April 2007 Archives

CMS, the leading provider of promotions logistics services, announced that over 331 billion dollars in potential consumer savings were distributed through coupons in 2006. With over 2.6 billion coupons redeemed, marketers found an eager audience in almost half of the country. Almost 142 million consumers used coupons in the past 12 months, with substantial usage across ethnic and demographic lines.

Both overall distribution and redemption have posted declines in recent years; 2006 was no exception. Overall distribution declined by 12% in 2006, with a corresponding 13% drop in redemption. But with more than 286 billion coupons distributed, it is clear that marketers still depend on coupons to propel their marketing strategies.

That illustrates the investment marketers are willing to make to move products off the shelf,

said Matthew Tilley, Director of Marketing for CMS.

Ultimately, it says volumes about how much they trust coupons to do the trick. You hear a lot of talk about the advertising value of coupons. While brands would be foolish to completely depend on that value to justify their investment, it would be equally foolish to completely ignore it.

This element is clearly evident in the way marketers are utilizing coupons. The emphasis on Free-standing Inserts (FSI's) continues to grow despite continued declines in newspaper readership. About 89% of the coupons in 2006 were distributed via FSI's in Sunday newspapers. Overall, 92.5% of all coupons were distributed via methods sent directly to the home (direct mail, newspaper, magazine, etc).

The heavy use of lower-redemption channels mutes the overall picture, and obscures the performance delivered by other distribution method types. The use of in-store methodologies (covered in detail in a recent CMS Advantage Update, available to Premium Subscribers here) actually declined slightly in 2006, from 5.3% to 4.9% of all coupons. The percent of coupons redeemed by in-store method, though, increased to over 34%. Clearly, different targeting and distribution strategies allow marketers to reach consumers in compelling ways.

A number of noticeable trends also have an impact on consumer perception. Average expiration period fell somewhat to 2.9 months, and the average expiration period for FSI coupons held steady at 2.6 months. Average face value also declined, both on a per-coupon and per-item basis.

For the second consecutive year, the increase in the consumer price index (CPI) outpaced the increase in the average face value distributed for all coupons, possibly causing consumers to find coupons offers less attractive. The prevalence of multiple purchase coupons also increased, to almost 28% of all coupons distributed.

The prevalence of these factors that normally discourages redemption makes the solid consumer response to coupons all the more reassuring. As marketers continue to address changing demographics and technologies, and customize their coupon promotions likewise, they will ensure greater consumer response. Coupons remain a relevant and compelling way to reach consumers and move product, but adaptation is necessary for marketers' offers to stay relevant.

Read more: CouponInfoNow