Universal Music Group uses custom iPod skins paired with CDs to drive lagging sales.
When Universal Music Group, one of the four largest recording labels in the music industry, noticed declining sales of some of its older CDs—think The Police’s Ghost In The Machine circa 1981 and Nirvana’s Nevermind circa 1991—it suspected mp3-downloading sites such as iTunes were siphoning its sales.
To verify this theory and find a solution to the problem, Universal enlisted the help of distributor Bamko Promotional Items. Its answer? Design custom iPod skins to match CD cover art and package the two together as a free gift with purchase.
Universal challenged Bamko to provide an innovative product that would drastically increase sales of its catalog titles. However, they didn’t want to up charge the customer, so Universal gave Bamko a $1 per unit budget.
“At the same time, they were launching an e-platform for people to go and purchase Universal’s music online,” says Paul Emmer, director of sales for Los Angeles, California-based distributor Bamko Promotional Items (UPIC: Bamko783). “They were looking to cross promote both the album and the online platform, so the skin was kind of the perfect match.”
Before Bamko implemented the idea for the iPod skins, it conducted a focus group for 30 people between the ages of 18 and 35—Universal’s target demographic for the 15-20 underperforming titles in its catalog. The focus group confirmed Universal’s assumption that consumers in this group downloaded music much more than they bought CDs.
In the focus group, 85 percent owned iPods and 60 percent said they would apply a decoration to their iPod, if it represented their favorite recording artist.
“We saw these little iPod covers at kiosks in the mall and thought they would be an interesting idea,” Emmer recalls. “They’re a piece of paper that’s coated with an epoxy resin. They go on top of the iPod, giving it protection and keeping it from slipping, such as when you place it in your car.”
The focus group perceived the value of the skins was between $10 and $20, yet the actual production cost was below $1.
Based on the focus group findings, Bamco recommended that Universal create custom skins to match the cover art for specific albums and package them together as a free gift with purchase. A price point of $9.99 was set for the pair. “The CDs were selling for $10 to $12, and the skins were selling at kiosks for $10 to $15, so they thought for $10 they were getting a skin and the CD at the same time,” Emmer explains.
Bamko produced 15,000 iPod skins for 12 different catalog titles in less than a month. The skins were drop shipped to retailers such as Best Buy, Circuit City and Costco across the country and outside the U.S.
During the year-and-a-half-long promotion, the iPod skins sold better than expected; an additional 5,000 skins were even reordered for two of the titles.
Emmer adds that even though the promotion was meant to appeal to older consumers who had been fans of the albums when they were released, it drew young people as well. “Nowadays younger people are listening to old music,” Emmer says, “because a lot of new music is rooted in that older music.”
The iPod skins promotion not only earned Bamko a spot as finalist for the 2010 PPAI Pyramid Award, but it impressed Universal Music Group so much it later asked Bamko to create 500,000 skins for Mariah Carey’s album, E=MC2. The album’s sales went triple platinum.
(Above) Universal Music Group packaged iPod skins with slow-selling CDs and doubled the perceived value of the purchase.