Feature: Interactive Gift Cards - The physical to the digital

The US gift card market is saturated. Newcomers are joining on a regular basis and market leaders have to evolve their offering constantly to ensure that they stay ahead of the game. Visit any major retailer in the US and the average consumer will be bombarded with countless offers trying to sell them gift cards for everything from music to fast food.

While some retailers have tried the novelty route and dressed up their gift cards accordingly, others have taken a different approach and flooded retail shelves with countless gift card designs hoping to entice consumer interest through sheer quantity.

In the end though, all gift cards serve the same purpose - they store money. This is their primary function.

It should come as no surprise then, that the US gift card industry, which has offered gift cards and gift card malls for several years, has now moved into the next generation of gift cards.

Technology has pushed the boundaries even further and allowed the American gift card industry to launch the first interactive gift card. These are quickly becoming readily available in the US and have become extremely popular in a relatively short period of time. Why? Because they allow the end user to ‘experience’ far more then he or she ever would with a ‘regular’ gift card. They also allow the retailer to engage and communicate with their consumers on a level that were previously unattainable.

When the plastic gift card market first launched in the US it was an innovative way for end users to spend monetary funds through the checkout counter in major retail outlets. However, technology for the cards was in its infancy and only allowed for transactions between end users and retailers. With the market moving forward at tremendous speed, technology has had to keep up if not exceed industry expectations.

While traditional plastic gift cards continue to be big business in the US, with billions of dollars being spent by consumers on them each year, retailers know that valuable usage information simply isn’t available, because these gift cards are static.

However, this has all changed with the launch of interactive gift cards.

With enhanced digital features, (that mean they can play films, music, deliver software, or drive the consumer to product promotions etc), the new interactive gift card gently eases its way around the issue of data capture by ensuring that all end users have the option of providing data, where there is an appropriate incentive in place such as a discount coupon or entry into a competition to reward the consumer for completing the registration details.

So, what are the full benefits of new interactive gift cards?

Functionality of the new interactive gift cards exceeds the commercial and brand experience that has been available from traditional plastic cards to date. The benefits aren’t just for the retailer who can use and analyse the information supplied, but also for the end user who will have a far more enjoyable experience and can be kept up to date with the latest product promotions and exclusive offerings.

The cards supply the retailer with the ability to develop a more compelling and holistic gift card/brand strategy including the following:

1. They deliver the ability for the retailer to get to know and interact with the consumer and learn what they actually spend the card on, as well as gaining valuable opt-in demographic info, which is vital for post campaign return on investment analysis.
2. They drive product awareness and dedicated promotions using interactive content built around the retailer’s objectives.
3. They potentially increase basket spend at the checkout counter.
4. They can propagate viral email referral programmes, offering various discounts/incentives to consumers.
5. They give a fuller brand experience through their interactive content, such as video, music, editorial, downloadable games etc. This also has the potential to make the card highly collectible if the campaign itself is a limited edition run e.g. with content built around a film release.
6. They offer the ‘stand out’ factor in an industry that is already flooded with static gift cards. They are also compatible with DVD players and DVD Rom drives, as well as PS2 & Xbox consoles. The gaming aspect is an additional benefit if the retailer wants to target a young demographic group.
7. The cards can also suggest that the receiver becomes a gift card giver too via incentives that are built into the content.
8. Cost can be negated by the retailer by partnering with licensors for content (e.g. film houses looking to promote upcoming theatrical/home video releases).

While the interactive gift card market is fairly new to the UK, it has already proved extremely popular with the end user. However, it is still early days and only time will tell if it can maintain or even exceed the popularity of the traditional gift card.

British gift card providers and issuers should monitor the US situation carefully. Gift card malls were only recently launched in the UK and we are still along way off from launching interactive gift cards. By paying attention to our American counterparts and seeing how they handle any situations that arise from their launch can we be ready for them when they are finally available here in the UK.