No one can say for certain why Americans will happily shell out $2 for a bottle of water, yet threaten impeachment when a gallon of gas reaches $2.50. But that disconnect is paying dividends for a surprisingly wide swath of U.S. advertisers this summer.
Six Flags launched a promotion in May that offered a $15 discount on up to six tickets for people who presented a gas receipt at the parks. A generous offer, but in dollar terms exactly equal to its long-running 2- for-1 deal for anyone who brings a can of Coke to the parks. Nonetheless, the gas deal proved so popular, the company extended the promotion through June.
"Our guests responded well to it," said company representative Wendy Goldberg. "They know that we feel the pain at the pump too."
If not feel it, they at least get it. Indeed, it would seem advertisers from tourist destinations to car companies to state lotteries are learning this summer what politicians have long known: The exchange rate between money spent on gas and actual dollars is far from even. In other words, a $100 gas rebate is worth a lot more than $100.
"Its biggest value is the psychological effect," said Britt Beemer, founder of America's Research Group, a marketing consultancy that studies consumer behavior. "It shows your customers that you understand and care about their pain."
In the car category, Ford is offering free gas through the end of the year for people who buy a 2006 model, which amounts to $1,100 on its largest trucks and SUVs. General Motors just completed a promotion that capped the cost of gas at $1.99 a gallon for customers in California and Florida and gave a $1 refund for each gallon purchased by customers in Memphis, Tenn. It's the first time either company (or Six Flags) has used gas discounts or reimbursement as a national promotion.
GM added the promotion to its extensive lineup of incentives because of its emotional appeal, said representative John McDonald, and because it was sure people would notice such an incentive. "This happens to be the big issue right now," McDonald said.
Ford echoed those sentiments. "Gas prices are on everyone's mind right now," said representative Lydia Cisaruk. "It just made sense to us." The company will not release results of the promotion, but Cisaruk said, "It has had tremendous buzz in the marketplace."
Dennis Virag, president of Automotive Consulting Group in Ann Arbor, Mich., stresses that Ford and GM are not offering additional incentives with these promotions, just repackaging ther existing deals and tying them to gas prices. "They can spend less on these promotions and get better results," Virag said.
Currently, more than 100 bed-and-breakfasts around the country are advertising gas vouchers or cash reimbursement on an industry Web site as part of a coordinated "Tanks A Lot" program. In remote western Montana, Glacier Country offers $50 gas cards as part of a lodging package with the slogan, "Take a vacation and we'll help you with the gas."
And even companies with no connection to travel are getting in on the action. The Maryland Lottery is holding weekly drawings to give away 200 gas cards worth $100 each to people who mail in $5 worth of losing scratch-off tickets. ConsumerClub.com, an online shopping portal, is offering $10 gas vouchers for every $100 in merchandise purchased through the site.
Despite a healthy July 4 travel season, with more than 40 million Americans traveling more than 50 miles from home during the holiday—a 1 percent increase over last year, according to the American Automobile Association—Beemer said America's Research Group has completed three studies this year on the effect of gas prices on consumer behavior and found it will have more impact as the summer continues.
Hence, Beemer predicts the number of offers will grow as more companies look to capitalize on the issue. Indeed, he is advising most of his clients to develop a gas promotion: "The longer gas prices stay up, the more it becomes a great marketing strategy."
"There's an opportunity for smart companies to use this to their advantage."
Despite a healthy July 4 holiday travel season with more than 40 million Americans traveling more than 50 miles from home during the holiday, a 1 percent increase over last year, Beemer said his company has completed three studies this year on the effect of gas prices on consumer behavior and found that it will have more impact as the summer vacation seasons continues. The studies found that 40 percent of Americans said they would cancel or shorten their travel plans this summer because of the price of gas. A USA Today/Gallop poll in June found that fewer than 40 percent of Americans planned to take a vacation within the next six months, the lowest level in 28 years. A survey of people in the Delaware River Valley last month found that 54 percent were reducing their driving and 42 percent said they are staying closer to home because of the gas prices.