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How Brands Can Maximize Margins on Promotions Ahead of the Super Bowl

AI, Offer Management Platform, Maximize Margins

by Nick DeStefano January 11, 2021

After a 2020 holiday shopping season marred by the uncertainty wrought by the COVID-19 pandemic, companies across the U.S. will be circling February 7th on their calendars. The Super Bowl, one of the largest shopping events of Q1, represents billions of dollars in potential revenue, and an opportunity for multiple brands, particularly in the CPG space, to maximize margins, especially if they institute an optimized promotion model.

As a consumer holiday, the Super Bowl stands alone in its sheer spending capacity, notoriously on the advertising side. The cost for a 30-second ad spot during the game tends to tick up every year, and in 2020 that number hit approximately $5.6 million, according to Statista. Spending potential surrounding the event is also increasingly significant; 2020 saw a consumer spend of more than $17 billion, with an average spend of $88.65 per person. There’s real money to be made here, particularly in food and beverage sales, but also on collateral goods like televisions and merchandise.

The big question is how COVID-19 will affect these sales figures in 2021. On one hand, with a population set to stay at home, there will surely be higher spends on food for the game from grocery and big box stores (in addition to an uptick in food delivery, all at the expense of in-person bar and restaurant sales). On the other hand, with an economically hurting population discouraged from group gatherings, people may be living leaner this year.

It can be an impulse among brands, particularly those in the CPG business, to maximize sales by offering blanket discounts and hoping to make up margins through volume. With so much pressure on sales numbers over margins, this drive is understandable, but it’s misguided. Especially with the unpredictability of the past year, competition for consumer dollars looks to be even more fierce than in years past. With a smaller piece of the pie to go around given a more precarious disposable income outlook, an increase in offers from competitors, and more consumers staying home in smaller groups, incentivizing sales presents a unique challenge for brands this Super Bowl.

By implementing a more strategic, optimized promotion system, brands are better able to maximize their margins without entering a race to the bottom on prices. The tools available to modern brands—like the RevTrax Offer Management Platform—leverage AI to identify customers and target promotions based on the discount at which they’re likely to buy. This new strategy is a total paradigm shift; instead of blanketing an entire customer base with one baseline discount, individual customers receive an adaptive offer that still incentivizes a purchase, without destroying margins. Why would you offer a customer a 50 percent discount on tortilla chips when they would buy the same bag of chips at a 10 percent reduction?

The beauty of optimized promotions is they function based on predictive analytics that put customer data privacy at the forefront. Instead of applying outmoded demographic data which can not only feel intrusive to a customer, but are often out of date by the time they’re made actionable, predictive analytics takes current purchasing data to create a system of promotions that can be applied immediately, are built to convert, and leave nothing on the table when it comes to gross profits.

When brands enter the mentality of deep, broad-scope discounting, they train customers to seek the lowest prices, which does nothing for profits while simultaneously diminishing the value of a brand. Keeping a higher baseline price and adapting promotions on an individual customer basis maintains brand capital while providing a more focused discounting strategy.

While there’s a lot of uncertainty surrounding the Super Bowl—both on the field and in the market—brands that work to maximize their margins through promotion optimization will wind up winning. RevTrax’s suite of AI-enabled tools are here to help brands across the spectrum quarterback these next-generation sales strategies.

Interested in learning more? We would love to help with your promotional marketing needs. Learn how RevTrax's solutions can help your brand navigate the Big Game by speaking with a specialist today.

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