How Does Giveaway Marketing Work?

Offering giveaways can increase sales overall.

It's not hard to find companies willing to give away free stuff. Whether it's part of an online promotion or a street corner display, businesses always seem willing to spend money on samples. Companies receive a clear return on investment from giveaways, since there are a variety of ways in which giveaway marketing can be used to increase sales.

Drives Product Awareness

Free samples of a new product increase consumer awareness of its existence. While not many would notice a new product on the crowded shelves of a retail store, if they've received a free sample and enjoyed it, they might seek it out. This is more powerful than signage or advertising the product, which has less of a lasting impact than direct experience.

Contact Information Collection

A giveaway is often provided in exchange for a valuable marketing commodity: consumer contact information. Whether it's getting an email address or a "like" on the company Facebook page, this information is used later by the company to promote its brand. This direct contact would not be possible had the consumers not voluntarily given their info in exchange for free stuff.

Proof of Product Quality

For an existing product that wants to expand its customer base, offering a sample can encourage new customers to switch brands or sign on as a new client. If a shopper is satisfied with the brand of yogurt he normally buys, it likely won't occur to him to switch to another brand. If he tries another brand of yogurt as part of an in-store giveaway, he might be impressed enough with the taste to change his purchasing habits.

Free Promotion

Targeted giveaways that focus on people of influence do so with the hope they'll spread the word about their product. This can include bloggers and online personalities who regularly comment about their product and entertainment preferences. Websites such as GetGlue.com offer giveaways to members with the expectation they'll discuss their product experience online.

Encourage Event Attendance

Offering free stuff is one way to get people to show up to promotional events for a business. Whether these people continue to patronize the business or not, the buzz created by attracting a crowd is often enough to get people into the store, or around the table where the product is being sold.

Preparation for the Upsell

Companies can offer a basic product for free, and then charge for product enhancements. In this way, the giveaway is a gateway to an expanded product line. The commercial website Vistaprint.com offers free business cards to site visitors; once they place the business card order, patrons are offered additional items for a fee.

References

• Marketing Magazine; Frito Lay, Like, Totally Nails Facebook Giveaway; Chris Powell; August 2011
• Tech Crunch; Social Marketing: Glue Guru Giveaways Target Online Influencers; Erick Schonfeld; February 2010
• Inc.; Increase Sales With Giveaways; Marla Tabaka; April 2009
• Entrepreneur; Special Events; Rieva Lesonsky; August 2004
• GetGlue.com
• Vistaprint.com