What to avoid when giving an advertising discount?
In the competitive world of online advertising, business strategies like discounts and promotions are necessary to encourage advertisers to place and renew their ads on your website. With that being said, here are five things to avoid when giving out advertising discounts because, after all, some discount strategies may not only hurt your short-term profit margins, but also have long-term repercussions.
When discounts are provided frequently throughout the entire year, customers are more likely to suffer from overload. Think of it this way, too much of a good thing can be toxic. Customers will not feel the joy of getting a good bargain when they do not expect it if they are offered the same discount over and over again. It is better to spread them out and have periods without any discount to strengthen your pricing policy.
When discounts are of the same style each and every time they are given, customers will also become bored of those deals. For example, if your discounts are always pegged at 10% regardless of the time of year and the type of purchase being made, your clients are more likely to go somewhere else for more exciting deals, say 20% for bulk transactions and 10% for single transactions. It is more effective to create a promotional plan with different intervals and different promotional amounts.
In your eagerness to attract advertisers to your website, you should never put your bottom line in jeopardy. Huge discounts can result in your own net losses, which may mean a premature closure of your business – and that’s definitely something you want to avoid. A discount should be designed to encourage a new client from signing up or an existing advertiser to renew a contract or add additional campaigns. It should not be used to start a price war as it is often not sustainable and can destroy your business. Customers may also start to expect the same large discount repeatedly which will affect your profit margins and put you in a difficult situation.
Why bother giving discounts to customers when these are too low or too little in their perspective? A one or even three percent discount might not be enough to incentivize your advertisers. You want to encourage your customers to take advantage of the discounts because these are great deals that will lower their advertising costs, which ultimately contributes to higher profits. If you cannot offer a decent discount then it is better to not offer anything at all until a better opportunity arises.
Difficult to qualify
You can set up promotional requirements and coupons in your ad server, thus, taking the manual work out of the entire process. However, be sure that the criteria and requirements will apply to many customers instead of just an elite few. It is best to stay away from too complicated, too restrictive and too misleading rules for discounts. These can result in mistrust, complaints and even worse, legal complications due to false advertising.
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