Sampling appeals to online upstarts and conglomerates alike. Smaller brands get exposure and a potential new retail partner, while larger established companies can trial new products and iterations of existing ones.
“Free sampling in stores is a great way for brands—which have saturated the marketing opportunities on Facebook and Google—to get more exposure,” says Andrew Lipsman, an analyst at Insider Intelligence.
For years, companies large and small used online ads to help target their products at specific demographics. But doing so became less effective in 2021, when Apple Inc. began letting iPhone users block brands from tracking their online behavior. Meanwhile, several states including California enacted digital privacy legislation that made it even harder for companies to access consumer data. The upshot: It’s now much more expensive to find new customers through social media channels and keyword search ads. Online merchants lost an average of $29 on each purchase from a new customer in 2022, more than triple the cost eight years earlier, according to a study by SimplicityDX, a software firm that helps brands with social media marketing campaigns.
Los Angeles entrepreneur Michelle Razavi was eager to boost sales of Elavi, a low-sugar nut butter she launched three years ago as an online brand. Ads on Instagram, Amazon and other sites had become pricier and less effective amid growing competition for eyeballs. So Razavi cold-called a Costco Wholesale Corp. executive to ask about giving out samples in stores.
A few months later, she and co-founder Nikki Elliott were standing on the precious real estate Costco shoppers pass on the way to the checkout, handing out dollops of cashew butter atop banana slices. Over four weekends, they gave out about $8,000 worth of product and exposed their brand to thousands of shoppers at Costco warehouses in Los Angeles. Comparable sales and exposure would have cost them about $80,000 via Instagram ads and social media influencer campaigns, they estimate.
Razavi says about 3% of Costco shoppers who tried the product made a purchase, much higher than the 1% who purchase something after seeing a social media campaign. “In person, you see people’s reaction and can adjust your approach,” she says. “Online is just marketing to a dark screen.” Now she and her partner are negotiating to start selling their nut butter in dozens of Costco stores.
Walmart has been working with brands to build its ad business, which includes online ads and free samples. In the second quarter, the retailer reported a 36% increase in ad sales at Walmart Connect, its US retail media business.
One of its partners, Mondelez International Inc., is using free samples to raise awareness about new and seasonal products such as those Halloween-themed Oreos. The snack maker has also handed out goodie bags to curbside pickup customers, typically with a QR code they can use to add the items to their next order. The company isn’t abandoning online advertising but increasingly will use it to point shoppers to recipes with its products or an array of snacks for, say, a college football watch party.
“We can’t just have a sampling table at Walmart and expect it to sell,” says Steve McGowan, head of shopper activation and strategic partnerships at Mondelez. “We have to have an omnichannel approach. We need digital media to alert people that this is in the store and potentially a digital offer to get them over the hump to buy the full package.”