FreeWater is testing ad-supported water bottles at SXSW

Josh Cliffords, the CEO of the beverage company FreeWater, is turning bottled and boxed water into a new form of direct advertising.

The idea is this: Slap an ad on the side of a water bottle and you can give it away for free. Freebies, Cliffords is convinced, are the best way to win over consumers.

“Other advertising mechanisms harass you into buying something, and it’s an inconvenience—TV commercials, a YouTube commercial, a pop-ups, that annoying person on the corner that won’t let you walk by without taking a flier,” Cliffords told Marketing Brew. “​Even if you want what they’re selling and your dream product is on that flier, you have to get past the split second that you are inconvenienced. With this, it’s the exact opposite.”

The Austin, Texas, based start-up is in the midst of one of its biggest marketing moments at the annual South by Southwest conference. As attendees amble about the media, tech, and entertainment event, they might just spot a FreeWater truck distributing free, ad-supported aluminum bottles and paper boxes around Austin. On those bottles and boxes, attendees will see advertisements for the crypto banking app LVL and the consulting firm Juice Consulting, both FreeWater clients. (Juice Consulting, which is distributing 3,500 of the branded aluminum bottles during SXSW, is also doing PR for Freewater).

Fingers crossed: FreeWater is hopeful that positive results for its clients during SXSW, including an influx of QR code scans, website visits, and subsequent business inquiries, will help propel the company to attract even more advertisers throughout the year.

“It’s gonna be a big test for us,” Cliffords admitted.

Global problem, local solution

Cliffords’ idea for FreeWater began in 2015 when he realized the extent of the global water crisis while running an NGO assisting refugees. According to the World Health Organization and Unicef, 771 million people around the world lacked access to "even a basic level of service" in 2020, and about one in four people were without safely managed drinking water.

After unsuccessfully seeking financial support in Europe and seeking advice from Silicon Valley, Cliffords relocated to Austin, where he thought free water and other free supermarket items might be well received. By February 2020, the company was preparing to incorporate—and then the pandemic came.

With that hurdle came an opportunity. As shoppers in Austin waited to buy groceries at busy stores with limited staffing and hours, Cliffords showed up with an old-school beta test: FreeWater prototypes made out of cans of beer.

Cliffords removed the shrinkwrap, rewrapped them with FreeWater labels, and asked shoppers if they wanted to crack open a cold one while they waited.

“They were really nice, and they gave us all this feedback—these QR codes are too large, or they’re too small because my phone won’t let it work right,” Cliffords recalled. “I do like this. I don’t like that. We gave out thousands of them.”

After finalizing the product, FreeWater debuted its first batches of branded, free water and began distributing it. The company wanted to find more traction, so they turned to TikTok. Cliffords now regularly posts videos of himself promoting the product, explaining his business model, and handing out FreeWater to passersby in Austin; the company’s TikToks have attracted more than 2 million likes.

A simple premise

The core selling point behind FreeWater is simple: freebies are “one of the most reliable ways to build goodwill and favorable brand associations,” Adam Alter, a professor of marketing at New York University’s Stern School of Business, told Marketing Brew. In other words, he said, “How can you dislike a company that gives you something for nothing?”

If advertisers can align themselves with those positive associations from consumers, the thinking goes that they will benefit from that positive association. “Human social behavior revolves around the norm of reciprocation,” Alter explained. “If someone is good to you, you’ll be good to them, and vice versa. A company that gives you something for nothing opens this loop, and, without realizing it, you become indebted to the company in some sense.”

Cliffords stresses this positive feedback loop in conversations with potential advertisers. “Imagine if you were eating dinner with your family, and every single day for a week, a company paid for all your beverages—I’ll say Nike shoes,” Cliffords said. “Then a month later, you go to buy a pair of shoes, and you decide: Am I going to buy a pair of Nikes, Reeboks or Adidas? You’re probably going to go with the brand that paid for all of your free stuff.”

Some brands are betting on that premise to help boost their businesses. FreeWater has attracted attention from Austin-based organizations like the Animalis Fabula Film Festival, Black Denim Records, the California-based sports training company SportsWest Performance, and a few national advertisers, including the TV network truTV.

As advertiser interest grows, FreeWater is rolling out a water-distribution van in Austin to distribute its free product straight to consumers, and is working on adding attribution and tracking capabilities that help marketers understand just how effective their water-bottle advertising is.

Cliffords is hopeful that FreeWater’s philanthropic commitment is attractive to socially conscious brands. For each bottle or box of water monetized by ads, the company donates at least 10 cents to the nonprofit Well Aware, which drills wells to improve access to water around the world. FreeWater also does not use plastic water bottles, despite their being cheaper and easier to manufacture, since most of them end up in landfills or polluting waterways. The company is working on providing fully biodegradable packaging in future shipments, Cliffords said, and is also looking for ways to reduce waste in its own supply chain.

Clifford is an optimist. If he can make FreeWater work, he’d like to eventually open a free supermarket, all made possible through the sale of ads.

“Water is obviously just our first product,” he said, “and every time we introduce a different free product or service, we’ll donate to a different cause.”