FSIs, Digital Offers Post Strong Growth
By Jack Grant
The twin engines of couponing continued the growth of America’s favorite promotion in the first half of 2010.
Free Standing Insert (FSI) activity increased 10.1% and retailer promotion activity grew 56.2% to more than 6.7 billion pages. Meanwhile, the number of digital coupon events increased by more than 80%, and the number of manufacturers distributing digital coupons increased by more than 30% versus year ago.
“CPG manufacturers are continuing to use FSI coupons to reach consumers in the home to deliver advertising impact, influence consumer purchase decisions, and secure retail merchandising support,” said Mark Nesbitt, President, Kantar Media Intelligence, provider of the research.
“Digital coupons complement traditional FSI coupons to reach the consumer in the home while they are actively making purchase decisions,” he said. “As more manufacturers distribute more digital coupons, it becomes increasingly critical to understand competitive digital promotion tactics to insure that events break through the clutter to deliver the right offer to the right consumer.”
During the first half of 2010, the number of digital coupon events increased by 84.0% versus the first half of 2009 across key websites tracked by Marx, a Kantar Media solution. Additionally, 200 manufacturers distributed digital coupon offers, an increase of 31.5% compared to the 152 manufacturers that were active in the first half of 2009 across these key websites.
The 10.1% increase for FSIs is the greatest observed during the first six months of a calendar year, surpassing the second highest growth reported in Coupons Dropped of 8.0% realized in the first half of 2004.
“In addition to Target’s expanded use of cooperative FSI coupon vehicles to support their retailer promotion activity, other leading retailers are expanding their use of retailer promotion events, especially within the Food, Drug, Value, and Pet Specialty channels. One of the trends observed in response to the declining economy was consolidation of retail shopping trips within the super center format. The increased use of retailer promotion events within cooperative FSI coupon vehicles may be an effective retail response to combat the consolidation of trips.” said Nesbitt.
Refrigerated Foods led the increase in activity within the Food Areas. This is a 3.9 point increase in the first half of 2010, contributing to an overall Share of Activity for the Food Areas of 64.6%. Health Care drove the greatest decrease in activity within the Non-Food Areas with a 4.6 point decrease in the first half of 2010, which resulted in an overall Share of Activity for the Non-Food Areas of 37.5%.
Face Value and Face Value Per Unit decreased in four of five Food Areas in the first half of 2010 versus a year ago. In contrast, Face Value increased in all four Non-Food Areas during this period. All Food Areas had Face Value and Face Value Per Unit of less than $1.00, while all Non-Food Areas had Face Value and Face Value Per Unit greater than $1.00 during the first half of 2010.
Retailer Promotion – Digital versus Print
On retailer websites monitored by Marx during the first half of 2010, there were 268 manufacturers running digital promotion events. This is 25.8% more than the 213 manufacturers that participated in retailer promotion events in traditional print FSI vehicles during the same period.
“Manufacturers are distributing coupons on retailer websites to build purchase intent with the consumer and drive shopping trips for the retailer,” said Bob Cristofono, Vice President of Sales at Marx. “Increasingly, manufacturers need to understand competitive promotion activity on retailer websites to fully understand retail pricing, merchandising support, and promotional lift.”
During the first half of 2010, 35 new products included digital promotion events across the websites monitored by Marx compared to 196 new products that included traditional FSI coupons during the same period. However, there was an average of 6.1 Event Dates Per New Product for digital promotions compared to 1.6 Event Dates Per New Product for FSI coupon promotions. New products continue to gain support with digital coupons, with nearly four times the number of Event Dates in digital than in print.
Social Media Insights
“Manufacturers are blurring the lines between traditional FSI and digital promotion by developing integrated retailer and new product campaigns,” said Dan Kitrell, Vice President of Account Solutions at Marx. “In addition to moving coupons online, many leading CPG manufacturers are also including social media references in their FSI coupon creatives. Facebook is the primary social media being used, but Twitter is included in addition to Facebook in about half of the creatives analyzed. In most cases, the social media icon is the only reference. However, some brands have developed programs to incent consumers to support social media websites including opportunities to download additional savings, join web clubs, and contribute to charities,” said Kitrell.
Overall FSI Activity
During the first half of 2010, more than $234 billion in consumer incentives were delivered via FSI coupons in Sunday newspapers, up 17.8% from the same period in 2009. During the same six month period, more than 155 billion coupons were distributed within more than 113 billion FSI pages. FSI coupon average Face Value achieved a new record level in the first half of 2010 at $1.51, up 7.1% versus the first half of 2009. However, Average Expiration (Fuse) dropped to 8.8 weeks, down 9.0% versus a year ago which is the largest percent decline in Fuse for the first half of the year reported in the last five years.
Top 10 Retailers Based on Pages Circulated
Retailer promotion pages increased 56.2 percent to more than 6.7 billion pages in the first half of 2010. While the number of retail banners remained flat, the number of active manufacturers that participated in retail promotion events increased 57.8 percent from 135 in 2009 to 213 in 2010.
Target continues to lead with more than 1.3 billion pages, up 66.9% versus the first half of 2009. Dollar General had the largest actual increase based on Pages Circulated among the top 10 retailers, increasing 566.8 million to more than 1.0 billion pages to rank second during the first half of 2010. Family Dollar went from a rank of 29 in the first half of 2009 to a rank of 5 in the first half of 2010, distributing an additional 488.9 million pages for a total of 512.8 million Pages Circulated. Walgreens and PetSmart also reported large increases in Pages Circulated, up 69.4% and 32.7%, respectively. These trends reflect the overall growth of retailer promotion within traditional FSI vehicles to drive trips, transactions, and profits across channels and retail formats.
CPG Non-Food vs. Food
In the first half of 2010, Non-Food categories distributed more than 92.0 billion coupons, up 10.2% versus the same time period in 2009, while Food categories distributed 64.0 billion coupons, representing an increase of 9.8%. All areas reported increases in Coupons Dropped during this period.
Additionally, manufacturers are increasing the value of the offers that are being delivered to consumers in both the Non-Food and Food segments. Weighted Average Face Value (WAFV) for Non-Food increased 9.1% to $1.87 and was combined with a 0.4 point increase in Multiple Purchase Requirements (MPR) resulting in Weighted Average Face Value Per Unit (WAFVPU) increasing 6.2 percent to $1.65. WAFV for Food increased 1.7% to $0.99 and was combined with a 2.7 point increase in MPR resulting in WAFVPU remaining flat
at $0.74.
AUGUST 2010
Distribution, Redemption in 2010 Continue Record-Breaking Trends
By Jack Grant
Coupons are continuing their torrid growth.
The second quarter of 2010 markets the seventh consecutive quarter of growth in the number
of coupons redeemed. Driven largely by strong growth in the first quarter, overall coupon redemption is up 6% in the first half of 2010, according to statistics released by Inmar.
While the average face value and the overall offer value are trending up, expiration periods are contracting, leaving consumers with a mixed bag.
The average coupon value hovered around $1.59 throughout the first half of the year. That represented a 7% increase for the second quarter. The value of both food and non-food promotions saw similar increases. Increasing face values combined with multiple purchase requirements remaining at a steady 26%, means that the overall value consumers received was generally higher, reported Inmar.
Expiration periods have shortened down to 2.3 months on average. Just last year, the average fuse was 2.7 months. While the valid period contracted, the length remained reasonable and was more than offset by the increased value consumers enjoyed from coupons throughout
the quarter.
Meanwhile, the mid-year 2010 CPG Coupon Facts Report, released by NCH Marketing Services, a Valassis company, stated that distribution and redemption in the first half of 2010 continued to build on the record-breaking growth trends of the past year. In total, consumers saved nearly $2 billion with coupons in the first six months of the year – a 37% increase over pre-recession levels.
Marketers offered 18 billion more consumer packages goods (CPG) coupons in the first half of 2010, up 11.4% from a year ago and 24.8% from mid-year 2008. As shopping behavior has become more entrenched in value-oriented habits that originated during the recession, overall redemption volume has increased 7.9% year-to-date, with a higher growth rate (+12%) coming from the Health and Beauty Care (HBC) segment in 2010. The sustained growth in coupon redemption volume produced the seventh consecutive quarter of year-over-year increased usage. HBC marketers also increased their use of coupons at the fastest pace, up 20.8% from a year ago, compared to 6.7% for the grocery segment
“Marketers have increased their promotional activity as consumers have embraced mindsets toward value and are defining what has been called the ‘new normal’ when it comes to these learned shopping behaviors,” said Suzie Brown, Chief Marketing Officer for Valassis. “Consumers are adjusting their spending and becoming more strategic in their purchases as deal seeking escalates. Today’s shoppers don’t leave the house without their coupons and they don’t seek savings in just one place or from one media source.”
First-half 2010 findings also reveal a shorter expiration of 9.5 weeks compared to 10.6 weeks for the full year of 2009. In addition, face value is up to $1.43 for the first half of 2010 compared to $1.37 for 2009.
“More coupon discounts are crossing retailer checkouts as distribution and redemption are
on the rise,” said Charlie Brown, NCH Vice President of Marketing. “However, as marketers
are using coupons to motivate consumers and support the retailers selling their products,
they also are changing tactics when it comes to face value, offer duration and multiple purchase requirements.”
The average face value offered across all coupon media has grown 4.4% from a year ago. Duration shortened by a week, and more than a quarter of all coupons require the purchase of two or more items.
Overall, CPG marketers continue to allocate the largest share of coupons – 85% – in the free-standing insert (FSI) via newspaper and shared mail delivery methods. The Internet continues to grow at a much faster pace than all other distribution media, up 79% from a year ago. It represents 1.2% of all coupon distribution, the report revealed.
Among retailers, the largest increase in redemption volume so far this year has been in convenience stores, warehouse clubs and discount variety chains, such as dollar stores. Redemption across those store types as a whole is up 36.6%.
Market Watch
ICN Launches Solution to Prevent Coupon Fraud
By Jack Grant
Coupon fraud costs manufacturers and retailers some $400 million per year, according to the Coupon Information Corporation (CIC), the fraud watchdog agency. That problem may soon be a thing of the past because of a new service from the Intelligent Clearing Network (ICN) that aims to eliminate coupon fraud.
The Fraud Prevention Service reviews every coupon scanned in “real time” at the store’s checkout. If a counterfeit coupon is detected, a message is sent in milliseconds to the cashier not to accept the coupon.
“Most experts agree that the best way to eliminate fraud is to block the redemption of counterfeit coupons at the point-of-sale,” said Rich Thibedeau, ICN Executive Vice President. “Our new ‘real time’ Fraud Prevention Service automatically blocks the redemption of known counterfeit coupons and also enables manufacturers to create a master file of valid coupons. Any coupon presented at the POS that doesn’t match one in the master file is automatically rejected. “
This year alone, CIC has dealt with over 200 incidences of coupon fraud costing millions of dollars. The problem appears to be growing, in part due to the ability to proliferate fraudulent coupons on the Internet and to the availability of high quality, low-cost printers.
Many retailers have attempted to control fraud by loading fraudulent coupon definitions down to the POS, according to Thibedeau. But this process is time consuming and has limits on the number of fraudulent coupon definitions that can be maintained.
With the introduction of the new GS1 Databar coupon standard, due to become effective January 1, 2011, coupons will contain more information than current UPC-A barcodes, in part to control mis- and mal redemption, but not fraud.
The new Fraud Prevention Service will support the new GS1 Databar coupons, said Thibedeau, and eliminate the need for retailers to manage fraudulent coupon definitions at the POS.
Jim Petras, Managing Director of Early Stage Partners, said, “The introduction of ICN’s new Fraud Prevention Service is just another example of innovation occurring with ICN’s real time connectivity to retailers POS.
ICN pioneered digital coupon processing without the need to download and upload pre-defined offers to the
POS. That will be followed beginning January 1, 2011 by their ability to electronically process GS1 Databar paper coupons.”
ICN is an innovative software-as-a-service (SaaS) company that electronically validates and clears paper and digital coupons and other incentives in real time at the point-of-sale in grocery, drug and mass merchant retailers. Its single connection to a retailer POS can help solve the problem of mis-mal redemption and fraud for the coupon industry.
Inmar’s New Mobile Promos
Inmar, provider of digital coupon clearing and other promotion transaction settlement, will work with Augme Technologies, provider of the AD LIFE mobile marketing platform, to create and execute interactive digital promotions. The collaboration will produce the first live offer to run on Inmar’s ONiX digital incentive network.
The initial campaign will work to induce product loyalty by leveraging the convenience of mobile phones with the retail flexibility of Inmar’s ONiX network. Augme will deliver an offer that requires multiple purchases, which can be made over time and at multiple retailers.
Shortcuts.com Doubles Offers
Printable Coupons are now available on Shortcuts.com, the free online savings site. It enables shoppers to print coupons for many of their favorite grocery brands at home and redeem them at many of their favorite stores nationwide – no matter where they shop.
Printable Coupons adds to the company’s existing capability of Electronic Coupons, which link the savings directly to the savings cards of participating retailers, including Kroger, Safeway, Giant Eagle and Shop N' Save, which reach more than half of the country's households.
Kroger’s Online Coupon Center
A new digital coupon center on the website of Kroger, the grocery chain, features store brand and Web-only exclusive coupons.
Shoppers can load offers directly onto the loyalty card for Kroger and other banners the grocery chain operates: City Market, Dillons, Fred Meyer, Fry's, Jay C, King Soopers, QFC, Ralphs and Smith’s. They are prompted to link their loyalty card to the website and can load up to 150 coupons by selecting the “load coupons to card” option.
