Are Gift Cards a Winning Strategy? – Midweek Media Breakdown

Gift cards are a major revenue driver for countless brands and retailers during the holiday period. The global gift certificate market is estimated to be worth around 845.39 billion in 2022. (Source

There’s a reason we might be seeing more and more brands leverage digital gift cards as a sales motivator, particularly this year. Digital vouchers are a great option during the holidays when gift-giving is at its peak and budgets are tighter. With the cost of living rising globally, the perceived value of gift vouchers is also increasing.

Gift cards give immediate cash flow to businesses. But for brands looking to drive holiday sales, should digital gift cards be a go-to strategy? While gift cards do incentivise consumers to spend, it’s important that brands implement the right reward schemes that will benefit them in the long run.

We’re here to break down some of the key reasons why you might want to capitalise on gift card demand during this period, or if your marketing dollars might be better spent elsewhere.


Why you SHOULD use gift cards: 

They incentivise purchases 

Everyone loves a good deal. Gift cards make consumers feel like they are cashing in on a special offer and getting a nice perk. Statistics show that 1 in 3 customers will make a purchase at a specific store because an incentive was offered. (Source) The time-sensitive element also encourages customers to act and motivates them more to purchase. 

Brands should work to increase the perceived value of their gifted offers. This can be done in a number of ways, however, one of the most popular is further incentivising gift card purchases with other special discounts or the possibility of earning extra reward points. 

Gift cards also help to increase the average order value. Whether it’s the customer purchasing the card or the one using it to its full value, gift cards can add a nice little boost to your holiday sales. 


Gift cards are a differentiator 

Gift cards also act as a differentiator. Rather than seeing another brand running a Black Friday or Christmas special, offering a voucher with bonus discounts can help your brand stand out in the noise, and further sweeten the deal for your customers.


Gift vouchers create positive brand experiences 

Getting a sweet perk from a brand creates quite an impact. Claiming a gift card is a fun, exciting experience and makes customers remember your brand in a positive way.

When designing digital gift cards, brands should do their best to create interesting, fun experiences that are a joy for customers to use. We’ve seen brands create apps or digital mailboxes with press-and-hold-to-open functions and interactive graphics. When it comes to generating positive brand experiences, the details matter.


Passive process 

Setting up the function for digital gift cards is a relatively easy and inexpensive way for brands to increase their holiday revenue. Once in place, these systems actually generate passive liquidity for business. This immediate cash flow is one of the main reasons all retail giants heavily flog their gift card programs during the holiday season.

Starbucks has a famously effective gift card scheme, earning them over $1 billion in extra revenue. (Source


Lead Generation

Offering special discounts and VIP benefits through your gift card scheme is also a great lead magnet. When customers sign up for your rewards program, they will share their first-party data with you. Keep them in the loop about special offers and you can hopefully build a valuable (and profitable) relationship!

With solid execution, this could be a great strategy for valuable lead generation during the BFCM leadup. 


Why you SHOULDN’T use gift cards: 

Are gift cards the right incentive for your brand? 

While we’ve just run through a few of the reasons you might want to implement digital gift cards, there are a few things to consider before you jump straight to offering vouchers this holiday period.

It’s important to consider other ways to incentivise purchases which might be more relevant to your brand. Perhaps a loyalty scheme or rewards program fits better within your offerings? When it comes to lead generation, competitions are also a popular option for brands to build their holiday mailing lists.

Is there solid demand for your brand? 

If you’re a smaller brand without a key differentiator, it’s a big ask for customers to purchase a gift card from your site, rather than a well-known established retailer.

It can be difficult for brands to promote their gift cards as giving the gift of choice, with a more limited or specialised product range. Without strong demand for your brand, relying on a gift card strategy this holiday season is quite risky.

Do you have a good digital partner? 

Gift cards work best when they are easy to purchase and even easier to claim. Your system needs to be user-friendly and even more importantly, brands need to choose a reliable hosting partner.
The right tech will make your digital gift incentive easy to make, deliver and track. All important features in a successful scheme.

They don’t help with immediate stock 

If you’re a brand looking to move stock quickly in order to make room for new inventory, gift cards won’t really help you. Yes, they produce immediate revenue. But it’s not immediate sales. The likelihood of their value being claimed in 6 months while your wanting to move out old stock is quite high. 


They can potentially limit customer choice 

It’s pretty common that gift cards and other reward offers can’t be used in conjunction with other offers, however, this can still leave a bad taste in the mouths of your customers. Especially if you’re heavily promoting BFCM and Christmas sales during this time, customer choice is further limited to full-priced items only. It would be a real shame if all the hard work you put into creating a positive brand experience was dashed.


So, are you contemplating a digital gift card strategy? Hopefully, the points above can point you in the right direction. Remember, every brand and every customer is unique. At The Graygency, we always recommend digging deeper into your marketing decisions and putting your advertising dollars behind what moves the needle the most. 


Thanks again for tuning into another weekly roundup with The Graygency. Check out our blog for more Midweek Media Breakdown posts.


Don’t forget to follow us on LinkedIn to get notified when we post next week’s social media news!

Become a client

Interested in working with us or have a question?

Reach out to our team.

Let's Chat
Man talking on the phone