Promotional Risk Coverage allows you to give away millions, without any liability associated to your promotion budget. The strategy behind marketing promotions, which include promotional risk coverage, is simple. It enables companies to differentiate brands in a very competitive market. Promotional risk coverage could provide your company with the means to give away millions in cash or large prizes. Your prize offerings are based on the odds of a winner claiming the prize. As long as your promotional strategy does not include a guaranteed prize offering as the only prize, your company can include promotional risk coverage with the promotion.

Promotional risk coverage can be found in promotions like you see on television, hear on the radio, read in newspapers or magazines, and see online or in internet promotions. They offer the consumer a chance to win, and when there is a winner, your company is protected against having to pay the winner. Much like you insure your car from an accident or your home from a natural disaster, you can cover your promotion against a risk associated with the liabilities of giving away large valued prize amounts. The cost of promotional risk is minimal, literally a fraction of the prize value, and is based on the promotional odds, the prize value, and the number of chances given to win the promotion – allowing you to deliver a huge incentive at a fixed cost that will never blow your budget.

Promotional risk covered promotions open up possibilities to offer larger prizes than most companies can afford, or would want to take promotional risk on. These large prizes are proven to increase registrations of online users, traffic in stores, and sales at any given time. Strategies including promotional risk coverage also build large brands through consumer loyalty. Everyone appreciates winning something, people enjoy watching others win, and everyone remembers who was offering the big prize.

Protect your company from promotional risk.

Promotional Currency’s proprietary promotional risk coverage service is a powerful tool that enables you to super-size your promotional programs.

Along with incorporating promotional risk coverage into all of their digital incentive product offerings, they help businesses manage their risk on redemption-based promotions. By analyzing the odds of redemption and then placing the risk with an A+ insurance company, Promotional Currency can provide your brand with a fixed-cost solution that amounts to a fraction of the actual promotional value. And should over-redemption occur, Promotional Currency will cover the cost – whatever the value of the prize, rebate, coupon or premium.

Read Case Studies: Sara Lee Royal Bank of Canada®
Benefits

• Offer High-Value Incentive for Fraction of Retail Cost
• Receive Fixed-Cost Solution that Ensures Budget Certainty
• Protect Your Company from Over-Redemption Expenses
• Eliminate Promotional Liability from Your Books

written by jross \\ tags: digital music promotion, digital music promotions, digital promotion, Digital Promotions, Music Download Promotions, promotion insurance, promotional insurance, Promotional Risk, Promotional Risk Coverage, promotions insurance

Digital music promotions are becoming more and more popular for marketers because they are valued by consumers. Whether you have a small business or work for a large corporation, digital music promotions are an effective, low-cost way to tap into different target markets. Thanks to iPods and mp3 players, fast broadband and smart phones, everyone is listening to digital music. CD sales are dropping, and not just because of the economy.   Consumers are value digital downloads and are responding to digital music incentives.

Of course, a successful digital music promotion involves more than just sending someone a $5 iTunes card for making a purchase. The smart marketers are tying their digital music promotions into a marketing campaign centered around a particular idea or event. One hotel chain recently gave free Classic Rock songs to their frequent travelers from a specially-designed website as part of their digital music promotion. Stay more nights, get more songs.

To follow are five examples of consumer markets, which value digital music promotions:

• Generation Y: I realize this is a rather large group. The largest of any group, in fact. At last count, Generation Y outnumbered Baby Boomers 82 million to 78 million. And it’s Gen Y that’s driving the digital music promotions. They’re the biggest users of smart phones, SMS technology, social networks, and of course, digital music. Any time you want to reach this age group with a marketing campaign, digital music promotions will be a safe bet.
• Runners and fitness enthusiasts: Nike hit on a particularly smart idea a few years ago, teaming up with Apple, and creating the Nike+ iPod Sport Kit. It’s a chip that will not only give runners their time, distance, pace, and calories burned, it will even pull up the music that matches your pace and inspires you to keep moving. It’s great for cyclists too. If you have an fitness-related business, a digital music promotions campaign that offers motivating and up-tempo music can really get your campaign off the starting blocks.
• Road Warriors: I’ve spent countless hours on planes and in cars, and I can only listen to podcasts for so long. But I would love to be rewarded for doing what I’m already doing, and listen to some of my favorite music. While we’re not out there for the rewards, they still make a nice incentive. In fact, some Road Warriors will make a game out of it, and try to find the most profitable rewards for the fewest miles traveled. So if you can create a digital music promotion which is based on miles traveled, nights stayed, or dollars spent, you’ll win the Road Warriors over.
• Stay At Home Parents: Tie your digital music promotions campaign into a product or service that a SAHM or SAHD is going to take advantage of. Parents are just like Road Warriors: they’re already doing their thing, regardless of the incentives. But if they can get a little something extra for buying a product from you, instead of your competitors, they’re more likely to take advantage of it.
• Entrepreneurs: Whether it is due to the economy, or the fact that more people have a burning desire to start their own business, we’re seeing more entrepreneurs and in the business world these days. They are working in coffee shops, meeting at restaurants, and trying to keep costs as low as possible. When you start looking at their buying patterns, you see coffee shops being a big part of an entrepreneur’s budget. The smart coffee shop owner is going to attract the entrepreneur crowd with a digital music promotions campaign. Instead of giving away a free cup of coffee, try giving away free downloads of the music you’re playing in the store. And if you have musicians play on the weekends, be sure to include any of their music in your campaign.

written by jross \\ tags: Digital Music, digital music promotion, digital music promotions, digital promotion, Digital Promotions

Sometimes I get asked to compare digital music to other promotional incentives.  There are lots of ways to do a comparison, but the takeaway is that few incentives create the immediate emotional connection.  In that spirit, I thought that each week I will try to find and share a “cover” for you to enjoy.  This week’s installment is a Deftones version of The Cars “Drive”.  Enjoy.

written by Steve \\ tags: Digital Incentives, digital music promotion, digital music promotions, Digital Promotions

Twenty years ago, I wanted to be Gordon Gekko.  He was a villain sure, but the way he worked the system – his vision, the raw ambition, that slicked-back hair… He.Was.Epic.

I must not have been the only one that felt that way, heck, Oliver Stone and 20^th Century Fox have brought him back, just in time for summer.  It is highlighted as part of my summer movie theater crawl.

Watching the trailer got me thinking about the practicing of hedging.  That is, reducing the risk caused by adverse fluctuations/movements in assets.  Hedging got a bit of a bad name a couple years ago – it turns out that some hedge funds “hedged”, but never properly secured the risks. When things went south, well, the cupboard was bare, more or less.  Many reasons why it happened, but a chief driver was GREED (and we are back to Gekko).

Here is the marketized version:  In creating promotions (and allocating their budgets), marketers often make assumptions on participation.  If that assumption is high, then there is some money left (that could have been spent somewhere else).  If the assumption is low however, well…not good.  Promotional risk is always there; it is just the degree that changes.

Business, finance, marketing, and manufacturing – it’s all about getting the most out of every available dollar.   Which is why the theory of hedging risk is so good.   A small portion of the upside is traded for a limit to the downside risk.

On paper, it is a sensible way to manage available monies and maximize budgets to the penny.  So, why don’t more marketers hedge their budgets with promotional risk coverage? Undoubtedly a lot of possible answers, but I think at the core, it goes back to a sort of greed, where marketers trade back end security and cost caps for lower upfront fixed costs (i.e. margin).

Greed is good, if you have the right hair.  However, if you want to learn more about the art of the hedge, drop me a line (steve@promotionalcurrency.com), and don’t forget the subject line: Purple Horseshoe loves Endicott Steel.

written by Steve

As far as screenplay/play writers go, I rank David Mamet near the top.  When he fires off a critical memo about a project in which he is involved, I pay attention, because there is probably something useful in there somewhere.

Case in point: http://www.slashfilm.com/2010/03/23/a-letter-from-david-mamet-to-the-writers-of-the-unit/

Colorful yes, but some great insight – he wants to create drama and keep it, getting the audience from point A to point B as efficiently as possible.  Sometimes however, even good writers try to do too much, then the plot starts to drag or linger, and the drama “flows out of it” of a given scene.

There is a good analogy in there somewhere about marketing. Sure, I know writers want to create drama, and as a marketer, the last thing you want is drama in a promotion, but there are some more relevant comps there.

As a marketer, we want to create reasons for consumers to act, and do that quickly and efficiently.  Sometimes, even good marketers try to do a bit too much within a promotion or campaign, and the execution suffers.

Next time you are putting a promotion concept together, look at the pieces and ask yourself “does this really advance the plot?

Then imagine how David Mamet would handle it.

written by Steve \\ tags: Promotions

This time of year, NCAA® March Madness is everywhere. Bracketology, or the analysis and prediction of the tournament’s brackets, is now entrenched as a rite of spring.  One of the great aspects of the tournament is the dramatic upset. You know, some team defies the odds and beats a team they should not.  Great article last week about historical upset rates, check it out here: http://www.cbssports.com/collegebasketball/story/13063296/bracket-science-searching-for-likely-upset-victims-victors.  If you like lots of statistics, it is a good read.  If you don’t, here’s the summary: the rate that a lower rated team “upsets” a higher-rated team is historically nearly 1 in 5 (19.9%).  The selection committee spends all those many hours trying to create accurate seedings, but there are things that simply cannot be accounted for and predicted.  Sure, there will be upsets, but where will they be? If you could figure out how to make a bracket “upset proof”, I could show you how to win a lot of contests (and fabulous prizes).

Want more proof? Of the 16 remaining teams in this year’s tournament, 5 were seeded at 6 (out of 16) or below.  Based upon their initial seeding, nearly 32% of them should not be left in the field. Predicting performance in a dynamic environment is tough because many unexpected things can happen.  I saw a report that out of roughly 4,700,000 brackets submitted at ESPN.com, exactly 12 had correctly predicted the remaining 16 teams.  Bracketology is fun.

This reminds me of the practice of trying to predict outcomes in response-based promotions (well without all the brackets, trash-talking amongst friends, prizes and things).

Sponsors implement a response-based promo and try their best to predict the outcome and related budget impact.  Have historical information on a similar promotion great, that can be helpful.  Only problem is, what marketers are challenged to go out and implement the same programs over and over again?  Everyone wants to do something new and fresh.  New and fresh is great, but new and fresh make forecasting more challenging.   What happens when redemptions outpace budget (an upset)?  Uh oh – bracket-busters in real life aren’t as much fun.

The good news is that it is possible to find partners to step in and fix promotional risk, and make your promos “upset proof”.  We are one such partner here at Promotional Currency.  Little known secret, but in the scheme of things, promotional risk coverage is surprisingly affordable.

“Upsets” happen in promotions, just like in the NCAA Basketball tournament.  The key is being able to protect yourself when they happen, because they are awfully hard to predict.

Are your promotions upset proof?

written by Steve \\ tags: Promotional Risk Coverage

If you have purchased furniture, at some point, you’ve probably had to assemble a piece or two on your own.   At first glance, it is looks like an easy process – legs go here, drawer face there, top goes on like so, etc. Sometimes there are even rudimentary instructions.  It is not that hard to assemble it to a point where it is functional.

Once you start using a self assembled piece, you often find that your creation has a few blemishes: it wobbles when you touch it, the drawers a bit misaligned, or the doors may not close all the way.  None fatal defects, but at some point you have to spend time trying to correct the problems and keeping it functioning properly.

The alternative is to buy a piece that is assembled (by someone that does that sort of thing for a living)– it may cost a few bucks more on the front end, it is put together well, everything lines up, and it functions exactly as designed. You can eat on it right away, put stuff inside, and generally enjoy how it complements your room (no worries about the craftsmanship, or intermittent tweaking required).

Compare the above to implementation of a digital music promotion.  To a sponsor (or their agency) assembly looks straightforward. All you need is music and a delivery vehicle right? Pick up the phone, call a label (or at least a music site), dazzle them with marketing acumen, done deal.  Or is it?

Can it be done as described above? Sure with some amount of time and effort. Look closer though, who takes care of the underlying issues like contracting/licensing platform reliability, budgeting, customer service, delivery obstacles, etc.?  Who’ll align the drawers?

The alternative is to partner with a specialist that assembles and executes the digital music programs for a living, handling all ancillary details mentioned above.   Licensing/contracting – check, proven systems in place.  At that point, a marketer doesn’t have to mess with making things fit together snugly; they can focus on other aspects of their business.  How much overall time and effort is saved going this route? How many fewer headaches involved?

Digital music as a promotional incentive can be a powerful tool for a marketer – just make sure that you have someone that can align your drawers for you.

written by Steve \\ tags: Digital Incentives, Digital Music

In business, people cover their risks. Ask a risk manager about the coverage options: property, casualty, liability, errors/omissions, workers compensation, the list is extensive. It makes good sense to protect yourself and cap liability, you know, just in case something bad happens, like a fire or worse, some sort of defective product or service makes it into the marketplace under your name. When it comes to promotions though, it is amazing to me the number of marketers who are suddenly willing to take their own risk. I had a client just this week that started to strongly consider taking a multi-million dollar risk themselves. As scrutinized as budgets are these days,that sort of thinking is a bad idea more often then not, and here’s why: Say a company wants to offer 10,000,000 $2 off coupons. Sure, they are only expecting 500,000 to be used, but in this post Madoff/AIG world we live in,they have to reflect the whole entire $20,000,000 liability on their books until the redemption period is over. A line item that size will definitely create a little disparity on a balance sheet. Now, the probability of this coupon redeeming at 30% are much, much greater than say, your office building burning down, yet the company buys coverage for this fire scenario, but is fully ready to take a chance on $6,000,000 promotion risk ride… After all, taking risks always works out for Danny Ocean and his crew.

Doesn’t it make more sense to protect yourself (and when I say yourself, I mean you, your budget, and your job) from something that could potentialy wreck all three? In the end, the aforementioned client agreed with my position, and decided to secure the redemption risk. While I am not certain whether their promo will meet their goals of increasing trial, but I do know my client won’t lay awake at night worrying about over-redeeming coupons, and I also know that the next 10-Q will not be weighted down by someone’s decision to “let it ride”.

written by Steve \\ tags: Promotional Risk Coverage

How did the promotion perform?

Let’s take measurement for digital music download promotion as an example. The first inclination is to jump right to redemption rate as a means test for success when in fact, that is one of the poorest possible metrics on which to judge efectiveness (unless the goal was to influence redemption as much as possible). Take a look at a CNET article that discusses results from a Pepsi-iTunes promotion (theory of “redemption as barometer”?).  Interesting…

What about finding out the result of the campaign from a marketing perspective ever happened to information on performance in market?
- How much extra leverage did Pepsi distributors get in the field as a result?
- Did Pepsi meet their sales targets (Pepsi was the primary sponsor after all, not iTunes)?
- For Pepsi, how far did the iTunes partnership go in effectively re-asserting itself as THE brand that best utilizes music?
- For iTunes, what was the increase in user base for the iTunes music store?

I admit that there is a challenge involved in obtaining answers to the above questions, as parts of the data required may be spread over various parties, none too eager to discuss their results with others. My contention is that in the Pepsi-iTunes promotion specifically, the benefits from that partnership were substantive for everyone involved, even though the redemption rate was what I would classify as modest.

Artificially weighting of something like redemption rate is not a good way to solely judge effectiveness. Let me give you a better example (the names and industries changed to protect the guilty):

A software company gave away music CDs to consumers that purchased multiple software titles. When the promotion was over, the company instructed it’s agency to analyze the promotion by contacting as many participants as possible to determine how many times each one had listened to their CD. That metric, it was determined, would be used to judge whether they would run a similar promotion the following quarter.

Sounds crazy right? the digital equivalent of this happened. last. year.

If I was the software company, I would be more interested in things like:
- Of people buying the software, how many saw the CD offer and chose that brand over a competitor?
- How many incremental software units were the field sales teams able to ship because of this promo? How many displays were they able to get?
- How many people went in to buy one title, and ended up buying more than 1 to get the CD?

With digital content, the redemption rate is much less important than what the incentive did in the market. A better question for a sponsor is whether the  incentive was effective in grabbing attention and creating action.   Better questions lead to better answers, and the better the answers, the better the marketer.

written by Steve \\ tags: Digital Content, Promotion Metrics

Force multiplier as a military term, refers to a combination of attributes or advantages which dramatically increases (or “multiplies”) the effectiveness of an item or group.

Most multiplayer games involving teams and combat include aspects of force multiplication, either as a player class, skill set, or specialized gear. On its own, a force multiplier is not particularly dangerous or effective. When added to an existing unit and used properly, they effectiveness and skill of that team increases (multiplies) dramatically. In PVP, the teams that recognize and leverage the power of force multiplication are generally the most feared (and effective) ones.

PVP teams in some ways are similar to promotional marketing teams. For every promotion pitch/execution, there is some combination of tactics/roles used to meet an objective. When leveraged by these teams, Promotional risk coverage serves as a FORCE MULTIPLIER. It helps amplify message, facilitate creative thinking (by removing budgetary restraints), stretches and/or fixes budgets, and contributes to effective solutions. The most effective marketers often incorporate promotional risk coverage at the concept level, and are able to leverage it to do some things that otherwise might not be possible.
The next time you start gearing up for a big raid, PVP battle, or promotional concept, devote some time on how to incorporate your “force multiplier” into your efforts, and let me know what happens.

written by Steve \\ tags: Gaming, Promotional Risk Coverage