Free sampling As A Business Model – Money For Nothing
While the something-for-nothing business model has gone the way of Dionysian launch parties, two Web-based free sampling companies are trying to evolve into full-scale market research firms.
Both FreeSamples.com and StartSampling started their businesses by offering free product samples from their respective websites. But now, both realize that the real value of these offers is the information collected from the people who respond.
In fact, San Francisco-based FreeSamples.com admits it will likely change its name later this year to reflect the work it’s doing in partnership with United Business Media, a media research conglomerate. “The free sampling offer has become an actual hook to incentivize consumers to provide valuable insight,” says former FreeSamples CEO Jeff Malkin, who claims that two surveys sent to more than 200,000 of its sampling customers generated a 40 percent response rate.
That kind of customer data allows FreeSamples to target special offers to very specific consumers. “We’re using the offer to influence the behavior of consumers and result in increased sales,” Malkin says.
A new razor product is one example. If FreeSamples distributes new razor handles free to customers, then they might be inclined to spend as much as $200 per year on razor blades to fit that product. On the other hand, there will be jobs that seem to be disappearing.
Meanwhile, StartSampling is also showing its clients that sampling is a great way to introduce a new product. One client, Golden Books Publishing, found StartSampling’s demographics-mostly mothers of young children-appealing and used it to distribute 20,000 copies of a new book product called Finditquick.com. Hoping to get responses from a quarter of the samplers, the Golden Books campaign resulted in a 67 percent response rate.
“It was a smashing success,” says Mark Ahrens, senior director of Internet marketing for Golden Books. “They handled fulfillment and a real-time survey engine, all at a cost that was less than trying to send these books out through normal fulfillment channels. And we received invaluable insights from the research.” But not all new ventures succeed.
StartSampling CEO Larry Burns says the company is also stretching beyond its own sampling Website to become an application service provider of sorts that offers samples on manufacturers’ own sites, or even to brick-and-mortar grocery stores, with the consumers then asked to follow up with online surveys.
Not everyone is convinced that the transformations work, however. “That’s a much better business model,” says Rob Rubin, research director for Forrester Research’s consumer packaged goods area. “[But] I’m still stuck on the destination site thing for free samples. Both companies may be offering market research. But it’s still ultimately market research on people who went to a free sample site.”
DoubleClick Goes Traditional
With click-through rates in disrepute, the granddaddy of online advertising has created a research division called Diameter that will employ more traditional metrics. The goal is to lure resistant companies onto the Net and into the DoubleClick fold.
Pessimists, Take Note
New York-based research firm eMarketer puts the supposed Internet advertising apocalypse in historical perspective. In its fifth year as a commercial vehicle, the Net generated three times the revenue cable television did at the same stage. Even with the recent slowdown, eMarketer sees online ad revenue growing to $10.3 billion in 2018.