Why you should give cash instead of Gift Cards

Many people find it difficult to shop for friends or family around the holidays, or they simply like to spoil and supplement a wonderful gift with some extra 'Gift Card' money. Let me explain why this is a bad idea.

First, from a social perspective, when you give someone a Gift Card to a specific retailer, you are essentially telling that person where to spend their money. You could give them cash, and trust them to spend it on something nice, but instead you just dictated where they should spend it. This problem often arises at baby/wedding showers, as well as weddings themselves.  What do you buy for $50 at Pottery Barn? The answer is nothing.

The second reason to avoid the gift card is that they are expertly designed to make money.  That's right, no matter what, they are making money from you. Gift cards generate money for the retailer in a few very simple ways. Breakage, Margin, and Float.

Breakage happens when you spend $50 on a Gift Card, and the recipient only manages to spend $49 (or less) of that $50. Worse yet, they lose or misplace the card and end up getting nothing. In Canada, the cards can't really expire, but if you don't spend it all, that's free money, pure profit, going into the retailers bottom line. (There are all kinds of tax and accounting rules that they have to follow to recognize revenue from Gift Cards, but the bottom line is-- they get the money.)

Margin is basically the profit that the retailer makes when you spend the card in their store.  If you had cash, you could spend it here and there and all the change would be yours, but with a Gift Card, if a stores average margin is 10%, then they are going to make $5 from your $50 Gift Card No Matter What!  You are guaranteeing that the money will go to them.  (See my first point about cash.)

...and last but not least, Float.  Float is what they call it in the loyalty industry when they get to have your money for a while before they give it back to you in some form or another.  You pay $50 now and give a piece of plastic to your family member.  The retailer gets to go use that money in the market to make more money before having to eventually give you the original $50 back, minus any breakage, and not including the margin they'll make off whatever you buy.

So, how bad is it?  Well, without quoting any sources (because I'm lazy) you can bet that breakage on Gift Cards is somewhere between 5-15%.  Depending on the retailer, margin could be anywhere from 1% to 50% (example: electronics suck, but accessories rock), and float is a nice few percentage points on the full amount for anywhere from 3 months to 18 months.

In conclusion, think about what you're doing this holiday season, and instead of buying a $50 Gift Card to Future Shop or Home Depot or IKEA, why not put a crisp, bacon-coloured, $50 Bill in that card.  Nobody loses Cash. It's universally accepted, and it can always be put in the bank for later.

PS: Under no circumstances should you ever buy someone a Gift Card for loyalty currency like Air Miles, Aeroplan Miles, PC Points, HBC Rewards, etc.  In doing so, you are essentially compounding all of the pitfalls of a Gift Card.

I'm taking Bing's Million dollar offer and de-listing from google

Microsoft's Search Division, Bing, has offered me $1.9 Million dollars to de-list my blog from all Google results, except the front page of course, and list exclusively with them.

The offer, tendered last week during the gold-rush of content-for-search acquisition, is part of Microsoft's "If we can't beat'em, buy'em" strategy which has begun to catch on for content publishers and news outlets around the world. 

Though I'm disappointed that I will no longer get 89% of my site visitor traffic anymore, I'm happy with the offer by Microsoft to be the exclusive provider of search for my site. And the money.  I plan on retiring, and not really creating any more content, since I'm now free to do other things, un-burdened by the need to make money. It's Win-Win.  My content won't be on Google (Good for MSFT), and I won't have to work (Good for me).

I'm jealous of Rupert Murdoch's deal, as he has a lot more content that he won't have to make, since nobody will be finding it very soon.  He can probably retire even sooner.

/Humour

Paint marketing must be hard.

A few years ago, Benjamin Moore launched the Aura paint line, and featured 6 or 7 different variations of flowers made out of paint as part of their brand identity. It was pretty neat.

Recently, a company called Boysen, launched a similar campaign internationally, using an identical concept. The campaign is featured on Ads of the World

Really makes me wonder if Paint marketing is that hard?  The Boysen ads are up for (or have already won) some Cannes Lions 2009 awards for TBWA in the Philippines, but now I'm wondering if those guys should really get the kudos and awards, or should get slapped with a big fat trademark violation and Dwight Shrute-level shunning by the international agency creative world.  Probably neither.

/Rant

Some say it's just a fad. I disagree.

The one thing that stands out the most to me in this video, is the stat that says that Gen Y will outnumber baby boomers by 2010. We're so set in thinking that Boomers are the generation to market to, but really, they're the generation funding the wants and desires of their children and grand-children-- Gen Y.

Poor Generation X. Pepsi has forgotten about you, and you're clothes are boring now. Marketers don't see you as a big segment, and you can't even claim you're the underdog of cool--because that's probably someone else at this point. Oh well. Watch this video, and drool about the possibilities...

Targeted Ads vs. Big Brother

This post is for Claire, because she was too tired to keep arguing discussing this with me last night.  I started out by describing how wonderful the latest targeting improvements on Facebook ads are, and how they're going to make marketers even smarter, and save lots of money from wasted mass-ad spends for multiple stakeholders.

Well that did it! How could I think this was good?  "People have no idea how much information Facebook has on us" she said.  Well-- you're the ones who put it on their website. Granted, but let's look at it from a utopian marketing world.  Imagine if every ad you ever saw was perfect. Perfect. It was from a company that you recognized, for a product you wanted, at a time when you were thinking about a purchase, with an offer that was just enough to make you convert.  That would be amazing.  But marketers are not there yet. 

Google Voice is a funny translator

I got a transcribed voice mail from my Google Voice account.  It's a Chicago number, so rarely are the calls actually for me anyway, and not wrong numbers or telemarketers.  Here's the transcription:

Yes, my name is John here. I'm not sure if I have the correct number and I'm looking for the and national association of of 3026. I want to give the brochure for the for the school. Concerning the of listed lessons. Ohh, being of an appraiser. If you can give me a call. At (773) 675-6381 if you could put meal or dried the vytek to papa phone number. I'd appreciate it. Thank you.

 I totally could "put meal or dried the vytek to papa phone number"--- if I knew what the heck that meant?  There's obviously still a ways to go yet on this transcription services, but one thing still blows me away:  Somebody called a number and left a voice message--- and Google sent me an email.  Wicked.

Solving the Gun problem

There has been a lot of chatter on the radio lately about the private members bill to eliminate the Canadian Gun Registry on which our government has spent over $2bn over the past 5+ years. It got me thinking about guns, shooting as a sport, gangs, gang violence, illegal sales of weapons, and other related things.  Here's what I think, and I welcome your comments:

People like to shoot guns for sport. This is commonly the argument to keep guns legal in Canada, followed by "You can't regulate insanity-- people will either use a legally obtained gun or buy and illegal gun and go on their rampage--why punish the legal owners?"   Well how about this: Make possessing a gun a crime so bad that that 14 year old gangster wanna be will actually consider not doing it.

Google Dashboard reminds us of what they know

Ever wonder just what a mega-giant and super data-gathering skynet-like company such as Google really knows about you?  Well now they'll tell you. Check out you're own Google Dashboard to see just what data is associated with your account.  http://google.com/dashboard

It's handy to have everything so interconnected, but it's also a little scary to think that if something goes wrong, whether that's a computer error or a human error, there's a lot exposed.  I like that I could see where my credentials had been used to authorize me on another site, and revoke access if necessary.



Official Google Blog: Transparency, choice and control — now complete with a Dashboard!

$100 in Groceries to the Winner!

I need to learn from some 'Average' Canadians.

This is a completely un-scientific survey I'm doing with some friends, colleagues and family (and blog readers). Since every effort deserves a reward, I'm going to do a draw for a $100 Sobeys Gift Card (which you can use at Sobeys, Price Chopper, or Foodland) for all those that do the survey. (Clearly I have a limited budget).

Continue Reading...

If it were my budget I'd be pissed

Just noticed this Facebook Engagement Ad (of the 'Become a Fan' variety) that seems to be a waste of ad dollars. Why you may ask?  I became a fan earlier in the day today. Facebook's ad management system knows this, because it even displays that I'm a fan IN the ad unit itself.  So why then is it even displayed to me?

I recently had an in-depth conversation with a sales manager for Facebook Advertising in California to understand how these engagement ads are purchased.  Different from social ads that are self-service, and can be purchased 'by the click' by bidding a CPC rate that fits your budget, these engagement ads are actually CPM-based, or 'Cost per Thousand impressions' and thus are for bigger budgets and national awareness types of campaigns.

So, who cares, right?  Well-- If I were the brand manager (or media buyer, or community manager, etc) for Molson Canadian 67, the new low-calorie beer from MolsonCoors, I'd sure care that my CPM-goodness was being wasted on converted eyeballs.  I'm a fan.  It's not like I'm just not interested and they need to keep showing it to me until I convert--- I clicked and became a fan already.  What's the point?  I'd be pissed.
/rant