brandcentric blog

Inmar recently published a press release highighting that 2009 saw year-over-year sequential growth in coupon redemption for the first time in 13 years.  This activity translates into 27% annual growth from 2008 with nearly 3.3 Billion coupons redeemed.  Pretty impressive statistics, but not at all suprising given the anemic global economy and cash-strapped consumers.

But the real news here is the contribution that digital coupons continue to deliver to this equation.  The numbers tell the story all too well:  Print coupon distribution via FSI accounted for 89% of total coupons in circulation and about half of redemptions…which leaves the balance to digital,  mobile and point-of-sale coupon delivery.  So roughly 10% of total coupon distribution (via digital and other means) drove roughly half of all redemptions. 

On a related note, just today Cellfire and Verizon announced a pretty cool distribution partnership.  It’s essentially a white label version of the Cellfire store, and will put digital coupons in front of a large swath of Verizon mobile users.

Given this very apparent shift to digital, it’s amazing that Valassis and other print media publishers are still able to command the insertion rates they do.  I wonder how long it will be before they dump their print FSI service and go all-in to digital delivery only.  Time will tell.

It’s hard to deny that digital coupon distribution is poised for a breakout year.  According to Scarborough Research, 11% of US households printed coupons via the internet in 2007 (up 83% since 2005!)  That figure has no doubt grown since this study was executed, given the multiple price advances manufacturers were forced to take in the first half of 2008. 

To add some perspective to this, newspaper FSIs still reign supreme for reach in coupon delivery, with 53% of households obtaining coupons through this medium (up just 8% since 2005).   And other delivery vehicles such as in-store, direct mail and product packaging will continue to have their place.

But CPG marketers now have some pretty interesting choices with how to deliver coupons to consumers in the digital realm.  Here are three different approaches that all have their pros and cons:

1. Printable coupons -  Consumers visit coupons.com (or one of their distribution partners), select desired coupons, print locally and then redeem during their next shopping trip.  The initial fear some manufacturers (and many retailers) had with printable online coupons is print fraud.  And to an extent, the concerns are still very real.   Coupons, Inc. has invested significant R&D into minimizing unauthorized prints, but fraud persists. Still, this approach accounts for the vast majority of digital coupon distribution to date.

2. Loyalty card integration- This approach is intriguing, as it eliminates the print fraud concern and provides a more streamlined consumer experience.  In this case consumers select desired coupons online and electronically “deposit” the coupon as stored value onto their retail loyalty card.   During their next shopping visit, the value is automatically deducted from their card if the qualifying item is purchased.   The big hitch with this approach is that participation today is limited to Kroger and its affiliate retail banners.  AOL’s Shortcuts and SoftCoin’s eCoupon program for P&G are the two technology providers driving this innovation.

3. Mobile delivery – This model is still in its infancy, but offers a rich opportunity to engage consumers in a more meaningful way.  One entry point is to offer and deliver mobile coupons to consumers during the shopping trip, while a buying decision can be affected.  Companies like Cellfire  can push discount offers to a mobile phone and/or leverage electronic value deposit to select retail loyalty cards, as in approach #2 above.

It’s an exciting time to be driving a digital marketing strategy for today’s consumers.  And within the world of digital coupon delivery, brand marketers have a pretty interesting array of choices to draw from.

Catalina Marketing made a pretty sizable investment upgrading their printer network from black & white to color in 2007.   I have to say, the color coupon print outs are more attention-grabbing and engaging.   Catalina has since focused their message to brand marketers around the network as a viable alternative to traditional media.  Using Catalina as a targeted marketing vehicle is indeed one way to reach a defined demographic more efficiently based on purchase history.  My experience is that Catalina coupons can redeem at 5% or higher, vs. the half-point to 1.5% redemption (on a good day) for FSIs, albeit off a much smaller distribution.

This video is a pretty interesting overview of how Catalina is marketing the service to brand folks focusing on the targeted marketing message.  My only real question is, what’s up with the caveman harrassing the shopper at 1:03?