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

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

I want 13...BILLLLLLLLLION dollars!

Mine is straightforward – take the promotional products industry, and reduce its sales by 70%, or $13.8B. Ok, not the sales exactly, more like the topline number.

According to the Advertising Specialty industry, in 2008 promotional products industry sales were $19.8 …BILLION dollars! I don’t have anything personal against the ASI/PPAI folks, but I question the effectiveness of the marketing spend. Let’s cut to the chase, the interrogation goes like this:
How effective were your (insert promo product here) …flashlights? Do you know who got them? Will you be able to follow up with those consumers? How easy were they to distribute? Did the perceived value of the incentive net incremental sales?

Ouch, these answers can be prickly.

I think that promotional products/incentives have their place, it’s just at the end of the aughts, I think they should be (mostly) digital. Why? Well, digital incentives (for today, let’s call it “content”) have several advantages to physical products: They offer instant gratification, you can track who has them, integrate those consumers into your CRM plan, distribution is simple (by comparison), and by taking advantage of breakage, you can offer consumers a higher perceived value incentive. The thing I really like though is the way that you can engage a consumer in a rich experience, and get them interacting with your brand in a positive manner. Try doing that same calculus with a free hat and get back to me.

So back to my plan…by leveraging digital incentives, the promotional spend becomes more targeted, distribution becomes less expensive (and less worrisome too), and know marketers are able to pass incentives (with higher perceived values) to the consumer. These are substantive benefits, with less waste and lower costs. My idea is not really an evil one; it’s just a wakeup call to marketers and promotional sales folks alike. The digital future is now, embrace it, leverage it, benefit from it. This message is not unique to me alone, check out Tom Foremski’s thoughts on the Internet’s devaluation effect…

World domination can wait until later.

written by Steve \\ tags: Digital Incentives, Promotional Products