Instant On-Pack Offers Tops in Redemption
By Rose Anthony
It’s a classic case of a little tactic making a big impact in the crowded world of promotional marketing.
In 2018, 256.5 billion CPG coupons were distributed, according to NCH Marketing Services. Instant on-pack coupons represented less than 1 percent of that total, but they yielded an impressive redemption rate. In fact, in/on pack coupons posted the highest average redemption rate among all forms of coupons in 2018 at 15.25%.
Such a track record is a win-win for both consumers and marketers.
Instant On-Packs, also called Instant Redeemable Coupons (IRCs), refer to coupons that are affixed to the product, either in the factory or in the store. Such placement provides easy access to shoppers. Instant on-packs activate consumer purchases in three ways:
- Encourage new product trial
- Provide an attractive alternative to a competing brand.
NCH officials say on-pack offers motivate immediate, impulse purchase decisions. They have the power to break a consumer's ties to a competitor’s product. They draw attention to a product, avoid print media distribution costs, and have higher redemption rates than media-delivered coupons.
For marketers, the performance of these coupons upends the typical relation of distribution to redemption shares; in this case, a large redemption relative to small distribution.
Based on the findings in an NCH coupon analysis, Dry Grocery is the #1 ranked sector for Instant On-Pack distribution and redemption volume, with a 5% increase in redemption in 2018 over the previous year.
Instant on-packs increase activation in several product categories:
- Frozen Food – 69% increase in redemption
- Refrigerated Foods – 9% increase in redemption
- Household Good and General Merchandise – 33% increase in redemption.
The top five retailers ranked by redemption volume in 2018 were, in order, Kroger, Walmart, Ahold Delhaize, CVS, Target. They represented nearly 50% of all CPG coupons redeemed.
“IRCs were always powerful and effective since they were targeted and at the point of purchase. They also rewarded loyal customers and enticed new customers,” said Art Averbook, the now retired president of Co-Op Promotions, which specialized in on-pack and in-pack promotions and sampling.
“We worked in all categories, especially alcohol, beer and wine since there were often hundreds of competitors,” he said. “The secret of success was for the product to highlight the promotion.”
Editor’s Note: The data in this story is aggregated across all Instant On-Pack formats (Factory-Applied, Field-Applied, Cross-Ruff, and Neck Hangers) for offers redeemed by NCH manufacturer clients. NCH redemption data is representative of 13 out of the top 20 distributors of CPG coupons.