Artificial Scarcity

by John Eberhard

In this article I am going to talk about a marketing strategy or copywriting strategy, and actually, a whole business model, that exists today. You may have seen this strategy used. I’m not in favor of it.

My first experience with what I will called the “artificial scarcity” model was maybe 20 years ago. I responded to some offer of a free 2 day cruise or something like that, and you had to sit through a presentation where they tried to sell you something. In this case we got on a bus and went up to the desert. They had built a recreation center and hotel in the middle of nowhere, and they were selling plots of land around this thing.

The idea was you buy a plot of land, you get access to the recreation center and hotel, like a timeshare, and eventually a town will get built there and your land will be worth a lot more. Well I didn’t know if a town was ever going to get built there. Before I committed to spending $15,000 I wanted to d a bit more research. But no, the deal was only available that day.

About 5 years ago, a company called Stompernet released a course on how to market on social media. I think the course cost around $2,000. This was at the beginning of social media marketing, and these guys knew how to do it and no one else did at that time. So their course offering broke all records and they made millions within two or three days.

Since this release made such a big splash, I did some research on it at the time. There was one guy associated with the release who did the copywriting and the release strategy.

Basically it was a case of created, artificial scarcity. The course was only going to be offered to X number of people and only until X date. But why was it only for X number of people and until X date? Why couldn’t it be a situation where they could sell it to an unlimited number of people, and continue indefinitely, the way most companies do business?

They purposely made it that way to create the idea of scarcity. From the marketer’s point of view, this gives you a couple advantages:

1. Some people will sign up for the service who otherwise would not have, because they fear they will miss out otherwise.
2. People have no time to do any due diligence on the purchase.
3. You can probably inflate the price higher than you could otherwise charge.

Of course there is one big disadvantage, which is, if you end up having a big hit on your hands, you are limited to how many you can sell and how long. You aren’t really in a business. You’re just sort of doing something temporarily. And you can’t later go back and say “Hey we’re offering this now again, or for a longer time,” because then you totally lose credibility.

I studied some material from this copywriter who did the Stompernet release, and he listed out all these other releases he had worked on (mostly courses), and they were all done this way, with the release only being offered for a short period of time and then it wasn’t offered any more.

One reason offered for doing it this way was that the person giving the course and the “personal coaching” could only coach so many people at a time. But this was a made up reason, because if he’s such a good coach he could train other trainers, like most businesses do.

Recently I saw a reputable company that I respect offer a course on doing copywriting this way, with headlines saying that you could “5x your conversions.” I checked into it and found they were promoting this artificial scarcity strategy. I had no interest in this, and I have never tried to create a campaign this way for my company or any of my clients.

I object to this model for a number of reasons:

a. I think scarcity is not a happy thing in life or society, and to artificially create it is not a constructive business tactic.

b. I don’t like the way this strategy or business model manipulates people and plays off their fears. Based on fear, some people will end up buying the product or service that would not have otherwise bought it and may not really need it. Also they will probably end up paying too much for it.

c. I think to create a viable business or service offering is not necessarily an easy task, so to assign an arbitrary cutoff date, where you won’t sell the item after that date, is foolish from a business perspective.

I think the proper way to write copy and market, whether it is online marketing or offline marketing, is to have a product or service that people need and is a helpful and useful product or service, to tell people why it is good and what benefits they would get from it, let people do any research they want, and let them make up their minds. The usefulness of the product or service should be what sells them, not gimmicks or manipulation.

That is not to say that you can’t occasionally have a buy now discount, that ends on a certain date. That’s quite a bit different. But threatening to take away the product or service completely is too manipulative, and I advise people not to take this route.

Leave A Comment...

*