The Big Picture

Are on-pack promotions becoming extinct? Is it just about price now?

Maybe they're just in hibernation, or they've flown south for winter (I wouldn't blame them), but there seems to be a dearth of on-pack promotions out there. 

As we've said before, pure discounting is a slippery slope, with few fringe benefits. Consumers will come to expect it and long term it fuels the consumer's desire to solely buy on price. That's no fun for anyone.

A well run compelling promotion engages the consumer, develops and builds on the brand proposition, preserves margin, captures valuable data and provides a real point of difference between you and the herd. If you get it really right the pr spin offs, viral buzz and the Twitterati can boost the impact of a campaign enormously.

So, marketers, be bold, be brave and be creative. Retailers maybe putting on the pressure on shaving your bottom line, but they will always want a good promotion. Just take a look at PromoWatch for a few live examples - we're loving Doritos King of Ads and Carlsberg England Team Talk.

New CAP Code for Advertising & Sales Promotion for September 2010

CAP - Committee of Advertising Practice, have this week announced the new set of rules which will come into force on 1st September 2010.

Whilst there may not be any fundamental changes to the existing legislation governing Advertising, Direct Mail and Sales Promotion, there is a warning that the rules may be enforced more stringently in the future. So you can expect dawn raids from the promo police; visits from mystery cop-shoppers; stop and search of suspected account 'handlers'. You have been warned!

Rules are rules after all, and with the major TV vote-rigging scandals that brought the whole concept of promotions in to disrepute in 2007, just beginning to fade from consciousness, the industry is keen to avoid future incidents.

So, it makes sense to acquaint yourself with the latest edition of the code. Whilst they do not post exhaustive lists (why not?) the information on current legislation is available on www.asa.org.uk or www.cap.org.uk. You can also check out recent adjudications on these sites which can help with specific examples.

Are there any major changes for promotional marketers to concern themselves with?

Specific areas of the code which are worth noting from a sales promotion point of view are provided below.

Section 3.23 - 3.26 - Use of the word FREE in marketing communications

No product may be described as free if:

• the consumer has to pay anything to take receipt of the product
• if the consumer has to pay for packing, packaging, handling or administration charges
• the Cost of responding, or purchasing a 'qualifying' product, has been increased to cover the free item (Any increase in cost must be unrelated to the cost of running the promotion)
• the quality of the qualifying product has been reduced

If the free product is an element of a package of products, it may not be described as free unless the previous package price remains unchanged.

Further, a 'Satisfaction or your Money Back' style offer must not be described as a 'Free Trial' neither can offers for which a non-refundable purchase is required.

Section 8.17.6 - Prizes and Gifts

Promoters must specify the number and nature of prizes or gifts available that can be won. If the exact number cannot be pre-determined, a reasonable estimate of the number and a statement of their nature must be made.

Promoters must distinguish which prizes can be won (including estimated prize funds) from those prizes that will be won during the promotional period.

Section 8.25 - Instant Win promotions

Participants in instant-win promotions must receive their winnings at once or must be informed immediately what they have won and how to claim without any delay, cost or admin barriers. Instant-win mechanics must be distributed on a fair and random basis. Verification must take the form of an independently audited statement that all prizes have been distributed or made available for distribution in that manner.

Section 10.15 - 10.16 - Database Practise in relation to Children

Marketers must not knowingly collect personal information from children under 12 for marketing purposes without parental consent.

Marketers must not knowingly collect personal information relating to other people from children under 16.

What is good national coverage for 3rd party promotions?

There is no point running a promotional offer on pack if no one can use it. How often are you drawn in by a great headline offer only to find your nearest venue is 50 miles away? As we always say, coverage is king. But what is good national coverage? Well, it depends on what promotional partners you are wanting to feature. For example you're not going to want to travel for half an hour to collect your Friday night takeaway, but you might be prepared to travel up to 2 hours for a big day out or to visit the coast where you'll spend most of the day. So, adequate coverage for one will be poor for another. To illustrate this, take a look at the following chart.

You will note that only business and holidays / day trips achieve an average travel distance over 20 miles. In fact, trips for all other leisure and social purposes are less than 10 miles.

How can we use this to work out national coverage?
The UK covers an area of 94,526 miles². Dividing up the UK into 10 mile squares, you would get c. 945 locations. But, this of course assumes that the UK has an even spread of population and amenities.  

UK population density per hectare, with 25 mile grid

As you can see from the map, only about 1/3 of the UK has a population density above 1.5 persons per hectare. So 1/3 of 945 = 315 locations. However, as we can see from our chart, most people travel less than 10 miles for most leisure purposes. For a 7 mile grid the number of venues doubles to 630 locations and roughly doubles again to c. 1260 for a 5 mile square. We appreciate that the population density varies across the UK but this is evened out by the fact that we are basing the grids on average journey times for the different purposes.

These figures are obviously ideals, but are they achievable? We also need to take into account the universe of available venues for your chosen sector. Naturally the number of businesses in each sector tends to expands to meet available demand for mature leisure sectors; that's market forces for you. 

Approximate universe for certain leisure sectors:
Sector Universe     10% target
Public Houses 60,000 6,000 (nigh on impossible)
Takeaways 30,000 3,000 (we've done this!)
Hairdressers 20,000 2,000 (unlikely)
Health Clubs 6,000 600 (yes) 
Public Swimming Pools 5,000 500 (yes)
Days Out & Attractions 5,000 500 (yes)
Cinemas 780* 78 (n/a chains dominate here)
* Source: Screen Digest; CAA

As a rule of thumb, you are likely to secure a promotional offer from 10-20% of any target base. (Paradoxically landlords are far more reluctant to run promotions that will drive traffic into pubs. On the other hand Indian restaurants are very promotionally savvy.) So in most cases, the available universe of venues would not prohibit the recruitment of good national coverage.

Final Thoughts
Third party offer recruitment is 'self selecting'. Partners will participate where there is competition between businesses and competition exists in more densely populated areas. Ironically, this means that businesses in more remote areas have a captive audience and are less likely to participate, which in turn means that these people are least well served by promotions.

Clearly if you want to provide a great sales promotion that delivers on it's headline, good coverage and therefore accessibility is essential. Using our figures as a guide, will help you determine if a provider is offering a good proposition. Always compare like with like when considering a promotional offer and be wary of the offers fulfilled on a concierge service. Ask them for a list of venues and do due diligence. If the venues know nothing about the promotion - run a mile.