Coupons have low redemption rates. They contribute to diminished brand equity and accelerate the price race to the bottom. These are common complaints about the use of coupons. But there is something else coupons do — drive sales. That's the analysis of retailers based on new Kantar Media research, which found increased participation in Free Standing Digital Inserts (FSI) and digital coupons on retailer websites.
According to Kantar, retailers selling consumer packaged goods increased their involvement in FSI promotion pages 11.8 percent last year versus 2013. Digital coupon events on merchants' websites increased even more, 16.5 percent in 2014 versus the previous year. Kantar also found that retailer feature ad pages increased 4.2 percent for the same period even as advertising expenditures dipped 2.8 percent.
"These trends indicate retailer and manufacturer marketing dollars are increasingly being directed toward programs that communicate specific and easy-to-understand value to the shopper," said Dan Kitrell, vice president of Marx Account Solutions at Kantar Media, in a statement.
"Although retailer advertising provides continuity and builds equity with shoppers, retailer FSI coupon events effectively reach shoppers in the home when they are writing shopping lists and planning shopping trips, while digital coupons distributed on a retailer's website provide relevant incentives to shoppers who are likely planning a trip to that retailer," said Mr.Kitrell. "Retailer feature ads frequently make the value of the combined offers easier for the shopper to understand by 'showing the math' including regular price, feature price, and net price paid after the coupon savings are applied."
Walmart, Kroger and CVS stood out among food, drug and mass retailers for increases in FSI and digital coupon activity in 2014.
Walmart's FSI participation was up 15.7 percent and digital coupon events increased 18.4 percent in 2014. Kroger was up 10.2 percent for FSIs and 29.1 percent for digital coupons. CVS's FSI activity was up 47.2 percent while digital coupons increased 23.8 percent.
Manufacturers stand to benefit by greater coordination of event timing with retailers, according to Mr. Kitrell.
"Timing becomes even more important if the retailer decreases total activity for the year," said Mr. Kitrell. "By identifying key weeks and key categories at key retailers, manufacturers can improve their program effectiveness during critical selling seasons, new product introductions, and other key initiatives throughout the year."