CPGmatters: Digital More Effective Than Print for Attracting New Product Users

Discussion
Jul 13, 2011
Avatar

Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.

Digital print-at-home coupons are more effective than print FSI (free-standing insert) coupons at getting consumers to try a product for the first time, but they yield an 18 percent lower ROI than print FSI coupons.

That’s the bottom line of a new study of coupon users drawn from Knowledge Network’s National Shopper Lab, a research-ready panel of 23 million loyalty card shoppers across the supermarket and drug store channels.

The analysis, which focuses on coupon trends from 2008 (the beginning of the recession) through 2010 shows that digital print-at-home coupons:


  • Attract more new buyers by 35 percent
  • Drive more incremental redemptions by 13 percent
  • Yield 18 percent lower ROI than print FSIs (with ROI defined here as incremental profit divided by the cost of the couponing program).

The analysis also showed that digital coupons are showing important strengths. For the digital coupon events analyzed, 46 percent of redeemers were prior non-buyers of the product, compared to 34 percent for traditional print FSI coupons. In addition, digital coupons drive more incremental redemptions. More than three-quarters (77 percent) of redemption volume is incremental, versus 68 percent for print coupons.

The new findings also reveal coupon use among different consumer groups; the analysis has been keyed to 21 Acxiom PersonicX Life Stage groups and shows that:


  • High-income young adults ("Taking Hold" group), Generation X ("GenX Singles"), and fledgling members of the workforce ("Beginnings") recorded some of the highest increases in overall coupon use, jumping by anywhere from 26 percent to 40 percent between 2008 and 2010.
  • Well-off Baby Boomers ("Boomer Barons") and large families ("Jumbo Families") were among the strongest users of both digital and paper coupons.

"Although the bulk of the coupon business is still paper, digital coupons are doing an excellent job of attracting more affluent, savvy consumers," said Neal Heffernan, senior vice president and general manager at Knowledge Networks, in a statement. "Digital print-at-home coupons yield a lower ROI due to their higher redemption rates and the historically low distribution costs for print FSI coupons, but digital coupons have established a foothold with some key consumers that every brand wants to be friends with, such as large families and high-income Boomers."

A trend report outlining the study stressed that the shift to digital is still very much in progress. "But as more and more coupons can be carried on smartphones and loyalty cards, digital couponing will become more ingrained and less demanding."

Discussion Questions: Do you see digital coupons addressing a different need than free-standing inserts for brand marketers? What’s the next step for digital coupons?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

11 Comments on "CPGmatters: Digital More Effective Than Print for Attracting New Product Users"


Sort by:   newest | oldest | most voted
Ryan Mathews
Guest
9 years 9 months ago

I kind of see FSIs going away over time for a variety of reasons and digital coupons–or some form of digitized incentive–taking their place. Print may not be dead but it is increasingly a developed taste, especially in a world where consumers are used to holding up their smartphones to a scanner in order to get a discount.

The next stage for digital coupons would be the aggressive development of truly individuated programs, totally tailored on an individual basis as opposed to collaborative filtering.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
9 years 9 months ago
The most accurate way to analyze a promotion and fairly compare it to other promotion options is to use a cost per unit moved calculation. Take the total cost of the promotion and divide it by the total units moved. You may need to adjust for some seasonality when comparing to other promotions, but overall this is the most accurate way to analyze different promotional programs. Over time the cost of digital coupons will go down for two simple reasons. 1) The fees associated with digital coupons will go down as more competitors enter the market and the technology becomes less expensive and 2) redemption will go down over time as consumers adjust to digital coupons and they are used less frequently. This happens with all new marketing tools. There is an initial consumer acceptance that quickly fades. I am still in favor of promotional programs that are electronic/instant and tied to a retailer’s loyalty card. Letting the consumer not have to worry about coupons whether digital or printed is the best option. Although digital… Read more »
Max Goldberg
Guest
9 years 9 months ago

Digital coupons are just another way to reach value conscious consumers, and like FSIs are part of an overall marketing mix.

The world is going to digital and with the proliferation of smart phones, we’ll see more applications, including coupons and payments moving to mobile. That being said, it will still take savvy marketers to reach consumers and motivate them to buy.

Cathy Hotka
Guest
9 years 9 months ago

The article says that the survey was done of coupon users. That’s a relatively small subset of the retail universe. The future of the coupons to make them available to loyalty program users, automatically, without forcing them to shred pieces of paper by hand in the aisle.

Dan Frechtling
Guest
9 years 9 months ago

Digital coupons address slightly different needs than FSIs.

1. Supplemental reach. For the forseeable future, FSIs will be more effective at driving tonnage. Digital coupons address the 1/3 of US adults who don’t use paper coupons. FSIs are to mass promotions what TV is to mass media. FSIs are for carpet bombing.

2. Targeting. Combining digital coupons with behavior–purchase history, clickstream, collaborative filtering, or similar means–allows marketers to execute strategy. Strategies may be general ( “drive trial with new buyers”) or specific (“recapture packaged dinner buyers lost to frozen food category”). Digital coupons are smart bombs.

3. Optimizing. DS-IQ has executed load to card digital coupon programs that adjust mid-flight based on which values and which segments drive highest response, most new households, etc. In this form, digital coupons they are guided missiles.

The latter is one of the most exciting next steps for digital coupons. For more on digital coupons and 2G digital shopper marketing, please see http://bit.ly/nSlTxd.

Jorey Newcomb
Guest
Jorey Newcomb
9 years 9 months ago

The next step is SMARTphones. I see a significant need being addressed by digital:
1. Ease of consumer use.
2. Accuracy and abuse prevention for retailers and manufacturers.
3. More laser focused coupon events, by time, and specific consumers, and product affinities.

Julia Staffen
Guest
Julia Staffen
9 years 9 months ago

Like Ryan, I believe that PSIs will be used less and less. As more consumers trust online and mobile mediums and as social commerce continues to grow, we’ll see more people using digital coupons instead. For right now, I think digital coupons address the more web savvy and affluent customer–mobile coupons and social commerce make receiving and redeeming a digital coupon a seamless experience.

In the future, digital coupons will be used by all–a simple QR code in store to access current offers and promotions, tailored coupons sent to loyalty club members based on buying habits and coupon notifications when a customer checks into a location are all measurable and tangible ways digital coupons could be used by retailers in the future.

Bill Bittner
Guest
Bill Bittner
9 years 9 months ago
I am not real surprised by the findings of this study, although it is nice to see intuitive expectations backed up by facts. In the old “depth verses breadth” battle, I would expect digital coupons to achieve greater depth than FSIs just because they can be targeted to likely purchasers. This should yield more first time redemptions and greater incremental sales. I did really enjoy some of the links in this article. As more sites like the AllYou.com site manipulate digital data in a way that makes it easier for consumers to take advantage of discounts I think more consumers will take advantage of the offers. The challenge is that these same tools will discourage impulse purchases as shoppers show up at the retailer’s doorstep with their shopping list in hand and plan to visit multiple locations on their shopping trip. I don’t know how retailers should view this. Are shoppers attracted by digital coupons as desirable as those who plan to do all their shopping at their favorite retailer and will make impulse and… Read more »
John McIndoe
Guest
9 years 9 months ago
Coupons are an integral part of an effective marketing strategy in today’s conservative CPG marketplace. Today, 44% of list-making consumers use digital coupons to make their shopping lists very similar to the 47% that make lists with the help of store circulars. With more than two-thirds of grocery shopping consumers making lists before entering the retail environment, the market for coupons, both digital and FSI, is sizable. The key to successfully employing digital coupons is to understand that a one-size-fits all strategy will not, in fact, fit anyone well. Today’s consumers are embracing the digital tools to simplify their CPG shopping experience while saving money along the way, but the means and degree of adoption varies rather significantly across consumer segments. For instance, consumers aged 18-34 are 30% more likely versus consumers in other age brackets to make their lists with the help of coupons. Consumers aged 35-54 are more likely to use the Internet to make their list rather than coupons. Those aged 55 and older are most likely to stick to their “tried… Read more »
Ralph Jacobson
Guest
9 years 9 months ago

FSIs have been around for decades, and the “connected consumer” is still a minority of the total shopper audience. Therefore, FSIs will be around for years to come. As will newspapers, btw, no matter how many you see closing their doors today. Old habit die hard with consumers. Digital coupons will continue to grow, however, paper will thrive (with a 1% redemption rate, ugh) for some time, still.

The next step for digital coupons is to get into a more mainstream channel, such as television, for instance. When was the last time you saw a commercial offering a digital coupon available on a website, etc? It is still not happening within the masses.

Anne Frisbie
Guest
Anne Frisbie
9 years 9 months ago

I agree. Digital coupons will take on much greater adoption when the hurdle of printing is eliminated. Compete.com released a study that showed that mobile smartphone consumers are very interested in receiving discount offers. Target just launched the ability for consumers to receive offers on your phone and then redeem them directly at the cash register–without printing.

wpDiscuz

Take Our Instant Poll

How long do you think it will be before digital coupons provide the same or better return on investment than FSIs?

View Results

Loading ... Loading ...