Ad-tech start­up ifeel­go­ods has unearthed a big secret about suc­cess in e‑commerce: peo­ple pre­fer get­ting some­thing for free more than they like mon­ey off discounts.

E‑commerce ana­lysts, web con­tent man­agers and e‑commerce man­agers alike might want to sit up and take note: ifeel­go­ods dis­cov­ered that peo­ple are three times more like­ly to click their way through an ad and 30 per cent more like­ly to buy when they’re offered a dig­i­tal reward instead of a straight discount.

Gifts just work bet­ter than discounts

Co-founder and CEO Michael Amar explains:

“When an online retail­er tests a 10 per­cent off and free ship­ping offer against an ifeel­go­ods dig­i­tal reward offer of equiv­a­lent cash val­ue, they are see­ing dou­ble and triple the CTR, 30 per­cent or more improve­ment in con­ver­sion rate, and a sig­nif­i­cant earned media chan­nel from the 60 per­cent or more of shop­pers that share their suc­cess with the offer.”

The two-year-old start­up spurns tra­di­tion­al pro­mo­tions like dis­counts and coupons in favor of dig­i­tal alter­na­tives, clev­er­ly tai­lor­ing its pro­mo­tion­al gifts to cus­tomer pref­er­ences. If you’re look­ing at child-friend­ly X‑Box games for the kids this Christ­mas, for exam­ple, an ifeel­go­ods ad might appear offer­ing a free copy of the lat­est Angry Birds game, where­upon you might just go on to make an in-app pur­chase and ben­e­fit the devel­op­er in the process.  Or if a cus­tomer is surf­ing for T‑shirts fea­tur­ing a favorite rock band, he or she might be pre­sent­ed with an iTunes gift card.

Sup­ple tar­get­ing trans­lates into major success

Amar’s fel­low co-founder, Suchit Dash, says that ifeel­go­ods’ whole approach is much sup­pler (and sub­tler) than sim­ply shov­ing fixed rewards at con­sumers.  The firm tar­gets con­sumers with what they’re already show­ing an inter­est in.  For exam­ple, it’s found that iTunes gift card offers gen­er­ate more clicks when they’re fea­tured on Apple’s iAd plat­form, reach­ing Apple device users who will be more like­ly to take up the offer of a few extra songs.

And the company’s clear­ly going from strength to strength: it raised $9.5 mil­lion in Series A fund­ing (tak­ing its total to $11 mil­lion) and now has offices in New York, Sil­i­con Val­ley, and Paris, han­dling 150 reward providers and 100 adver­tis­ers.  Adver­tis­ers include Coca Cola, Groupon, Wal-Mart, Mei­jer, Renault and Uni­ver­sal Pic­tures and gift card dis­trib­u­tors include Ama­zon, iTunes, Skype and Zyn­ga.  And the list is growing.