November 7, 2007

Review of Comdata 2007 Study on Gift Card Trends

Last week, Comdata, based in Brentwood, Tennessee and a wholly own subsidiary of Ceridian Corporation (NYSE:CEN), released their fifth annual survey on gift card trends for 2007 (PDF, ~1MB). The 145 page PDF document is chock-full of information about gift card trends in purchase behavior, usage habits, attributes & enhancements, and expected 2007 holiday season purchases. The document also summarizes findings, provides recommendations, lists survey respondents’ characteristics, and documents the questionnaire utilized. Anyone serious about gift card trends should comb through the PDF in greater detail.

Gift Cards Purchased in 2007

Figure 1. Gift Cards Purchased for Others in 2007

For those who are reluctant to do so, we’ve combed through the document and highlighted the more interesting facts. One of the main conclusions provided in the document as quoted and highlighted in Figure 1 above is that “the biggest change in gift card usage compared with 2006 is the large increase in consumer preference for bank (cash) gift cards. While only 14% of adults purchased this type of card, 39% of recipients prefer to receive a bank gift card such as Visa, MasterCard, or American Express.” The conclusion is similar to what Archstone reported in their 2007 holiday gift card survey. The best evidence that cash gift card is experiencing phenomenal growth is indicated (in Figure 2 below) by the 400% increase of people receiving cash gift cards from 4% in 2006 to 21% in 2007 of the people surveyed.

Gift Cards Received in 2007

Figure 2. Gift Cards Received in 2007

Surprisingly enough, while 14% of the people surveyed are considering give pre-paid cash gift cards, 21% surveyed reported receiving a such a cash gift card, as indicated by Figure 2 below. This difference between giving and receiving could be attributed to employers giving cash gift cards or some other factors.

Another similar conclusion both reported by the Comdata and Archstone reports is that consumers are more likely to increase the amount of money they load onto gift cards. Specifically, quoted in the Comdata report, “for the 2007 holiday season alone, the average gift card purchaser expects to spend $203 on gift cards, up from $186 in 2006. The average amount per card increased from $46 in 2006 to $53 in 2007″.

Some other interesting tidbits are:

  • 53 percent of card users often or always spend more than the amount originally loaded onto their cards. They are also most likely to redeem their cards over two visits, increasing store traffic and the potential for sales over the value of the card. This reinforces and supports Walmart, Target and other chain store’s marketing strategy in utilizing gift cards to drive and increase consumer spending at their stores.
  • 48 percent of gift card purchasers would be likely to buy a gift card that is a CD or DVD with multi-media content. This is good news for Serious USA, the pioneer and leader in interactive gift cards.

Lastly, the Comdata report on page 64 reported that less than 15% of the respondent claimed that their gift card purchases were directly influenced by either television, radio, or Internet advertising. This is only a slight bump up from 13% of respondents from 2006. Maybe merchants should spend more of their marketing budget more wisely on other promotions or branding versus gift card promotions.

New Comdata® Study Shows That Holiday Gift Cards Are More Popular Than Ever [BusinessWire]

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Readers' Comment (2) | Posted by Alex | Filed under: Trends

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