PROMOTIONS
SECTION ONE
SECTION TWO
 |
Digital Coupons: Widespread Use, Limited Role
While the vast majority of consumer packaged goods (CPG) marketers include
digital coupons among their promotional tactics, most firms are using them in a secondary role.
That was the key result of a new national survey by the Shopper Technology Institute (STI). Partners in Loyalty Marketing (PILM), a Chicago-based consultancy, conducted the study on behalf of STI.
The study found that 84% of CPGs are now using digital coupons, but 45% reported using them in a “supporting” role because of its limited scale, and 42% said that this is a “toe in the water” effort to test the waters, said PILM’s Tanya Bhothinard, senior director of client service.
“Since this is a new and upcoming tactic, I am expecting it to grow as the technology advances,” she predicted. Thirteen percent of survey respondents said digital coupons play a “core role” in their product promotional activities to “amplify an integrated marketing campaign” or “secure incremental merchandising at key retailers,” she noted.
For perspective on the size of the market and digital coupons’ place in it, the study relied on numbers from the Inmar Coupon Topline Trend 2012. There are 311 billion coupons of all kinds distributed annually, with 3.5 billion redeemed. Of those, 273 billion are distributed by freestanding insert, with 1.5 billion redeemed, and there are 1.2 billion digital coupons distributed with redemption of 0.2 billion. So while digital coupons represent a very small percentage of total coupon distribution — much less than 1% — they are over 5% of redeemed coupons. This shows that people who take the time to print-at-home or load-to-card digital offers are much more likely to use them.
When asked about digital couponing success, two of three executives (68%), said it was too early to tell, selecting “neither successful nor unsuccessful.” None said digital coupons were very successful, 6% said moderately successful, 16% said moderately unsuccessful, and 10% reported their efforts have been very unsuccessful.
The study showed that digital coupons have significant benefits over paper coupons. While 34% of FSI-delivered coupons result in new buyers, 46% of digital coupons attract new shoppers. And while 68% of FSI coupons result in incremental sales, 77% of digital coupons provide additional revenues.
Asked what vehicles CPGs used the most and the least to deliver digital coupons, four out of five methods appeared on both lists. On the list of vehicles used the most, coupon websites are the clear leader cited by 48%, followed by emails at 16%, retailer websites at 16%, brand websites at 10%, and social networks at 6%. Of those used the least, mobile was cited most often by 33%, followed by social networks at 20%, retailer websites at 15%, brand websites at 11%, and emails at 9%. So coupon web pages, such as Coupons.com, are clearly the most preferred, while mobile couponing has yet to gain meaningful traction.
The primary objective for any digital coupon is to drive sales, said Bhothinard, with 61% saying they use them to incent purchases. “The redemption rate is much higher than for paper coupons,” one respondent wrote.
Thirteen percent use digital coupons to introduce new products, “especially among the younger consumers, since this is a media that they are much more comfortable with, and an area where manufacturers felt they could leverage digital coupons,” Bhothinard said.
But 26% reported using digital coupons for “other purposes,” such as part of an integrated marketing campaign where they are a component, but not the main focus, she added. “Another way people are using it is as a leverage point in talking to retailers.” A CPG might want another facing or special display, and in return, will offer to put a digital coupon on the retailer’s website.
Asked about evaluating the success of digital coupons, 73% based it on traffic and redemption, 40% said sales and volume vs. last year, and 23% checked sales and volume vs. a control. “To us, the minimum you should track when doing a digital coupon is to look at the traffic or circulation, and then the redemption,” Bhothinard said.
Respondents to the survey reported on factors affecting the success and obstacles to digital couponing. Key success factors included:
- Ease of use and reach. “We see that the short turnaround time makes digital coupons a great preemptive tool. Because they are so reactive, you can turn them on and off quickly,” Bhothinard noted.
- Attractive demographics. “We see that digital couponing attracts the younger shoppers and they can be used to build a higher lifetime value (LTV). CPGs are using the coupon websites as a way to introduce brands and get trial. We saw that one of the benefits of digital coupons was that it attracts new users much more than FSIs.”
- Brand building. “Digital coupons have the ability to go viral. With all the bloggers out there, this is a very quick way to promote your brand, while achieving an authentic image. Because it is going viral through bloggers, someone else’s endorsement is promoting your program.”
- Purchase insights. “The ability to track, not just impressions, but also clicks, provides better insight into the purchasing decision funnel. Because you can track the impressions, you know how many people are printing, and then you can put unique OCR (optical character recognition) codes on your coupons to find out the redemption.”
- Potential for lower costs. “Some manufacturers see much lower costs than with traditional printed coupons, meaning FSIs, for the most part. And then the cost for versioning is much lower. When you do versioning on paper, you have to go through so many renditions and there is that up-charge. When you do the digital coupon, you just slide things in and out, and it is very easy to do. And then the load-to-card coupons are less prone to fraud. So there is some cost savings there as we see more people move into the load-to-card arena.”
Obstacles to success with digital coupons identified by the study include: lack of distribution control; low unit and redemption volume; limited acceptance; stacking or doubling down, and high settlement costs.
PILM’s recommendation to CPGs is to track and evaluate digital coupons. “From the survey,” Bhothinard said, “we learned that digital couponing is a new technology and people are embracing it. We are not sure what is effective in terms of success from a manufacturers’ point of view, but we know they have to be there. Right now it is being used similarly to paper coupons to incent sales. For this, tracking and evaluation will become more and more important while going down this path.”
Bhothinard previewed the results of the study last month in Chicago at the fourth annual LEAD Marketing Conference, hosted by the Shopper Technology Institute. The conference focuses on Loyalty, Engagement, Analytics and Digital solutions.
Click on the LinkedIn logo to join the new Shopper Technology Institute Discussion Group
SECTION THREE
