Magazine Article | July 1, 2003

Gift Card Mania

Source: Innovative Retail Technologies

Gift cards are all the rage, but are you marketing them correctly?

Integrated Solutions For Retailers, July 2003
Matt Pillar

Seems like I can't get away from covering gift cards. Every retailer I talk to has implemented, or is implementing, a gift card program. Even the POS VARs I interview for our sister publication, Business Solutions magazine, are clamoring to strike deals with card vendors, especially in hospitality. It's a trend that spans every tier and vertical of retail.

ValueLink, the gift and spending card service of First Data Corp (Denver), recently released the results of its gift card market study. The research, gathered from a survey of more than 1,200 adult consumers, shed some light on gift card awareness and usage. If you're like most retailers, you're probably spending some serious coin marketing your gift card program. But do you know the demographics of your gift card buyers? How do your gift card buyers differ from your targeted consumer demographics? How do you know you're hitting the right person with the right message?

Who's Giving Them?
Remember that gift card buyers aren't necessarily the consumers you target with your product marketing. Toy stores, for instance, won't have much luck marketing a gift card program to their primary consumers. While kids might be willing to spend their weekly allowance on cheap plastic, they're not likely to spend it on cheap plastic gift cards. According to the ValueLink study, most gift card buyers are young, working adults and college-educated, middle-aged parents. The study estimates that 60% of gift card purchases are made by middle- to high-income individuals, and that while men and women purchase an equal number of cards, men are more likely to spend more per card. Men dropped an average of $58 dollars on each of the 4.5 cards they purchased in 2002, $13.00 more than the average woman spent.

Who's Getting Them?
As the paragraph above alludes, perhaps more important than who's buying gift cards is who's receiving them. The recipient demographics are important to understand, because the recipient, more than the giver, is your target consumer. ValueLink's study found that adult men received the most gift cards in 2002 (31% to adult women's 28%).

The study concludes that levels of gift card awareness are lower among young adults and older adults, but those 65 and older are putting the most cash (an average of $77.00) on the cards they buy. That's $27 more per card than the overall average.

Internet Users Buy More Gift Cards
The study shows gift cards are an important element of a multichannel sales strategy. Awareness of gift cards among Internet users is 87%, 20% more than non-Internet users. Internet users are also more likely to purchase gift cards than non-users (54% vs. 37%), and nearly 75% of Internet users said a gift card that could be used with multiple merchants would be appealing. The lesson in all these statistics? Target your products at Junior and your gift cards at his mom, dad, and grandparents.