Digital schmigital, FSIs continue to rule coupon world

Shopper marketing conversations these days may be dominated by digital strategies, but the time worn free-standing insert continues to dominate as the distribution vehicle of choice when it comes to coupons.

FSI’s accounted for 89.6% of the 167 billion coupons distributed during the first half of the year, versus 87.3% for the same period the prior year, while digital coupons accounted for less than 1% of total volume, according to the U.S. mid-year 2011 Consumer Packaged Goods Coupon Facts Report released by NCH Marketing Services Inc., a Valassis company.

Other interesting trends regarding coupon distribution and redemption behavior showed CPG companies actually distributed fewer coupons during the first half of the year with the 167 billion coupons distributed representing a 6.2% decline from the 178 billion coupons distributed during the first half of 2010. Even so, consumers saved an estimated $2 billion as coupons tended to have higher faces values, shorter redemption windows and there was an increase in the type of coupons where shoppers have to make multiple purchases to receive the savings.

Despite fewer coupons in the marketplace, the overall volume of redemptions increased 2.9% to 1.75 billion, continuing an upward trend that began with the recession. The gain came on top of sharp increases in prior years when redemption volume grew 18.9% during the first half of 2009 and another 7.9% during the first half of 2010.

The shift in redemption behavior occurred even though marketers sought to reduce their redemption liability, according to Charlie Brown, VP marketing with NCH.

“CPG marketers are fine tuning their strategies including the number of offers in the marketplace,” Brown said. “We are seeing many companies that are continuing to increase the total number of coupons they offer, including a few top coupon distributors promoting at a double-digit rate of increase over the prior year. But there are also a number of companies that have reduced their coupon activity for reasons specific to their own situation, such as cost management or changing tactics.”

As for where shoppers are redeeming coupons, the largest increase came in the drug channel where a 26% gain was seen. The next largest increase occurred in a channel described as “other” that includes dollar stores where redemption activity increased 11.2%. Discount stores, including supercenters experienced a 10.4% increase while redemption activity at conventional supermarkets declined 3.1%.

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