Not surprisingly, these goods have become top-of-mind for marketers looking for promotional giveaway items to strengthen sales and brand identity. Yet marketers like these items for another reason: they're not as expensive as consumers might think.
50 CENTS AND UP
For consumers, the value of phone cards, compact discs and CD-ROMs begins at $10 and goes up. For marketers, the cost of these hot premiums is barely 50 cents to $15 per item.
"In the consumers' mind, these are highly valued, highly desired premium items," says Ron Schwisow, president of Teraco, a prepaid long-distance telephone card-marketer.
"Long distance telephone time, for example, is seen by many consumers as being high-priced and costly. Being given a telephone card with, for instance, 20 minutes of time is seen as something truly valuable," he adds.
Prepaid TeraCards, for instance, start at $4.28 each for 100 cards with five minutes of time. But as the quantity of cards ordered increases, the per-card cost drops.
HOOPS AND PHONECARDS
As part of its NCAA basketball promotions, Gillette Co. in 1995 and 1996 teamed with fellow NCAA sponsor Sprint Corp. to offer five-minute, prepaid phone cards as an in-pack premium with purchase of Good News, Daisy, Atra and Trac II shavers.
There were 16 cards each printed for the men's and women's divisions, with artwork of players shooting, dribbling and rebounding. All of the cards together could be put together to make a puzzle.
In 1995, the personal grooming marketer dropped 4 million in-pack cards, and in 1996, 2 million cards were wrapped in with the disposable razors.
Using Teraco's estimate of 6 million five-minute cards costing 80 cents per card, Gillette spent $4.8 million on this giveaway, excluding costs to promote the program. That amount can also buy roughly 10 30-second spots on NBC's "ER," according to price estimates from the beginning of the 1996-'97 TV season.
"There wasn't any merchandise left at the end of these promotions," says a Gillette spokesman. "The phone cards were a nice tie-in with the rest of our overall [college basketball] promotion."
BUILDING BRAND EQUITY
One of the key reasons marketers value phone card promotions is that they build brand equity, says George Mercer, VP-product management, Catalina Marketing Corp.
"Consumers are reminded of the brand every time they use the card," he says, since a short advertising message is played before consumers can dial the desired number. "At a time when many marketers are competing on price, this is a way to reward consumers with something other than a price reduction and have them remember your brand name every time they pull out the card."
For many of the same reasons, marketers also are beginning to use more compact discs and CD-ROMs as consumer promotions. In many instances, marketers can purchase CD-ROMs for as little as 50 cents each, but the perception on the part of consumers is that marketers spent a lot more.
CHEX CD-ROM GAME
General Mills this spring will spend more than $5 million on a high-tech promotion that packs a CD-ROM computer game in 6 million boxes of cereal-or about 80 cents a box.
Touted as the first of its kind in the cereal industry, Chex Quest
3-D, a non-violent, action adventure game, uses the same game engine as Doom, one of the most popular computer games. Chex Quest has several levels and asks users to visit the company's Web site to download subsequent levels.
"CD-ROM games like this retail for about $30 at retailers . . . and as such, it has a high value for consumers," notes Josh Field, marketing director for Richmont Co. and formerly Chex Cereal Group Marketing Director. "We found that the demographics of households with CD-ROM-equipped computers closely mirror those of Chex households, making this a good premium."
"Whether consumers actually have a CD-ROM [drive] or not, there's a perception that this is very valuable," adds Dori Molitor, president of WatersMolitor, the Minneapolis-based promotion marketing agency that developed and is executing the program. The payoff for Chex is that "consumers are immersed in the brand's equity simply by playing the game for a half hour or so a couple times a week. A deep, strong impression is made in a fairly subtle, indirect way."
The soft-sell approach also is what Seagram Americas' Absolut vodka has in mind for its new Absolut CD-ROM, which will be packaged with about 100,000 bottles of Absolut Kurant this spring. Called Klub Au Kurant, the CD-ROM offers visitors a variety of interactive and imaginative club experiences in six different cyberbars.
Each bar has its own sense of style, along with special drink recipes to introduce new Kurant mixed drinks. For example, visitors to the Underwater Bar are greeted by a mermaid and told the Kurant margarita is the catch of the day.
The marketer declined to reveal the cost of the program. But according to software industry sources, such a CD can run as low as 50 cents per disk-a cost that includes programming.
"This CD-ROM gets the message out in a compelling way that appeals to the hip, trendy, cutting edge audience we're targeting with Absolut Kurant," says Russell Aronson, manager-marketing services for Absolut.
Compact discs have been used by marketers such as Dean Witter, Discover & Co.'s Discover Card, which last fall offered cardholders an exclusive CD sampler of country star Trisha Yearwood. Cardholders had to purchase Ms. Yearwood's new release "Everybody Knows" with their Discover cards to get the CD.
"Music is seen as a valuable gift as well as an enjoyable one," a Discover spokeswoman says.