Innovation: Promotion design.

The factors that determine promotional participation rates

Are often considered as something of a mystery yet time-and-again promotions agencies produce winning ideas and formulations that capture public imagination.

As indicated in the diagram below, promotional success is a numbers game. The more people you can make aware of the promotion, the more you will have who will consider taking part, and the more who consider taking part, the more there will be who actually take part. And then if enough of the response you get is incremental, the bigger the return on investment will be.


Successful promotion is a "numbers game"

Raising awareness will result in greater response.

Our view is that response can be summarised as the product of two components: the logistical effort behind the promotion and the structural design of the promotion.

The logistical part is more easily measured and controlled. How much distribution the promotion gets: whether it is supported by advertising, how visible it is in-store and so on. All of these help multiply awareness, promotional participation and sales success. The better they are done, and the more they are done, the better the result.

By contrast, the structural component is much harder both to measure and to control. We define the structural component as the mix of the promotional idea and its actual manifestation. If the underlying promotional idea is poor or the idea is not well-enough developed, the conversion from awareness into participation will be much lower than otherwise.

We believe that measuring overall interest in a promotional idea is not enough to tell us if the promotion will be anything more than just adequate. To truly judge its strength we need to understand how it performs on each of the 5 key criteria that determine promotional engagement. Only by doing so can we compare it objectively with past promotions and see why each is stronger or weaker than another.

  • Relevancy: To how many people is the promotion relevant / likely to be of potential interest?
  • Identification: How well-known / well-liked is the promoted brand and any partner brand?
  • Accessibility: How much effort will be involved in taking part in the promotion?
  • Value: What is the monetary and emotional value of the reward and how easy is it to win/obtain?
  • Risk: How big is the downside risk to taking part in the promotion - i.e. if I change my brand to take part in it, what's the risk I'll have to throw it all away unused etc.?

Once the data have been collected they are grouped and weighted together to summarise the strength of the promotion on two key dimensions: Functional and Emotional. The product of the promotion's performance on each of these two key dimensions determines the promotion's overall Promotional Engagement Index (PEI) score, as indicated in the diagram below.

The higher the PEI score the higher is the level of engagement and, other things being equal, the higher will be the number of people who are therefore likely to participate.

Calibration to expected participation rates is achieved by comparing the PEI score for the new promotion with the scores for the benchmark promotions run in the past.

It should be emphasised that the PEI score is not a prediction of promotional uplift though, nor is it a prediction of a positive ROI. The actual uptake and ROI you get will depend on many other factors in addition to the strength of the concept. But having the PEI score enables you to weed out those promotional designs that would be doomed to fail even if you did everything else absolutely right.

If this sounds like your idea of promotion planning why not simply give us a call? Tel: +44 (0) 20 7917 6042