Promo - February 2008 - (Page 35)

Lead Generation Lead-gen schemes use big brand names to lure unwary consumers By Brian Quinton photo by Curt Goodwin Psst. Hey, Bud. Want a free $500 Target gift card? How about a $250 Victoria’s Secret card? Or a $100 card for Toys ‘R’ Us, no charge? Just fill out this consumer survey. Oh, and this one. This one, too. And then you’ll have to sign up for two of these six credit cards. And four of these magazine subscriptions. Don’t worry, they’re refundable. Now, can you get three friends to sign up too? Welcome to the wonderful world of incentive-based lead generation, where everything is promised, very little is actually delivered, and the word “free” always comes with an asterisk. It’s a place that lures consumers with the power of big brand names, and then— by design—sends the great majority of takers away disappointed, frustrated and possibly angry. These lead-gen schemes initially used small electronics and mobile phones as bait. But the last holiday season saw a flood of e-mail, online banners and search ads offering a new category of incentive: high-dollar gift cards from well-known retailers which are in no way associated with the spammers or questionable advertisers. That changes the game because consumers tend to complain sooner to retailers than manufacturers. After all, thousands of customers probably haven’t filed complaints with Apple because they failed to qualify for a free music player after clicking on “iPods 4 Free!” But disappoint enough seekers of a “free” Wal-Mart gift card promised by some unaffiliated company, and the phone lines can heat up in Bentonville, AR. Using retailer names in lead-gen campaigns at the holidays is even more problematic, since many customers may already be shopping at these merchants and could be expecting to receive official e-mail from them. The threat to these stores’ brand equity seems real. Yet the merchants contacted for this story chose not to speak. Maybe they’re hoping the problem will just go away, or that regulatory pressure will rein in incentivized lead generators. But both those hopes might be dashed. The extent of damage to brands from this is hard to measure or confirm. Retail brands declined to take part in this article, and of course incentivized lead generation can be done properly. But the possibility for harm exists and should be monitored. NUISANCE OR REAL PROBLEM? In 2005, Wal-Mart was fed up enough to sue online marketing platform ValueClick when that company’s leadgen division offered “free” $500 WalMart gift cards. The retail giant stated that ValueClick was abusing its intellectual property and customers complained when the premiums didn’t show up. ValueClick countered that the card it depicted in the offers was distinct from Wal-Mart’s and that the copy specified that the retailer was not associated with the promotion. The case was settled in 2006, on terms neither party has disclosed. Meanwhile, incentivized lead generation has proliferated because it’s human nature that people generally will want something for nothing. When the Internet was young and the lead-gen business relatively uncrowded, the mission was to get people to give up their contact info for a consumer item typically worth less than $25. Those days are gone. To cut through the mailbox and cyber clutter, lead-gen marketers have upped the ante with DVD movies to Razr phones and iPods to even bigger-ticket items. Offers for flat-screen HDTVs and Sony laptops are now common. And the retailer gift-card valuations have kept pace, with offers for $1,000 gift cards not uncommon. The costlier the offers, the less leadgen companies can afford to fulfill them, of course. So where companies once were content to have half or twothirds of their applicants drop out on the way to qualifying for a premium, these new high-stakes offers require that the chances of completing the process and earning the gift be slim indeed. That’s done through roadblocks in the qualifying process known colloquially as “breakage.” While different lead-gen companies impose varying levels of difficulty, it’s not unusual to see—in very small print—that in order to get your free gift, you need to: 1. Register with valid information. 2. Complete the user survey. 3. Complete at least two silver, four gold and six platinum offers. 4. Refer one unique household that also completes these requirements. Purchase may be required. Purchase may indeed be required— most likely more than one. And those purchases probably will involve entering credit card data. Registrants are often faced with a time limit for completing offers and a further requirement that the lead-gen company must “certify” the completed offers. ONE IN 1,000 Lead generation can be done properly with incentives. Both the Direct Marketing Association and the InterContinued on page 36 Promo / WWW.PROMOMAGAZINE.COM / February 2008 35 http://www.promomagazine.com

Table of Contents Feed for the Digital Edition of Promo - February 2008

Promo - February 2008 Contents Editor's Note Reality TV Products Rebound - Soon? The Real World Young But Not Stupid Social Tease Health Quencher How Effective? Big Game in Big Easy Commentary Mailbox Marketing Q&A: Coke's Kruse Control Gift-Card Monte Room Service The Agency Center Resource Center Can't Beat Loyalty Index of Advertisers

Promo - February 2008

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