Until now the majority of prepaid phone cards issued in the United States have been free. They have been given away by packaged-goods manufacturers to promote their products and brands.
ards will continue to be a strong promotional vehicle to draw consumer attention to a product.
Brand marketers will increasingly use the interactive features that phone cards offer to collect valuable consumer research and add an extra dimension to the promotions, such as providing additional information and running a sweepstakes or contest.
Here is what executives had to say about the direction of prepaid-phone-card promotions:
SN: Why have prepaid phone cards become an effective promotional tool?
Goldberg: First, they are a new technology to America. They have been used for a long time overseas. They offer a good opportunity for manufacturers to give their customers -- be they consumers or retail customers -- a nice gift that is easy to give, universally used and perceived as being very rewarding. Almost everyone makes long-distance phone calls. The opportunity to get free long-distance service is something consumers really like. Some companies have used them as trade incentives to increase case sales. In that case, the card is given to the retailer or individual store manager. It is very easy to use, about the size of a credit card, very convenient to give away and carry. It has high perceived value and represents a new technology that intrigues people.
Schloss: Any type of consumer-driven incentive helps sales of the product. It also may make people more aware of phone cards. They will get a free phone card with the purchase of some product, such as a greeting card. They will try the free three-minute phone card and think it is neat. After trying the free card, they will buy a phone card. That has been our experience.
Veres: A phone card is a good promotional tool because people want long distance. They don't need another mug or cap, but they can use long distance. Even if someone doesn't need the phone card for his own use, they can give it to their mother or son or daughter. Everyone knows someone who can benefit. Everyone sees the value. A phone card can be used to introduce people to new services you have to offer or to reinforce your brand.
Goldberg: Prepaid calling cards can change consumer buying habits. The card can cause consumers to sample the product. It reminds consumers that they got the card through the product tie-in.
When you call the 800-number, you may hear a message from the company that put the promotion together. You have to get through the message before you can dial the number you want to reach. After you call, you will hear a "thank you" and a message about how many minutes are remaining on the card.
Consumers don't seem to mind getting a very brief advertising message when they call the 800-number, particularly on promotional cards. They understand it is free. They are willing to listen to a 10-second ad. If the ad went for two minutes, they might get upset. You can say a lot in five to 10 seconds. The consumer is OK with that if he can get free long distance.
Kaminsky: Phone cards and tie-ins, in terms of the packaged goods/retail aspect, are becoming more mainstream. Phone cards are turning up in packaged goods such as cereal, and the public is becoming increasingly aware of them.
Capka: Almost every Fortune-500 company has utilized a promotion, but few people include other messages such as, "Push one to hear about the big sale coming up," "Push two to hear where you can find coupons" and "Push three to get on our mailing list." All kinds of things can be done that haven't been done.
Canty: A cereal manufacturer giving away cards is an effective application. In the last couple of years, it is beginning to go one step further. The prepaid-phone-card providers are putting market research mechanisms on the cards.
When the cereal company gives away the phone card, in order for the consumer to activate it, he has to answer a series of questions. The company giving away the cards is able to find out demographic information or other information about his customer base.
Typically, the prepaid-phone-card provider can download the database directly from the computer [and send it] straight to the packaged-goods manufacturer, so the information never has to be keyed in. It's a pretty straightforward and effective route.
Capka: There is no better incentive than a prepaid phone card as a promotional vehicle. There is no one who does not appreciate free long distance.
But giving away a card with three or five minutes is not enough time. People don't use it. Phone companies know this. It is called breakage. Over 100,000 cards are put out, but 60,000 will never be used. The company giving the cards out paid for them, but it didn't really give the consumer anything.
The idea is for the consumer to use the card with your name on it. They are holding your name in their hand. Then they dial the 800-number and it says, "Thank you for buying my product." It may say more: "Did you know?" "Would you like more information?" If they never use the card, it defeats the purpose of the promotion. A promotional card should have a minimum of 10 minutes on it. The average phone call in America is 3.5 minutes. People don't want to be on the phone for two minutes. Why defeat your purpose and give out a card that 60% of the people won't use?
Kaminsky: Prepaid phone cards are an attractive promotional tool because they are very versatile. No other kind of premium gives you back information about your customer. The promotional impact of a phone card is greater than some other premiums because the consumer can see and hear a message from you every time he uses the card.
SN: Discuss promotions you believe have been particularly effective.
Veres: In 1995 and 1996, Sprint had a phone-card giveaway in a Gillette razor package tied-in with the NCAA tournament. A set of 40 cards was available. They became collectible. The first year, Gillette had the phone card in a 10-pack of disposable razors. Last year, the card was in a package of blades.
People kept buying the products to get the cards. People talked on the Internet about which cards were available. It created a lot of excitement in the collector world. At the same time, Gillette doesn't want to be known just as the company that offers phone cards.
Brand marketers won't want to do the same promotion over and over. Even if the phone card is successful, they will want to offer a variety of gifts or premiums.
I saw a phone-card promotion on a box of cereal that was tied in with a sweepstakes. Other prizes were available. This was a creative and an interactive approach.
Another phone-card promotion gave children the chance to vote for the President by dialing a number and pressing the touch-tone buttons. This was also tied to a cereal. Anytime a promotion gets the customer more involved, it will work. It differentiates from retail. When you sell at retail, you are dealing with someone who wants to buy long distance. A promotion goes after a different market by getting consumers to buy a branded product and try a phone card.
Goldberg: The Sprint promotion tied with the NCAA was really good. As with all promotions, it is how they are presented to consumers. If it's done in a fun, creative way, the consumer will pay more attention and participate. Sprint/NCAA caught people's attention. It helped Sprint brand themselves as a sponsor. The card had beautiful graphics and became collectible.
A Hershey and Kit-Kat candy promotion was fun and creatively presented. From what I know of it, Hershey bagged phone cards on a number of Kit-Kat bars. It was a good match. Kit-Kat is a fun product and so is a phone card.
I just read that greeting card companies are including phone cards with greeting cards. Not only do you send a card to someone, but you send the means to get in touch. The card is small and thin, but even a paper phone card can be used. The greeting card company can sell the cards at a higher price. This tie-in would be perfect for a "miss you" card.
SN: How are prepaid phone cards being utilized most as a promotional vehicle?
Goldberg: Many different promotional tactics can be used for phone cards. Consumers like promotions that are easy. A free premium is the most likely promotional tactic. It works as an incentive for the consumer to buy a certain product by giving away a free phone card. It may be an incentive to buy the jumbo size or a bundle pack.
A prepaid phone card can be used for a sweepstakes -- not only as a prize, but also as a way to access the sweepstakes. The card can be used to find out if you have won.
It can be used as a purchase incentive. The more you buy, the higher the value of the card you receive. In the case of collectible cards, the consumer may want to buy the same product a number of times to collect a whole set.
A phone-card promotion also can be self-liquidating. If you buy product X, you send in proof of purchase and $2 for one hour of free long distance.
Seasonal promotions timed to Mother's Day or the holidays also work well.
Veres: I don't see calling cards used much as a reward, but I think they are a good reward. The prime use is advertising. People see the benefit of putting their logo on the card. I have seen the card used as an incentive. People will buy more of something if they can get a phone card. Right now phone cards are considered a cool thing.