2023 PRIZING REPORT

Rewards that
resonate in a
post-pandemic
world
 CONTENTS
04 Introduction

05 Methodology

06 Key Themes

11 Generational Perspectives

14 Conclusion

2023 PRIZING REPORT 02

Introduction
2022
The more things change, the more they Necessity
Prizes that make
stay the same. life easier
Since 2016, Merkle has kept its finger on the Physical prizes like
pulse of consumer trends related to prizing shopping sprees or
and rewards. While we have experienced vacations
economic turbulence and a global pandemic, Willingness to wait for a
some overarching preferences remain larger prize
vs. smaller immediate
relatively stable. Covid /
reward
inflation
But the underlying motivations for these
impact
preferences have been influenced by COVID Prizes that make
and uncertainty over inflation. Prizes that life easier
were “nice to have” only five years ago have Physical prizes like
become staples that many consumers are now shopping sprees or
prioritizing. vacations

Willingness to wait for a

Marketers should keep this in mind, being larger prize
sensitive to consumer mindsets not only as vs. smaller immediate
reward
they choose rewards, but also when creating
messaging around these prizes. 2018 Convenience

2023 PRIZING REPORT 03

Methodology
In December 2022, we surveyed 1,151 consumers who were sourced outside of the loyalty
programs and promotions that Merkle manages for clients. Responses came from US residents
aged 18 to 65, allowing us to evaluate responses by generation.

Respondents were split almost equally among gender, household

income, and generation.

49% 49%
Male Female

42% 51% 8%
up to $50K $50K to $150K $150K and up
household income household income household income

50%
Gen Z /
50%
Gen X /
Millennials Baby boomers

2023 PRIZING REPORT 04

Key Themes
A closer look at how consumers evaluate and select their rewards

Prizing Preferences
For physical prizes, a shopping spree and vacation are tied for first choice, followed
by a lifetime supply of their favorite brand.

Gender plays a role here, as women ranked their preferences as shopping spree,
vacation, and a room makeover. Men preferred a lifetime supply of their favorite
brand, followed by a vacation and shopping spree.

Easy Does It
Consumers consistently choose prizes that make life easier over those that make
them feel special.

Nearly three-quarters of respondents would choose prizes like grocery gift cards
over ones like a spa massage. This is consistent for households with income up to
$150,000; beyond that, the number has a modest drop.

Impulse Control
When faced with the choice of receiving a smaller prize immediately or a larger prize
in 6 weeks, consumers are choosing to wait. The lack of present bias demonstrates
that they are exercising more self-control and not overvaluing immediate rewards.

This split is less pronounced when the immediate prize tips the scale at $100, which
we consider a large prize.

Digital Flexibility
When it comes to prize payouts, consumers prefer Venmo, PayPal, or a Visa gift card.
They are opting for the convenience of spending their reward as they choose.

Less popular digital options include brand gift cards and digital codes for their
mobile wallet. Not surprisingly, cryptocurrency was the least favorite option across all
generation cohorts.

2023 PRIZING REPORT 05

Prizing Preferences
How income and gender impact choice
While there are some nuances between demographics, there are a few safe bets when it comes
to prize planning for a broader target audience. Rewards that focus on everyday needs, such as
groceries or even a mortgage or rent payment, will resonate with consumers seeking some relief
for their budget.

Consumers need the necessities

Across the income spectrum, we found that all consumers are looking for items that make
everyday life easier. While this is most pronounced among lower income households, even those
earning over $150,000 are leaning into rewards such as grocery gift cards or free gas for one
year.

Which would you rather win?

80%
72%
61%

39%
28%
28%
20%

Low Income Middle Income High Income

(up to $49,999) ($50,000 to $149,000) ($150,000 and up)

Something that makes day-to-day life easier

Source: Merkle Prizing Report, December 2022 Something that makes you feel special

2023 PRIZING REPORT 06

Men are playing favorites
Similar to what we have found in past reports, vacations and shopping sprees remain enticing
grand prizes for both genders. However, the male segment made a distinct shift by choosing a
lifetime supply of their favorite brand their number-one preference. This is driven primarily by
millennial and baby boomer males and likely influenced by tighter budgets.

Which prize do you find most appealing?

TOP PRIZES WOMEN MEN

Shopping spree 1 3

Vacation 2 2

Makeover in one room of your home 3

Lifetime supply of favorite brand 4 1

Home technology upgrade 4

Source: Merkle Prizing Report, December 2022

TIP: Some consumers are concerned about tax liabilities if they win
a big prize. Consider alleviating their worry by increasing the prize
amount to include cash for taxes.

2023 PRIZING REPORT 07

 Prizing Odds

Guaranteed reward vs. chance to win Promotion structure + prizing

Respondents find the chance to win a large prize If your budget doesn’t allow for
and a guaranteed small prize almost equal in guaranteed rewards, consider an
appeal (52%/48%), slightly favoring the chance instant-win component instead.
to win a large prize. The promotion structure of a
sweepstakes paired with an
Consistent with past reports, there are less instant-win component can be
pronounced differences in these prize structure highly effective.
preferences across gender, household income,
and generation cohorts. Larger sweepstakes prizes appeal
to those looking for a chance
to win, while a large number of
Which of the following is more appealing to you?
smaller instant-win prizes will raise
the odds of winning.
A GUARANTEED small rewards (e.g., $5 gift card, coupon for free product)
The CHANCE to win a large reward (e.g., hundreds to thousands of dollars)

56% 56%
44% 44% 53% 47% 51% 49%

(18-25) Gen Z (26-41) Millennials (42-57) Gen X (58+) Baby Boomers

Source: Merkle Prizing Report, December 2022

2023 PRIZING REPORT 08

Prizing Payouts
Timing and delivery of rewards
Consumers consider larger payouts worth the wait, and it’s worth considering if you are
evaluating prize amounts that are relatively close in value. These preferences have become more
pronounced since 2016, as consumers have been tightening their belts and taking a closer look
at their money. For delivery of their prizes, we see a significant uptick in popularity for Venmo and
PayPal, which displaced Visa for all cohorts except baby boomers.

Patience pays off

When faced with a choice of a smaller cash prize now, respondents agreed overwhelmingly
that the considerable increase in value was worth the wait. That willingness to wait is relatively
comparable when the prize amounts are closer together ($100/$200). Consider this in prize
planning, as $100 can have an immediate impact on everyday essentials.

Which would you rather win?

$5 you receive now 35%

$25 you receive in six weeks 65%

$100 you receive now 44%

$200 you receive in six weeks 56%

$500 you receive now 34%

$1000 you receive in six weeks 66%

Source: Merkle Prizing Report, December 2022

2023 PRIZING REPORT 09

Digital delivery
A generational divide separates older and younger generations by propensity for the
conventional versus lesser-known applications, with Gen X and baby boomers preferring Visa /
Amazon gift cards more than millennials and Gen Z, who prefer Venmo/PayPal credit.

33%
How would you 5%
prefer to receive
2%
a $500 prize? (18-25)
Gen Z 11%
47%
2%

33%
(26-41)
9%
Millennials
4%
5%
46%
4%

32%
17%

(42-57) 6%
Gen X
5%
38%
2%
Visa gift card
50% Amazon gift card
(58+) 19% Gift card from the brand
Baby Digital code for mobile Wallet
Boomers 5% Venmo/PayPal Credit
2% Cryptocurrency
24% Source: Merkle Prizing Report, December 2022

1%

2023 PRIZING REPORT 10

Generational
Perspectives

2023 PRIZING REPORT 11

Gen Z
Generational View

Key Insights

• While nearly 50% of Gen Z favor Venmo/PayPal the most,

Born: 1997 – 2012
they do opt for digital codes for their mobile wallets 2x more
than Amazon gift cards and almost 5x more than a brand gift
Gen Zers are digital
card. They’re also more open to digital codes for mobile wallets
natives, having
versus any other generation.
been exposed to the
internet and portable
• In terms of prizing, Gen Z follows other generation cohorts in
digital technology
terms of the top three prizes (shopping spree, vacation,
since birth.
and lifetime supply of favorite brand), but breaks out from the
crowd a bit, ranking the opportunity to be the face of the brand
as fourth. This is likely due to their heavy use of social media and
possible aspirations of becoming an influencer.

• Although the numbers are small (under 20%), this cohort rated
highest for emerging prizes like gaming/metaverse, and
Note: Consult Merkle for any
augmented/virtual reality (AR/VR) content. chance-to-win programs target-
ing Gen Z teens under age 18 to
• While we only surveyed adults 18+ for this report, keep in mind ensure your program is COPPA
the oldest Gen Zers are just graduating from college and/ compliant and includes parental
or beginning their careers, and the youngest are still in grade consent if needed.
school*. These two audiences vary significantly in their lifestyles
and day-to-day needs.

2023 PRIZING REPORT 12

Millennials
Generational View

Key Insights

• When it comes to guaranteed prizes or trying their luck, 63% Born: 1981 – 1996
of millennial males would prefer the chance to win a large prize
(compared to 49% of females). As a group, 56% of millennials This cohort is known
overall would prefer the chance to win a large prize versus for heavy tech
a guaranteed reward. adoption of smart
phones, tablets, and
• Venmo/PayPal credit tops all other payment forms among social media; they
millennials at 46%, followed by 33% who prefer Visa. have also revived
nostalgic items like
• Of all generational cohorts, millennials are the most willing to
Polaroids and vinyl
accept cryptocurrency – albeit only 4%.
records.

• For emerging prizes, millennials are equally interested in stock

shares of their favorite brand (34%) and exclusive or limited-
edition merchandise (33%). Having grown up with collectibles,
consider tapping into that passion for prizing that will resonate
with this audience. Beanie Babies anyone?

2023 PRIZING REPORT 13

Gen X
Generational View

Key Insights

• When it comes to a chance to win, 53% of Gen X tilts toward a Born: 1965 – 1980
guaranteed small reward – showing a stronger interest in this
type of prize versus any other generation cohort preferences. The MTV generation
grew up with music
• Two of the top payment preferences for Gen X are gift cards: genres based on
Visa (32%) and Amazon (17%). But their top choice is Venmo/ social-tribe identity
PayPal (38%). Versatility matters to this group, who would like (punk, heavy metal),
options of how to spend their prize money. independent films,
and video games in
• Gen X mirrors the millennial cohort when it comes to emerging arcades and at home.
prizes; they are tied at 36% each for stock shares in their
favorite brand and exclusive merchandise.

• While they are not as interested in receiving a prize payment

in cryptocurrency, 11% wouldn’t mind getting it as a prize. This
demonstrates that they have a curiosity for digital currency, but
they would prefer more secure methods for actual payment.

2023 PRIZING REPORT 14

Baby Boomers
Generational View

Key Insights

• Half of this cohort prefer Visa gift cards, with 24% favoring
Born: 1946 – 1964
Venmo or PayPal credit. Not surprisingly, baby boomers have
almost no appetite for cryptocurrency or digital codes for Baby boomers
mobile wallets. experienced the
full spectrum of
• An average of 77% of baby boomers are more than willing to
technology: from
wait for a larger sum than a smaller cash prize now, regardless
landlines to cell
of denominations.
phones, newspapers
to the internet, and
• About 55% of baby boomers, predominantly males, would
vinyl records to
choose stock shares of their favorite brand, followed by limited
streaming music.
or exclusive merchandise.

• Similar to Gen Z , 51% of this group would prefer a guaranteed

small reward, regardless of gender. This almost equal split with
chance-to-win prizing makes sweepstakes and/or instant-win
promotions appealing for this generation.

• Remember this segment is likely to be retired or nearing

retirement; they have more time to travel (think vacation prizes).

2023 PRIZING REPORT 15


Conclusion
Finding common ground across cohorts
Post-pandemic life has been a shared
experience in uncertainty, compelling
consumer expectations, and priorities to be
rooted in pragmatism. In a tough economy,
brands can best support customers through the
delivery of relevant rewards and experiences
that add tangible value today. The results of
this year’s survey revealed subtle but essential
insights into the motivations and preferences
of today’s consumers across generations.
Yes, you can please everyone!
When planning for multi-generational or broad
target audiences, it’s critical to focus on the
rewards everyone can agree on.
2023 PRIZING REPORT
Key Takeaways
• Prizing preferences: All cohorts are looking
for solutions to help with their day-to-day
life; your prize could be just the helping
hand they need right now.
• Prizing odds: Cohorts are split almost
equally for a chance to win a large prize
versus a guaranteed reward; consider a
sweepstakes combined with an instant win
for the most appeal.
• Physical prizing: Vacations and shopping
sprees top everyone’s list, followed by a
lifetime supply of their favorite brand.
• Prizing payout: Visa gift cards are most
popular with older cohorts, but still hold
appeal across the board, due to their
flexibility. However, if your audience is
within the 18-54 demographic, lean into
mobile payment services like Venmo and
PayPal.
16
About Merkle’s Promotion Solutions
As part of Merkle’s Experience & Commerce practice, our Promotions team has deep roots in
the field, with a 25-year history in designing and implementing promotion and loyalty solutions
for clients across industries. We have become a trusted partner to brands looking to engage
and motivate their customers. By leveraging Merkle’s industry-leading, data-driven customer
experience management (CXM) expertise across data, digital experience, and strategy, our
promotion capabilities produce exceptional results.

About Merkle
Merkle, a dentsu company, is a leading data-driven customer experience management (CXM)
company that specializes in the delivery of unique, personalized customer experiences across
platforms and devices. For more than 30 years, Fortune 1000 companies and leading nonprofit
organizations have partnered with Merkle to maximize the value of their customer portfolios. The
company’s heritage in data, technology, and analytics forms the foundation for its unmatched
skills in understanding consumer insights that drive hyper-personalized marketing strategies.
Its combined strengths in consulting, creative, media, analytics, data, identity, CX/commerce,
technology, and loyalty & promotions drive improved marketing results and competitive
advantage. With more than 16,000 employees, Merkle is headquartered in Columbia, Maryland,
with locations in 30+ countries throughout the Americas, EMEA, and APAC. For more information,
contact Merkle at 1-877-9-Merkle or visit
www.merkle.com.

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