, respectively, backed off because participation required too much effort.
Despite their seemingly open-book ideas about sharing information, 90 percent and 79 percent said they chose not to participate because of security concerns. Thus, industry experts who are ahead of the curve advise marketers to start slowly, initially asking for just topline information and gradually building trust before hitting customers with more intimate questions. They also suggest being completely honest about how they plan to use the information, so respondents will know full well how their data may be used in the future. Participants should also be given the opportunity to opt out of any future marketing efforts, although some pundits say giving them the choice of opting in makes for a better start to the relationship.
In many cases, they probably will. Asked if they minded receiving follow-up information about future deals and promotions, 80 percent of both groups said they wouldn’t. Follow-ups only become a nuisance when they become too frequent, contain offers completely unrelated to the original one (List sellers beware!), or are delivered through a different medium than the one first approved, respondents said.
THE UPSHOT The Internet provides an unprecedented channel for marketers to communicate promotional offers to consumers. If used prudently, it can foster loyal customer relationships. But if used carelessly, it can create a customer base that will only be around until they find a better offer.
And if relied upon too heavily, it may cost marketers short-term. Because no matter how rapidly the U.S. population is acclimating itself to the Internet, it still relies heavily on traditional channels to interact with brands.
The electronic-only age can wait.
Pepsi’s recall blows away other brands Perhaps Pepsi is The Choice of a New Generation after all.
Among the 60-plus queries on attitudes and behaviors thrown at respondents to Online and Offline Marketing Strategies was one that, for marketers, has always been The $64,000 Question: Do you remember the brands that ran the promotions in which you participated?
Not surprisingly, when put on the spot, the answer to this open-ended query was “No” for 67 percent of respondents, including 65 percent of those surveyed online and 69 percent of those surveyed off.
Among those two-thirds who could recall the brands, Pepsi was the clear-cut winner. The beverage maker was named by nearly nine percent of respondents, three percentage points higher than any other brand (and double that of arch-rival Coke). NFO Research conducted the survey as Pepsi was undertaking one of the biggest promotions in its history, the online/offline PepsiStuff campaign.
Philip Morris’s Marlboro cigarette brand was cited by five percent of respondents to earn the second-best recall, followed by Coke and Procter & Gamble’s Tide at 3.9 percent each.
Among online consumers, brands with the highest recall were Pepsi, Tide, Marlboro, online points-program operator Mypoints.com, Marriott Hotels, and P&G’s Olay. On the offline side, consumers remembered sweeps companies Publishers Clearing House and Reader’s Digest, followed by Pepsi, Marlboro, and Coke.
