FSIs Poised for Growth After ‘Historic’ 2009
By James Tull
Free-standing inserts (FSIs) – always a significant force in couponing – have surged in recent times. In fact, FSIs have seen the most activity in a decade, with over 272 billion coupons dropped, representing an increase of 8% since 2008 according to the 7th annual FSI Distribution Trends Report.
Authored by Marx Promotion Intelligence, a division of Minneapolis-based TNS Media Intelligence, the report says retailer promotion pages earned a record spike, increasing more than 37% to in excess of 9 billion pages in 2009. This continues the pattern of substantial year-over-year growth rates that started in 2007.
“Last year was an historic one for the FSI industry as well as for coupon industry in general,” said Tom Murray, Valassis Vice President & General Manager, Free-Standing Inserts. “Redemption was up 23%! Clearly, coupons have never been more relevant to consumers.”
Murray confirms that 2009 represented the single highest page volume in history for FSIs. All the consumer and economics factors are currently in place for another big year, he added.
“FSIs have clearly emerged as a key component of manufacturer- and retailer-aligned promotion programs,” said Mark Nesbitt, president, TNS Media Intelligence. “As consumers adapt to new economic realities, marketers are increasing their use of FSI coupons within their marketing mix to deliver advertising impact, influence consumer behavior, and secure retailer distribution and merchandising.”
Nesbitt says that leading retailers are also increasing their use of FSI vehicles to drive planned shopping trips and further solidify shopper loyalty. Both retailers and manufacturers are working together to deliver relevant incentives to their consumers and shoppers during increasingly difficult economic times, he added.
Meshing the goals of retailers and manufacturers is something Tom Murray believes in.
“Over the last three years, Valassis has observed a number of key changes in the marketplace that have helped us form our current FSI strategy,” he said. “In order to facilitate this change in consumer behavior, we have worked to align our FSI distribution model to dovetail with how major retailers go to market.”
Murray says that one particular change is in the consumer’s weekly stock-up shopping trip, as it is more of a pre-planned event than ever before. More consumers now use a list when they shop (65% according to IRI's 2009 Consumer Trends) and the two key pieces of information consumers use to create their shopping list is the weekly retail circular and selection of coupons that are available, such as FSIs, he added.
Consumers whose shopping lists are influenced by FSIs now have more inspiration to draw from than ever before. In 2009, more than $385 billion in consumer incentives were delivered via FSI coupons, up 15% from 2008. During that same time span, over 272 billion coupons were distributed within more than 203 billion FSI pages, according to the report.
Also of note, FSI coupon average “face value” reached new heights in 2009 at $1.42, up 6.5% from 2008. At the same time, average expiration decreased 3.9% from last year, to 9.3 weeks. TNS says this indicates that manufacturers are delivering more offers of greater value to the consumer, but are decreasing the amount of time that these offers are available in the market.
Although these numbers are encouraging, it is important to note that each market is different in regards to how it is targeted with either FSIs or shared mail.
“For example, in Washington DC, our FSI is in the newspaper because the major retailers distribute their weekly circulars in the newspaper,” said Murray. “However, in a market like Philadelphia, virtually every major retailer (Food/Drug/Mass) has begun to use our Shared Mail delivery to reach consumers.”
In response to this shift by retailers, Murray says Valassis has converted its FSI distribution to Shared Mail as well. After three years of testing, the company now distributes about ten million of its sixty million FSI circulation in the mail, he added.
Here are the hard numbers concerning FSIs, according to TNS:
The consumer packaged goods (CPG) sector remained the largest user of FSI pages, with a 71.5% share, followed by direct-response marketing vehicles, which include general advertising activity, and franchise (restaurants, portrait studios and other businesses).
CPG and franchise increased 6.1% and 10.3% respectively, in number of pages distributed, while direct-response posted a 5.8% decrease vs. 2008. Retailer promotion pages increased 37.7% to more than 9 billion pages in 2009. FSI coupon support was included as part of 388 new product introductions last year, up from 334 during 2008.
A promotional strategy known as corporate “scale” events also grew in 2009. These events included both manufacturer solo inserts in which the entire vehicle comprises events from a single manufacturer and multiple-page corporate themed events that are distributed within cooperative FSI coupon vehicles.
“Manufacturers are using corporate scale FSI coupon events as an effective advertising vehicle to leverage their brand portfolios to break through the promotion clutter and engage their consumers while also creating a more robust merchandising opportunity for their retailer partners,” said Nesbitt.
The top 10 product types, based on coupons dropped, accounted for 34.8% of all FSI coupon activity during 2009. Combination/personal products (comprising personal care brands that are promoted across multiple individual personal care categories) ranked first and increased 7.5% over last year, to distribute more than 13.3 billion coupons.
Pet food and treats took second place, with a 4% increase to 13.1 million coupons.
With so many factors to consider, it is no wonder that companies such as Valassis are looking at a multi-tiered approach in order to most effectively engage customers.
“Our FSI strategy is actually much more than a Shared Mail strategy, Murray said. “We believe that in order to continue to reach consumers in significant numbers it will take a fully integrated media platform that will include newspapers, Shared Mail, online and digital coupons.”
Murray says this expansion will result in a new definition of what FSIs actually are, and the growth of his company's Shared Mail FSI delivery will be determined by how quickly retailers accept it as the primary means of circular distribution. As that occurs, Valassis will also evaluate aligning with them on a market-by-market basis, he added.
Market Watch
Latest Trends, Technology to Star at Annual Conference
By Rose Anthony
The annual Industry Coupon Conference – the only conference in 2010 dedicated exclusively to coupons – will take place April 27-29 at The Venetian & Palazzo in Las Vegas.
Hosted by the Association of Coupon Professionals (ACP), the event will feature a full slate of leading speakers including:
- Steven Vowles, senior vice president of marketing at Stop ‘n Shop will demonstrate successes in their loyalty program with targeted digital coupon offers on personal scanners
- Adam Schwartz, president of Couponsurfer.com, will shares consumer insight from the 1.6 million registered users of this coupon aggregation website.
- Tom Murray, Vice President and General Manager of Free Standing Inserts at Valassis, will present consumer insight and trends on the largest coupon distribution vehicle: FSI’s
- Laird Garner with Digital Incentives Journal International, will analyze the “Mobile Internet Revolution” and how mobile internet and digital coupons and incentives will impact the industry.
In addition, a retailer panel will discuss industry issues and opportunities from a retailer’s perspective. Each attendee will receive the book “How You Do What You Do” by Bob Livingston who will share how to differentiate oneself through service excellence.
An afternoon of track sessions will deal with specific topics in the coupon industry. .
The conference was developed under the leadership of ACP in collaboration with the Food Marketing Institute (FMI), Grocery Manufacturers of America (GMA), GS1 US, CIC and the Promotion Marketing Association (PMA).
The Conference Planning Task Force, led by co-chairs Ann Keeler of Integer and Earl Ellsworth of Universal Marketing, are finalizing details for the conference. More information is available at www.couponpros.org.
Education Workshop This Month
The Association of Coupon Professional’s highly-regarded Coupons 101-102 educational workshop will be held March 24 in conjunction with the CIC Summit in Washington, D.C. The workshop reviews all aspects of the couponing industry in an informative and interactive format designed for individuals new to couponing, or those who need an update and refresher course. Presenters are industry experts who can answer all couponing questions
A limited number of rooms are available for the discounted rate at a nearby hotel. Call John Morgan at ACP (610) 789-9993 for more information.
Digital Coupons Rolling
One hundred and fifty two CPG manufacturers distributed digital coupons in Q4 2009, a 3.4% increase versus Q3 2009, across the websites monitored as part of the Marx Digital ProMotion Report available exclusively from Marx, a Kantar Media solution. Meanwhile, 116 CPG manufacturers distributed digital coupons across the retailer websites monitored by Marx during Q4 2009.
Average Face Value Per Unit increased in eight of the nine major Areas defined by Marx. Other packaged goods had the highest Average Face Value Per Unit in Q4 2009 at $4.64, up from $1.53 in Q3 2009. This increase was in part seasonal, driven by high value offers for children’s toys and related items. Shelf Stable Beverages and Personal Care had the next greatest increases in Average Face Value Per Unit at 44.7% and 30.2% respectively. Refrigerated Foods was the only area with a decrease in Average Face Value Per Unit, declining 22.4% versus Q3 2009 to $0.45.
Verizon’s Digital Coupons at Grocers
Verizon is now offering a free digital coupon service for its wireless and FiOS TV customers that can help them save money on their next trip to the grocery store.
Verizon’s Spend Smart coupons, powered by Cellfire, eliminate the hassle of clipping and collecting paper coupons by giving users instant access to coupons via their wireless phones, TVs or computers.
Verizon’s Spend Smart coupons cover a wide range of products on customers’ shopping lists and can be used at more than 4,000 locations of more than 20 grocery chains nationwide, including ShopRite, Safeway and Kroger. Coupon brands and products rotate every two weeks, with more than $25 in monthly grocery discounts available at any given time.
FEBRUARY 2010
Counterfeit Surge Could Tip
Redemption Imbalance to Larger Chains
By Al Heller
Two different worlds in coupon redemption widen the competitive imbalance between larger and smaller retailers – and add to the ongoing fiscal pressures on CPG manufacturers.
On one hand, large retailers have the muscle to be paid within 15 days and gain leeway with payers on questionable coupons submitted. They also have the nerve to take invoice deductions off of CPG supplier invoices if agents don’t pay them quickly enough.
On the other hand, independents and smaller chains get relatively shabby treatment even if they are ethical and comply with payer requirements. One example: it takes 30 days for them to either be paid on redeemed coupons, or at least notified of a discrepancy that prevents such payment. Then the real fun of proving legitimacy begins. That could draw out over months or years because the reason for refusal to pay isn’t called out, so it requires investigation before an appropriate challenge can get underway.
Similarly, CPG suppliers are hurt by unannounced invoice deductions taken by large retailers that are supposed to equate to the value of coupons redeemed that remain unpaid. Retailers that do this don’t often articulate the reason, which leaves CPG challenged to identify it as a coupon deduction. CPG then has to go to the retailer’s portal, look up the debit memo number and find the retailer’s ‘support’ of the deduction. However, that only gives the dollar amount and invoices involved, not the reason such as counterfeit or otherwise illegitimate coupons. CPG then has to investigate within its own systems or the payment agent’s system.
So explains Ron Fischer, president and founder, RPR Redemption Processing Representatives, Blairstown, N.J., which recently settled a claim on behalf of a retailer that began in 2006. That time stretch is unusual, but it signifies the cash flow impact such disputes could have on smaller store operators, or conversely on CPG. His firm uses a proprietary, fully auditable process to collect for retailers on unpaid invoices, to research and challenge chargebacks, and to issue monthly reports.
A sudden rise in counterfeit coupons could tip industry imbalances even further in favor of larger chains, suggests Fischer, because the unregulated industry operates largely on voluntary guidelines. Trading partners that don’t want to take losses will pick on whomever they can. That would mean smaller retailers and smaller CPG manufacturers that lack the resources and the will to fight back.
The non-profit Coupon Information Corporation (CIC), Alexandria, Va., posted images on its website (www.cents-off.com) of approximately 100 new counterfeit coupons in January 2010. This compares with an average of six per month throughout 2009, which ranged from one in February to 16 in August, observed Fischer.
“Some manufacturers will pay a retailer if counterfeits are in small quantity because they realize stores accept them in good faith and there aren’t any instant cashier-level alerts that exist today,” he explained. “RPR (www.rpr-coupons.com) issues e-mail alerts to member retailers with images of counterfeits. But the problem is getting the notification down to floor supervisors and cashiers to keep them from accepting coupons that look good to the naked eye.”
Could the new GS1 databar become the control center for legitimate coupons, whether they come from print media, coupon websites, direct mail or other viable sources? Fischer thinks GS1 could play a principal role in enforcing coupon standards, but only as part of a wider industry initiative that could include:
- Enhanced fraud control measures through CIC
- Education through the Association of Coupon Professionals (www.couponpros.org)
- Collaboration of all couponing parties (CPG manufacturers, retailers, clearinghouses, agents) through a re-energized Joint Industry Coupon Committee – which once had considerable top-down support from major trade associations such as the Food Marketing Institute and the Grocery Manufacturers Association, but operates on more of a middle-management level now with fewer resources.
It remains an open question whether some or all of these elements could come together soon or at all. However, larger retailers will certainly be on board with any new technologies that prevent fraudulent coupons from passing through their registers. “If smaller chains don’t get on board, too, counterfeiting activities will shift more towards their stores,” notes Fischer.
The GS1 databar is just that. “With the new databar, the technology will be in place to load in a specific counterfeit coupon, and have it come up as an instant alert if anyone ever tries to pass one. This will solve the challenge of getting word down to the cashier level. Independents and smaller retailers will need to align with this, or they’ll become relatively easy prey for counterfeiters,” he adds.
Fischer contends the larger chains are already ahead with more powerful point-of-sale systems that scan to the full level, including family codes (which indicate the product type) and manufacturer identification numbers on coupons.
Al Heller is co-author, Consumer-Centric Category Management (Nielsen/Wiley, 2006) and president, Distinct Communications, LLC.
Consumers Use over $3.5 Billion in Coupons,
Drive 27% Increase in Redemption for 2009
By Rose Anthony
Annual coupon use is on the rise for the first time since 1992, according to statistics complied by Imnar. In fact, coupon distribution hit the highest level recorded since the company began tracking trends in 1988.
For the first time in 17 years, consumers used more coupons than they did the year before, with 3.3 billion CPG coupons redeemed – an explosive 27% increase over the 2.6 billion redeemed in 2008.
The increased coupon use started in October of 2008, coinciding with news of the U.S. financial crisis. That led to five consecutive quarters of double-digit growth (based on percentage change from the same period of the previous year).
The increase in redemption goes hand-in-hand with an increase in distribution, according to Inmar. Despite the tight economy, marketers invested heavily in coupons, boosting the number available to the highest level in over 30 years. Brands issued 367 billion coupons, at an average face value of $1.44, indicating that they were committed to promotions in 2009.
News America Marketing, the company behind the SmartSource Magazine coupon inserts
and consumer coupon site www.smartsource.com, says the data supports what they saw
last year.
“There has been a noticeable increase in page count over the past year,” said News
America Marketing Executive Vice President of Marketing Jesse Aversano. “Manufacturers understand that in a tough economy, coupons are an effective and efficient way to spend their advertising dollar.”
Matthew Tilley, Director of Marketing for Inmar’s promotion services division, said, “Brands saw coupons as a key to maintaining brand strength. If they reduced their promotional presence, they stood to lose sales to lower priced competitors and store brands. So they doubled down hoping to create brand loyalty once the economic dust settles.”
News America Marketing also reported an increase in retailer promotion pages in its free-standing insert (FSI), driven primarily by the shift in advertising and promotion dollars to shopper marketing initiatives, according to Aversano.
Online coupons also contributed to the rise in coupon distribution and redemption, with Internet distribution up 92% and consumer redemption of these coupons up over 360%.
“The weekly prints from SmartSource.com are more than double what we saw a year ago, which was double what our 2007 numbers were,” said Aversano. “However, in spite of the meteoric rise in online and digital couponing, the traditional newspaper-distributed FSI still accounts for 89% of all coupons distributed and over half of the coupons redeemed. Consumers expect to find coupons in their Sunday papers, and we’ll continue to be there for them. But they’ll also find us online, in stores, on cell phones and anywhere else that they want to find them.”
As coupon numbers across the board were on the rise in 2009, brands were forced to
mitigate the cost of increased redemption by maintaining face values and keeping expiration periods in check. In 2009, face values declined by a penny, reversing a multi-year trend of increasing values. Expiration periods were shortened by 10% last year, despite years of virtually no change.
“This is an exciting time to be in the coupon business,” said Tilley. “Of course, we don’t know how long this upward trend will continue, but it is evident that coupons are back on shoppers’ radar. The economic downturn has instilled a drive to be smart and frugal about spending, and coupons definitely have a role in fulfilling it.”
ACP Coupon Events on Tap
The Association of Coupon Professionals (ACP) has two events on tap in coming months: a regional education seminar and the annual conference.
ACP’s regional Coupon 101-102 Education Seminar is scheduled March 23 at the Hotel Monaco in Alexandria, Va. The annual Industry Coupon Conference will be held April 27-29 in Las Vegas.
For information on both events: www.couponpros.com and 610-789-9993.
ACP Eyes Digital Coupons
Digital coupons such as those delivered by mobile phones or loaded on a store’s loyalty card are gaining traction in the marketplace. To keep its members and the industry informed, the Association of Coupon Professionals (ACP) aims to study these new promotions in 2010.
“We’ll be working on developing a framework and some data for assessing and analyzing digital coupons,” said Matthew Tilley, who heads the Market Research Task Force that will spearhead the research. He defines “digital coupons” as “those that don’t require paper for redemption.”
He is calling for digital vendors to come forward and share some of their insights and data to help establish benchmarks for brand marketers and retailers looking into deploying these coupons.
“We want to come up with some kind of redemption rate that companies can expect from these coupons, and determine what factors into those redemptions,” said Tilley, vice president of marketing at Inmar. “Companies like NCH and Inmar can provide aggregate redemption information, but we’re not able to provide some of the other tracking points,” he explained.
“For example, how many people selected the offer and whether they redeemed it or not, or
how many people viewed the offer. Those kinds of data points have got to come from the distribution companies.”
The task force aims to develop a primer for these digital coupons. He hastens to add that the primer will not promote one vendor or type of digital offer over another one. “It will be basic and objective head-to-head evaluation, and people can make a decision based on that.” Internet print-at-home coupons will be included in the analysis as a point-of-comparison, he said, since those coupons are relatively mature and the analysis standards are widely accepted.
