FSI Activity Up in 2010

Free-standing insert coupon activity increased 7.2 percent during 2010 versus the previous year to more than 291 billion coupons dropped – the highest level of activity observed during the past decade by Marx, a Kantar Media solution and the industry standard for tracking FSI coupon activity.

Retailer promotion pages also achieved new record levels with a 46.4 percent increase to more than 13.3 billion pages in 2010, continuing the pattern of significant annual growth rates which began in 2007.

“Consumers continue to look for FSI coupons as part of their value-seeking behavior in response to the ‘new-normal’ economy,” said Mark Nesbitt, president of Kantar Media Intelligence North America. “Additionally, marketers continue to use FSI coupons to deliver advertising impact, influence consumer behavior and secure retailer distribution and merchandising. Finally, retailers continue to increase their participation in FSI promotions as a way to drive trips, transactions and profits.”

Nesbitt continued: “As manufacturers and retailers work together to influence the shopper on their path-to-purchase, it will be important to monitor competitive promotion tactics, creative brand messaging, and retailer promotion alignment within FSI coupons.”

FSI coupon support was included as part of 344 new product introductions during this period, down from 388 during 2009. “FSI coupons continue to be an important advertising and promotion vehicle to create brand awareness and to incent trial purchasing for new product introductions,” Nesbitt noted.

Corporate “scale” events continued to evolve as a promotion tactic in 2010. Scale events included both manufacturer solo inserts in which the entire vehicle is comprised of events from a single manufacturer and multiple-page corporate themed events that are distributed within cooperative FSI coupon vehicles. In 2010, manufacturers targeted key holiday promotion weeks, including distributing solo inserts on the Sunday of the holiday weekend of Easter, Memorial Day, the Fourth of July and Christmas. Corporate scale events contributed in part to the “pre-Thanksgiving” promotion week of Nov. 14 having the greatest activity with a weighted average circulation of 114.8 pages. The “New Year” promotion week of Jan. 3 (traditionally the heaviest weighted week of the year) was the second most active week in 2010 with 114.5 pages of FSI promotions.

“Corporate-scale FSI coupon events enable manufacturers to leverage their brand portfolios to break through the promotion clutter to increase share-of-voice with their consumers and share-of-merchandising with their retailers,” Nesbitt said.

During 2010, more than $451 billion in consumer incentives were delivered via FSI coupons, up 17.1 percent from 2009. During the same period, over 291 billion coupons were distributed within more than 212 billion FSI pages. FSI coupon average face value achieved a new record level in 2010 at $1.55, up 9.2 percent versus 2009.

However, average expiration (fuse) continued a steady downward trend with a decrease to 8.5 weeks, down 8.9 percent versus a year ago. These trends indicate that manufacturers are delivering more offers of greater value to the consumer, but are managing their financial exposure by reducing the length of time that these offers are available in the market.

The consumer packaged goods sector remained as the largest user of FSI pages with a 74.2 percent share, followed by direct response, which includes general advertising activity, and franchise, comprising of restaurants, portrait studios and other businesses. CPG pages distributed increased 8.5 percent while direct response posted an 8.1 percent decrease versus 2009; franchise was flat.

Retailer promotion pages increased 46.4 percent to more than 13.3 billion pages in 2010. Dollar General took the top spot from Target with a 162.9 percent increase to 2.3 billion pages. Target dropped to second despite a 22.5 percent increase to 2.2 billion pages. Wal-Mart had the largest jump within the top 10, moving up from 16 to seventh in 2010 with a 254.2 percent increase.

These trends reflect the overall growth of retailer promotion within traditional FSI vehicles to drive shopping trips, transaction size, and overall profits across channels and retail formats.

During 2010, there were 344 new products that delivered FSI coupons across 709 event dates as part of their introduction, averaging 2.1 event dates per new product. This activity is down from 388 new products, 788 event dates, and 2.0 event dates per new product during 2009. Despite being allowed to use FSI coupons to promote in only a limited number of markets, alcoholic beverages had the greatest number of new products with 32 in 2010. Snacks followed with 21 new products and milk/milk products was third with 14 new products.

In 2010, non-food categories distributed more than 173.4 billion coupons, up 8.1 percent versus a year ago, driven by the 11.8 percent increase within the household products area. Food categories distributed 118.7 billion coupons, representing an increase of 6.0 percent, led by the 3.3 percent increase for the dry grocery area. Eight of the nine areas defined by Kantar Media reported increases in coupons dropped during this period with other packaged goods being the only area with a decrease in 2010 versus 2009.

Additionally, manufacturers are increasing the value of the offers being delivered to consumers in both the food and non-food segments. Weighted average face value for non-food increased 11.7 percent to $1.93 and was combined with a 0.1 point increase in multiple purchase requirements, resulting in WAFV per unit increasing 10.4 percent to $1.70. Similarly, WAFV for Food increased 1.9 percent to 99 cents and was combined with a 1.5 point increase in MPR resulting in WAFVPU increasing 0.7 percent to 74 cents. These changes appear to be a response to economic pressures to increase the perceived consumer value of each offer relative to retail price.

The top 10 product types based on coupons dropped accounted for 35.7 percent of all FSI coupon activity during 2010. Pet food and treats ranked first and increased 13.6 percent to distribute more than 14.9 billion coupons. Combination/personal products (comprising of personal care brands that are promoted across multiple individual personal care categories) dropped to second place with a 13.7 percent increase to 14.8 billion coupons.

Kantar Media tracks more than 3 million brands and delivers insight to more than 22,000 customers worldwide.