Promotions can be a wonderful tool for advertisers. Not only can they encourage the trial usage of new products and increase short-term sales figures, but they can also drive much-needed traffic to web sites. Contests and sweepstakes are designed to create temporary excitement about a product; entry is often tied to a key action or conversion providing strategic value to the advertiser, allowing the advertiser to establish milestones for promoting its product.
Promotions generally encourage current users to use a product more frequently or to use multiple products; in essence, they reward loyal users for their loyalty. This is why promotions are traditionally used by established brands where the consumer is already familiar with the advertiser’s product and is more inclined to convert while participating in the promotion.
So if promotions are such an effective online marketing tool, how can they be hurting web advertising?
For starters, while a promotion is running, the focal point of the brand’s advertising switches from the product to the contest. This is fine once in a while, as promotional advertising should be part of a marketing mix with brand/product advertising. However, quite often this is not the case in the online realm. Instead, we see promotion after promotion, which takes up considerable resources for the advertiser and its agency. This can sometimes be to the detriment of advertising the core product, the only proven way of building long-term growth of the advertiser’s business.
Second, online marketing is still in its infancy – no brand can claim that it has really developed its product marketing to its full potential on the web. Ironically, with all of the unique opportunities to record direct results with online advertising dollars and the limitless possibilities of interactive one-to-one marketing the web offers, clients still spend millions on TV spots and print campaigns that can attribute only indirect correlative results to their success.
Third, it still costs a ton of cash to reach those eyeballs, and cost-per-click deals are a common way of buying them. Promotions designed for immediate response work very effectively with the cost-per-click model. Good for the media buyer, good for the online media outlet, and apparently good for advertisers. The only question is that while the same users are clicking away, registering for promotions and sweepstakes, the brand is getting lost behind the promotion. This is fine in the short term, but over time, how good can this strategy be?
Currently, broadband is opening a new and exciting era for the web. Dominant web technologies like Java, Flash, DHTML, streaming media, and database integration are really reaching a sophisticated level. Online media outlets have matured and are partnering with leading ad server companies to allow rich media to be a component of virtually any online ad campaign. The online advertising business is booming, and experts predict that it will continue to grow. Not to mention that products like TiVo are beginning to jeopardize TV advertising.
I would never claim promotions are a bad thing for advertisers, particularly web advertisers. In fact, promotions are a fundamental component in an online marketer’s advertising mix. However, promotions must be used responsibly and in conjunction with brand-building product advertising. While it may not create a usage spike as effectively as promotions do, brand advertising sells the product and gets consumers to purchase based on the merit of the product and its emotional appeal.
And, after all, what customers are more interesting to a marketing manager: those who buy a product because they just want it or those who buy because of an incentive?