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Monday, Feb. 25, 2008 at 3:05 pm

WIRED Sees a Future in “The ROI of Free”

By Robert Gorell
February 25th, 2008

Chris Anderson, editor in-chief of Wired and author of the bestselling book-turned-Web 2.0-buzz-phrase, The Long Tail, launched a juicy cover story today.

In “Free! Why $0.00 is the Future of Business” — which, as one might expect, is available for free at Wired.com* — Anderson argues that, across industries, businesses are baiting new customers with free stuff.

Of course, that’s nothing revolutionary. But it is evolutionary in the sense that we’ve come to expect some level of “free” something. In fact, we’re willing to pay top dollar for “free”! (Here’s how Ryanair does it.)

Back in 2002, Bryan evangelized “The ROI of Free“…

“An innocuous question can hit you where you live. I should have expected one day someone would ask me, “How do you measure your ROI for that?”

How does someone who writes “ROI Marketing” justify publishing so much content for free? Do we charge for advertising, rent our list, or bombard those names with commercial offers? No. In fact, Jeffrey, my brother and partner who handles such things, estimates we’ve invested about $100,000 developing free content for our newsletter, free whitepapers and other publications. How do we measure its ROI?

As our CFO will tell you, that $100k figure is nothing compared to what we’ve spent since “The ROI of Free” was published. Still, our dedication to free content remains — and for good reason.

Much like he did with The Long Tail (which also began as an article), this latest piece is Anderson’s way of cleverly cross-promoting-in-advance his upcoming book, FREE, which won’t be available in 2009. Looks like Anderson’s on his way to generating some positive word-of-mouth for the magazine and the book.

Has your business discovered the ROI of Free?

*Putting their money where your mouth is, WIRED will send you the print edition of its March 2008 issue for free — so long as you’ll offer a name and mailing address in exchange. ;)

In Books, ROI
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Comments (13)

  1. We’ve given away all sorts of FREE photography services to our local high school (our business consists of about 80% high school seniors) that the teachers and administration comment that we’re there nearly as much as they are… this is usually followed up with any assistance we need as we set up for our next FREE event at the school… I’ll be in all three lunch periods tomorrow… you can’t argue with FREE; it’s always in the budget.

  2. [...] Grokdotcommer Robert Gorell merkt terecht op dat we tegenwoordig verwachten dat we iets gratis krijgen: “It is evolutionary in the sense that we’ve come to expect some level of “free” something”. Soms komt betalen ook helemaal niet in je op. Muziek en de nieuwste films downloaden, waarom zou je er een cent aan uitgeven? Ik ben zelf van de Napster generatie en weet bijna niet beter. Daarnaast: online betalen voor een liedje klopt gevoelsmatig gewoon niet. Dat heeft Radiohead ook ondervonden met een actie die toch slim leek. [...]

  3. [...] Read More: Robert Gorell, The Future Now, on The ROI of Free. [...]

  4. Hey Robert:

    Wanted to e-mail you but can’t find a link on here. Anyway, since you had referenced my earlier post on the Elves, wanted to let you know I updated today with their Q4 financials. OfficeMax dropped $50 mil in retail sales this year compared to last Q4. hah!

    Also – this Free thing is crap. I took a run at the Long Tail the other day just to get myself warmed up for this next round! ;)
    cheers,
    Kevin

  5. I recall a lecture from a left-wing economist way back in the eighties. There is ‘unlimited demand for free services’. If ‘free’ is a cost effective promo for a paid product or service, then you can easily measure the ROI. Free without a payoff horizon is like waiting for Google to buy you out. An expensive long shot.

  6. [...] case you haven’t heard us talk about “The ROI of Free,” here’s what we mean: If you want to gain the attention of potential customers who [...]

  7. Robert, Just a question if you can answer. I totally agree that FREE stuff increases the perceived value of the product it is shipped with. But we are Giving away FREE DVD which shows “How to tie a Scarf in 10 stylish ways” with each of product we sell from our website http://www.uniqlooks.com This offer has not generated extra interest or sales. If you can comment on ti, it will be good. Here is website http://www.uniqlooks.com

  8. UniqLooks,

    I’m really glad you asked that question.

    The difference between your free offering and the logic behind the ROI of Free (which is what WIRED seems to be preaching as well) is that, with your offer, you’re using something “free” as a value-add to something that’s already being purchased.

    By giving something away for “free” if (and only if) a purchase is made, customers have a harder time viewing it as being really and truly Free-with-a-capital-”F”. That’s very different from just giving something away for free, then introducing buying opportunities later, once you’ve already convinced the market you’re worth it.

    Of course, I don’t know your business metrics, so I’ll tread lightly. But here’s one possibility: Perhaps you would sell more if, instead of telling people that you will give them the DVD with a purchase, that you offer the DVD for free instead. Then the DVD itself — not the scarf or the promise of the DVD — is used to bait sales. If you are proven to be a trusted authority on scarves, it may be easier to buy from you.

    Alternately, you might want to try not telling the customer that they will receive the DVD at all! Then, when they do receive it with their order, you offer it as a gift (“Our gift to you.
    Thank you for choosing UniqLooks, where there’s a scarf for every season”).

    But that’s a slightly different approach; something known as lagniappe. A close cousin of The ROI of Free, lagniappe exists to spread brand affinity, encourage long-term customer value, and stimulate word-of-mouth. (“Where’d you learn to tie a scarf like that,” they’ll ask. “I bought this from UniqLooks.com and they gave me a free DVD on how to tie them just so,” they’ll answer.)

    Again, the ROI-of-Free concept is different. And actually, this blog post and my personal response to you is a good example. FutureNow gives away free advice because one day you, or someone else reading this, will want to hire us.

    As Mike says above, “free” should have real business metrics behind it. But that’s the business’s concern, not the customer’s.

  9. Hi Robert,

    thanks for your response. It was great to get your views on this.

    thanks

  10. I am also going to offer something for free. I would add it today. Might be a driving lesson FREE form first 2 lessons if the call me after looking at my website.

  11. I admit I struggled at first with “Free” when it related to my own brick and mortar practice. As a counselor the only thing I truly have is my time and expertise; to give that away seemed counterproductive!

    Fortunately my web-savvy friend pointed out that I commonly talked with prospective new patients for 10-15 minutes on the phone before they committed to seeing me. In effect I was giving away my time for the patient’s benefit – I just wasn’t getting credit for it.

    Brilliant! Now my website features:
    “Are we right for you and your situation? Find out at no cost.
    FREE PHONE INTERVIEW”

    This “FREE” change has significantly increased activity from my website, and improved my closing rate.

  12. Hi..
    thanks for you information

  13. I am also going to offer something for free. I would add it today. Might be a driving lesson FREE form first 2 lessons if the call me after looking at my website.

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