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Digital Coupons Evolving to Reward Retailers
By Dan Kitrell
Innovative technology and shifting demographics are impacting how media are being consumed and how offers are being distributed. However, the most desirable results are still achieved when the message is delivered while the shopper is receptive to the information, or better yet, while they are actively seeking information and making purchase decisions.
Technology is making it possible to target specific shoppers with an individualized message or offer based on actual behavior. This may include delivering a brand advertisement to a shopper based on their current internet search or other online activity. Similarly, a retailer may deliver individualized offers based on a shopper’s proximity to their store or past purchase behavior.
How will these trends impact digital coupons in 2016 and beyond? The answer requires us to focus on the unique advantages of this tactic within the overall brand and retailer advertising and promotion landscape.
Digital coupon tactics are evolving to take advantage of innovative approaches and new technology. Emerging programs and tactics must be compatible with existing enabling technology like retailer point-of-sale (POS) systems and must be easy for shoppers to integrate as part of their existing shopping behavior. As with FSI coupons, digital coupons should not be evaluated in isolation and should be considered within the overall brand and retailer advertising and promotion landscape. However, the same three criteria of advertising impact, purchase incentives, and retailer alignment may be applied.
Digital coupons have not yet achieved the predictable advertising reach of FSI coupons, but they are a cost-effective way to deliver targeted purchase incentives and to reinforce retailer alignment. Digital coupons can also leverage the advantages of digital media platforms to provide new insights into online shopper behavior and increase advertising impact through “earned” impressions on social media. For example, digital platforms enable the effectiveness of an offer to be evaluated based on the number of coupons redeemed compared to either the number of offers that were digitally “clipped” or “loaded” to a card or wallet, or compared to the number of shoppers that visited a web page on which the offer was available. Together, these metrics enable new insights into shopper conversion rates along their paths-to-purchase.
The advertising impact of digital coupon offers may be increased by encouraging shoppers to take a desired action online or through social media. Although these activities may take some of the control away from the brand marketer, social media activity may also help the brand reach more potential users and be more influential based on a positive comment from a trusted source. To encourage this sharing behavior, some digital programs have “game-ified” their offers by providing additional incentives to shoppers who take specific actions to share the offer or engage with the brand.
FSI coupons are still the dominant tactic for distributing purchase incentives. However, digital coupons can be used to “boost” a brand’s advertising and promotion effectiveness or they can be used to “interfere” with competitive advertising and promotion activity. Brand marketers may offer digital coupons to increase brand awareness and to reinforce purchase intent. Although a brand may make a significant advertising and promotion investment to drive a shopper into the store and down the aisle to purchase their brand, a competitor may also capitalize on this investment by increasing the value of their digital coupon offer to win the sale at the shelf.
Although digital coupons may be distributed on a variety of coupon network, affiliate, and brand websites, distributing digital coupons on retailer websites may provide the most direct alignment of brand marketing and retailer merchandising support. Additionally, digital coupons on a retailer’s website will likely reach that retailer’s most engaged shoppers at a time when they are actively planning shopping trips to that specific retailer. By targeting engaged shoppers at a specific retailer, digital coupons may be a cost-effective tactic to accelerate distribution build for a new product, to secure merchandising support during a key selling season, or to increase sales for the brand and the retailer.
For 2016, Kantar Media forecasts that digital coupon activity will continue to grow, but distribution will become more fragmented as shoppers access a variety of digital offers through different media. For example, website traffic to digital coupon websites may decrease as more shoppers engage with the same offer through a retailer’s website or on their mobile device. Monitoring competitive promotion activity on emerging platforms like Amazon, ibotta, and Target’s Cartwheel app will become more important. Experimentation with receipt-based post-purchase rebate programs will continue but shopper acceptance will be slow.
The distribution of digital coupons will continue to shift toward retailer websites and proprietary retailer programs. This shift will enable brands to deliver the most relevant offers during the right weeks the reach the most engaged shoppers at the right retailers. Brands will need to more closely monitor retailer advertising, promotion, and merchandising to make sure they are not losing support to competitive brands including the retailer’s store brands.
Digital coupon activity will remain strong across both food and non-food categories. However, the mix between food and non-food digital coupon activity will be impacted by the importance of digital coupons at leading manufacturers, as well as the importance of food and non-food categories within each individual retailer. Brand marketers will become more sophisticated in adjusting the value of their coupon offers to promote a desired shopper behavior or to respond to a competitive initiative. Expiration lengths will continue to shorten to reduce the financial exposure of the offers and to more closely align with the retailer’s promotion period.
Dan Kitrell is Vice President, Account Solutions, at Kantar Media.
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