Reverse Marketing in a
My youngest son, Matthew and
I were talking the other day about the probability that someone drawn from a
random list of 200,000 names (that's how many people entered the Wendy's
kick-a-field-goal-from-50-yards-to-win-a-million-dollars contest) could
actually kick a 50 yard field goal. We both thought Wendy's and their insurance
company were quite safe from having to pay out a dime.
That is until Brian Diesbourg, a 25 year old from Belle River (ON), lined up at
the 50 in the Rogers Centre (after failing to make it from the 20, 30 and 40
yard lines) and, in front of 40,000+ screaming fans (now that's pressure) and
drilled it through the uprights.
Almost 600,000 television
viewers were watching the halftime show (up from 465,000 during the game), so
both the sports network and Wendy’s were getting a huge marketing push from the
stunt.
When the kick was made,
fireworks went off, Brian's girlfriend and family started jumping for joy and
the Toronto Argonaut players swarmed Brian; it was a happy scene. Someone from
Wendy's gave Brian one of those giant (fake) cheques showing ONE MILLION
DOLLARS on it. It was a great guerrilla (GM) marketing moment for Wendy's.
Remember that there have been
payouts of that magnitude before (twice in the NBA and once in the NFL—but that
was for a 35 yarder) so it isn't unique—still it was a good moment for Brian,
the
Brian did the media rounds
the next day still wearing his Wendy's shirt—more GM for the restaurant chain.
(CP/Adrian Wyld)
But now the truth is out.
Brian didn't actually get a million; he received a cheque for $25,000. That's
right: TWENTY-FIVE THOUSAND DOLLARS. Huh, what's with that? Well, it turns out
that if you read the small print, the winner ACTUALLY gets $25k a year for 40
years. Now that is reverse marketing in a big way. The contest should have been
advertised that way—WIN TWENTY FIVE THOUSAND A YEAR FOR LIFE (40 YEARS!).
And any way you cut it, the
contest isn’t worth one million dollars. If you use a discount rate of 5% p.a.,
it’s only worth around $352,000 in today’s money. Net present value, if your
discount rate is 10%, is just $226,000. Even if you use a 3% discount rate, NPV
is still less than half a million ($435,000).
|
Payout |
$25,000 |
Discount
Rate |
NPV |
|
|
$25,000 |
|
|
|
|
$25,000 |
3% |
$435,328.69 |
|
|
$25,000 |
5% |
$352,348.61 |
|
|
$25,000 |
10% |
$226,926.00 |
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
|
|
$25,000 |
|
|
Brian is a gentleman—he said
that the payout doesn't bother him; he would have blown the million if he had
received it all at once anyway. Now that's probably true (one third of all
million dollar+ lottery winners are bankrupt within 5 years of winning) but
what does matter is that Wendy's looks bad and cheap. Some people are calling
for a boycott of Wendy’s—geez, somehow I don’t think that is what they had in
mind when they organized the contest. If you are going to do some viral
marketing, might as well do it right.
Dr. Bruce
M. Firestone,
http://www.eqjournalblog.com/?p=6
http://www.dramatispersonae.org/EntrepreneurialistCultureFrontPage.htm
http://www.dramatispersonae.org/