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

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

In the incentive space, the perceived value spread is crucial. Marketers strive to provide an incentive with a much higher perceived value (than what a consumer has to do to earn the incentive). The higher the spread, the more effective the incentive becomes.

For the last 3-4 years, marketers have dipped into the mobile content space to leverage incentives in their programs. Incentives such as ringtones wallpapers and to degree basic mobile coupons have been used, with varying degrees of success. I like to classify these as Mobile content 1.0. According to research firm SNL Kagan, US ringtone sales peaked in 2007 at $714 million, followed by a 28% decrease in 2008. According to them, advances in technology have made it easier to bypass the traditional download-to-handset method. Extending this pattern out, it is not hard to conclude that mobile content 1.0 is not dead, but it is certainly on the backside of the “perceived value” curve. Point is, this type of mobile content has held some value to a consumer, but as technology moves forward, this perceived value (and related effectiveness as an incentive) is diminishing.

On the flipside though, I think that mobile content as an incentive is just starting to ramp up. As the mobile “phone” phases out, it is replaced by the “phone/media player/internet appliance/computing device”. With this shift, technology advancement makes the term mobile content take on a much broader definition. I call this next generation content mobile content 2.0. Need an example? Consider the explosion of the iPhone “app” market. According to Gartner’s 2009 Mobile device report , iPhone has a 13% market share globally. Impressive share, but based upon the hype surrounding the iPhone application, or “app” market, you would think that considerably more than 1 in 6 consumers have one. The great thing about these “apps” is that they are so diverse and so broad. In addition, the cost to develop is relatively low, especially when compared to the perceived value. Other examples are the wide array of social media applications, streaming content (music and video), casual games, and QR codes (plus a whole lot of GPS-related/geo-coding things that are near mind-blowing).

Over the last few years, consumer mobile phone behavior has had a dramatic impact on marketing (and possibly vice versa). According to my favorite futurist (Gerd Leonhard) and others, in the (near) future, mobile’s influence will dramatically impact everything we do as marketers. My question is, as a marketer, will you continue using mobile incentives to take consumers someplace they have already been? Or are you ready to step into the future and leverage the type of incentives that take consumers where they want to go? I’ve made my value assessment; yours is coming (sooner than you think).

written by Steve \\ tags: Mobile Content, Mobile Incentives

written by jross \\ tags: Digital Promotions

In a grab for market share, sometimes people will try anything. Take Asa Candler, Atlanta businessman and co-owner of Coca-Cola for instance. In 1894, he used handwritten tickets for a free glass of Coca-Cola to help market his new soft drink. Spotting this success one year later, grocer C.W. Post began using coupons to help sell groceries. His coupon gave people a one cent discount on his new breakfast cereal, Grape Nuts.

During the 1930s, coupons were characterized as a “necessity” to help families make ends meet during difficult economic times. ( http://www.couponmonth.com/pages/allabout.htm)

Fast forward to today – the tactic of using coupons to increase distribution and created trial for marketers has been used effectively for the last 70+ years. In fact, recent data suggests usage is tracking upward, and has been since 2007. Believe the hype, consumers like (and rely on) them:

- http://www.msnbc.msn.com/id/25500262/
- http://www.reuters.com/article/pressRelease/idUS118086+03-Sep-2008+MW20080903
- http://promomagazine.com/research/ads-resonate-coupons-instore-1218/

This relevance though (great as it is) increases redemption, and increased redemption means increased (but uncertain) costs, and increased costs are in direct contrast to marketing budgets that (for good or bad) are often on the front lines of budget cuts.

So what’s a marketer to do?
Abandon or limit a tactic that that seems to be resonating in the market?

Roll the dice and hope that incremental sales can soften blow of increased budget impact?

I am not sure it is ever a sound idea to go into a promotion with off budget liability hanging out, but in the climate of shrinking marketing budgets and every expenditure receiving extra scrutiny…why take the risk?

Promotional Risk Underwriting and redemption coverage fixes exposure on coupon offers, so marketers know their costs to the penny, prior to the coupon ever hitting the market. Call me old school, but I think marketers are best when they create and execute, not when they are sweating the cost implications of tail end promotional redemption.

As a tool, promotional risk coverage caps the exposure that can accompany redemption-type (i.e. COUPON) progams. No underspend, no overspend, no lingering worries about coupon redemptions 9 months after the fact.

So, if you’re ready to cash in on the coupon’s resurgence as a marketing tactic, but not interested in wearing your “accounting hat” as much as your “marketing hat”, I don’t blame you. Check into promotional risk, or redemption coverage – your budget will be happy you did.

written by Steve \\ tags: Coupon, Promotional Risk Coverage, Redemption, Redemption Coverage