The other day I received an envelope from Consumer Reports. It was soliciting contributions for a raffle fundraiser. The mailing had nine raffle tickets in it. Consumer Reports was requesting that I send back the tickets with a suggested donation of $9 (one dollar for each ticket). The mailing had a lot of paper:
The raffle had a grand prize that would be the choice of an undisclosed, top-rated car or $35,000. There were a number of smaller prizes bringing the total amount up for grabs to about $50,000.
The materials included a lot of gimmicky text. Things like:
- “If you’ve been issued the top winning raffle number, then 1 of those tickets is definitely the winner or a top-rated car — or $35,000 in cash.”
- “Why risk throwing away what could be a huge pay day?”
- “There’s a very real chance you could be the winner of our grand prize car!”
Consumer Reports also indicates that they’ll send a free, surprise gift to anyone who donates $10 or more. It feels funny to donate money with the thought that I might win more than I donate, but I get it. Fundraising gimmicks work. That said, I get frustrated when fundraising gimmicks are dishonest.
One of the pieces of paper in the mailing came folded with print on each side. Here’s the front:
Unfolding that paper and looking on the other side, I found a letter from someone involved in Consumer Reports’ marketing. The letter argues that it would be silly for me not to find out if I received winning tickets. Here’s a bit of it:
The argument in the letter is ridiculous.
First, the multiple tickets bit is silly. It’s like the Yogi Berra line at the opening of the post; cutting a pizza into more slices doesn’t create more food. It doesn’t matter how many tickets I have unless I get more tickets than the typical person.
Second, Consumer Reports doesn’t care if a non-donor decides not to turn in tickets. The most plausible explanation for why Consumer Reports includes the orange letter is that people who would otherwise ignore the mailing may end up feeling guilty enough to make a donation. Checking the “I choose not to donate at this time, but please enter me in the Raffle” box on the envelope doesn’t feel great.
Finally, it makes perfect sense why I might not want to participate. Writing my name on each ticket, reading the materials, and mailing the tickets takes time. My odds of winning are low. I’d also have to pay for a stamp.
Let’s give Consumer Reports the benefit of the doubt and pretend that the only reason not to participate is that stamps cost money. The appropriate stamp costs 55 cents at the moment. Is the expected reward for sending in the tickets greater than 55 cents?
Consumer Reports has about 6 million subscribers. Let’s continue to give Consumer Reports the benefit of the doubt and assume it can print everything, send mailings, handle the logistics of the raffle, and send gifts back to donors for only $0.50 per subscriber. That puts the promotion’s cost at about 3 million dollars. The $50,000 of prizes is trivial in comparison. Let’s further assume that Consumer Reports runs the promotion based on the expectation that additional donations brought in will cover the promotion’s cost.
The suggested donation is $9. Let’s say the average, additional funding brought in by this campaign comes out to $10 per respondent. To break even, Consumer Reports needs to have 300,000 respondents.
4/12/2019 Update: I received a second, almost-identical mailing in early April.
10/3/2019 Update: I received a few more of these mailings.
- The price of a stamp at the time of writing can be seen here.
- “Consumer Reports has more than 6 million members who read its print magazine and website.”
Drawn from a CNBC article (archived here).
- Consumer Reports runs multiple fundraising campaigns each year. Presumably, these fundraisers compete with one another. A subscriber who gives during the raffle campaign is probably less likely to give in a subsequent campaign than she would be in the counterfactual scenario where the raffle campaign never occurred. Accordingly, the additional, marginal funding brought in by the campaign may be smaller than the total funding brought in.
- 47,000/(300,000*9) = 0.0174
- 0.0174*9 = 0.1566