Good News and Bad News for FSIs

By Jack Grant

Athough digital coupons are on the rise, free-standing inserts (FSI) remain the primary distribution channel for coupons. Four of five coupons redeemed are from traditional print media, says a new study by NCH Marketing Services, a subsidiary of Valassis.

Announcement of the research results comes at a time when interest in National Coupon Month is low and coupon counterfeits and fraud is high.
NCH’s Mid-Year 2018 Coupon Trends Analysis for Consumer Packaged Goods (CPG) indicates that the FSI represents 94.5 percent of distribution quantity, reflecting its scale of consumer reach for CPG marketers. According to the survey, 93 percent of respondents reported using paper, while 75 percent of consumers said they use paperless coupons.

According to the 2K18 Coupon Intelligence Report, overall, 94 percent of consumers surveyed said they use coupons. This 4 percent increase from 2017 comes as millennials use coupons more often. Specifically, half of millennials said they “always or very often” use coupons, compared to 41 percent in 2016. The report also underscores the value of savings via print and digital media.

In the first half of 2018, CPG marketers shifted more of their coupon media mix toward digital formats, such as paperless clip-to-retailer-card offers. As digital distribution rises, redemption of these coupons has increased as well. Year-over-year for the same time period, paperless coupons redeemed jumped from 9.8 percent to 15.7 percent, according to NCH.

“The influence of coupons on consumers’ decisions is strong and growing with a broader media mix along the path to purchase,” said Charlie Brown, Vice President of Marketing, NCH. “This means marketers must strike the optimum balance of media reach and consumer activation to produce positive results for their brands across all retail channels and consumer audiences.”

Meanwhile, September is National Coupon Month, but there has not been a lot of supportive publicity from CPG companies or coupon organizations. This year’s low-key observance continues a pattern for the last several years, suggesting that the annual promotion needs some new energy and fresh ideas.
Another pattern for the last several years has been more incidents of coupon fraud, which continues to roil marketers of food and beverage brands and their trading partners.

“While paper coupons continue to be distributed at a high level, so do fraudulent paper coupons. ICN has seen a large increase in attempted use of fraudulent coupons during the first 8 months of 2018,” said Jon Robertson EVP Marketing for the Intelligent Clearing Network (ICN), which provides a comprehensive cloud-based paper validation, settlement and analytics technology that improves the entire paper coupon ecosystem with real-time clearing and settlement of paper coupons.

“Counterfeits are coming hot and heavy. People are always looking for ways to save a dishonest dollar,” said Bud Miller, Coupon Information Corporation executive director. CIC is a not-for-profit association of consumer product manufacturers dedicated to fighting coupon misredemption and fraud.

Coupon fraud occurs in several ways:

  • When a person intentionally uses a coupon for a product that he or she has not purchased or otherwise fails to satisfy the terms and conditions for redemption
  • When a retailer submits coupons for products they have not sold or that were not properly redeemed by a consumer in connection with a retail purchase.
  • When coupons are altered/counterfeited.

It’s no surprise why coupon fraud is increasing, Prosper Insights & Analytics finds that consumers rank coupons as the most influential media on the purchase of grocery and beauty products. Additionally, RetailMeNot research reveals that coupons can be instrumental to driving sales, as 67 percent of consumers surveyed said they have made a purchase they weren't originally planning to make solely based on finding a coupon or discount.

With this in mind, NCH says incorporating digital into the marketing mix is critical, but its analysis suggests marketers need to optimize the right amount of print and digital together to maintain the benefits coupons bring to brands: sales lift, new user trial and increasing market share.

                                               Mid-September 2018
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