CLIP: A Tipping Point for Online Coupons?

By Gian Fulgoni

I’ve often wondered if and when the Internet would become a major distribution medium for cents-off coupons issued by CPG manufacturers. Sure, I realize that there are concerns about the possibility of fraud if hackers figured out some way to print millions of coupons and some unscrupulous retailer tried to submit them for redemption. But, since the gang-clipping of coupons from newspapers appears to have been stymied, I figured that it was just a matter of time before manufacturers got to the point where they felt comfortable using the Internet. Today, I’m wondering if we’ve reached that point.

To begin, here are some interesting – even remarkable -- statistics about coupons. PROMO magazine reported that CPG manufacturers distributed 302 billion coupons in 2007, up 6% and representing a whopping 16 billion more coupons relative to 2006. The face value of the coupons was $387 Billion, a big increase of 16% over the $337 Billion in 2006 and representing a 9% increase in face value. Free-standing inserts in newspapers continued to lead the ways in which marketers distribute coupons (88%), followed by handouts (5%), direct mail (2%), magazines (2%), newspapers (1%), in/on-pack (1%) and the Internet (0.4%), according to NCH Marketing.

According to CMS, a promotions logistics company, the boost in value and sheer number of coupons available helped improve redemption in 2007. Consumers turned in $2.8 billion of the total $387 billion in available coupon value. That added up to 2.6 billion coupons redeemed in 2007, the first time since 1992 that redemption volume did not decline.

Economic pressures and consumer-friendly tactics combined to guarantee continued consumer and manufacturer engagement with cents-off offers in 2007. In fact, comparing coupon response to key economic indicators over time has shown a strong link between the economy and coupon redemption. Most notably, as unemployment and prices rise, coupon redemption increases. So, with today’s challenging economic conditions, I don’t think we should be surprised if coupon redemption increases again this year and next.

So, what’s been happening to the use of coupons online? Well, it certainly appears that surfing for coupons is growing in popularity. comScore’s data show that 27 million people visited coupon sites in October, up 33% from a year earlier (that’s 18% of the 148 million Americans who use any coupons in a year). The number of searches conducted using coupon terms also increased by 100% from January to September of this year. On a global basis, we saw a 42% increase in the number of pages viewed at coupon sites, so it’s certainly not just a U.S. trend...