The Economics of FREE in Experiential Marketing

How many times have you taken on a coupon or accepted a promotional gift, purely because it’s FREE?  The coupon for a FREE pair of gardening gloves invariably ends up on the table by the car keys and then sidles off to the bin, the t-shirt that declares your love of 4GB storage drives possibly ends up being slept in, and then painted in, but ultimately ends up cast aside.  With such little love for the bits and bobs that we collect on the commute or at the shops, we must ask ourselves why we accept them in the first place.

The answer is in the psychology. The sum of zero, FREE, is an emotional trigger, a source of irrational excitement that brings a burst, although somewhat temporary, of excitement and one that turns out to be far more tempting than discounts.  Numerous studies show that a huge upward swing is achieved in sales when a product is listed free as opposed to heavily discounted, even when that difference can be only £0.01.  FREE is better than £0.01. Hugely better it turns out.

Dan Ariely, professor of psychology and behavioral economics, and author of the book Predictably Irrational, believes;

‘Most transactions have an upside and a downside, but when something is FREE! we forget the downside.  FREE! gives us such an emotional charge that we perceive what is being offered as immensely more valuable that it really is.  Why? I think it’s because humans are intrinsically afraid of loss.  The real allure of FREE! is tied to this fear.  There’s no visible possibility of loss when we choose a FREE! item (it’s free)’

So what is the relevance to experiential marketing and sampling?  Experiential campaigns and sampling activity should always have a communicated element of free.  Instructing promotional staff to say ‘try a sample of’ rather than ‘try a FREE sample of’ is to miss the psychological trigger entirely that would lead too much higher interactions. Brand managers often instruct promotional staff to shy away from communicating FREE under the assumption that this will result in a deluge of ‘free loaders’, and that people will engage in the experience for the wrong reason.  This is missing the point.  Most of our targeted audience will be unaware of why the product or service we’ve created an experience around is awesome, we need to encourage them to participate, in whatever way we can, and then rely on the excellence of the experience and the promotional staff, to convert that consumer.  FREE is that enticement.

The concept of zero doesn’t just translate to pounds and pence either, potential consumers assess the value of the time spent doing one thing against another.  When planning an experience, time should be spent understanding how to create an obvious upside to the experience that will trigger a positive response from the consumer when they make their ‘time better spent’ assessment.  Whether it’s having a particularly engaging brand ambassador to welcome passers by, or the promise of FREE within the experience itself.

Planners, experiential agencies and brand managers need to recognise the huge value in FREE and leverage it to its full potential.

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Posted by

Phil Edelston