Called for clipping

Prepared Foods, August, 2005

Less than a decade ago, back when the Internet was new, viruses were few and worms were found only in the garden, the prospects for e-mail-delivered coupons seemed bright. Many analysts, in fact, predicted the demise of the free-standing insert in the Sunday paper.

They failed to check with the consumer first, however. The usage of Internet coupons accounts for far less than 1% of coupons issued by consumer products companies in the U.S. NCH Marketing Services Inc. (Deerfield, Ill.) puts the number at 0.2%, while the Promotion Marketing Association (New York) offers a kinder 0.5% usage rate.

NCH has examined the number of Internet coupon introductions and has found growth is subsiding. Growing concerns about fraud and counterfeiting are leading many companies to rethink the concept. As a result, the number of Internet coupons rose only 10% in 2004, after three consecutive years of 50% growth.

Nonetheless, experts believe Internet coupons have potential, especially considering the fact that many companies regard them as an efficient means of targeting consumers. Furthermore, consumers are not exactly embracing traditional paper coupons; manufacturers and retailers spent $275 billion on coupons in 2004 (a 6.6% rise from 2003, according to NCH), but consumers redeemed only 1% ($3.3 billion) of total coupon value that year.

Cutting it Out

Where Coupons are Distributed

Free-standing insert    79%
In-ad                   12%
Instant redeemable       1.5%
Magazine                 1%
Direct mail              1%
In-pack                  1%
Handout                  1%
On-pack                  1%
Electronic checkout      1%
Electronic shelf          .5%
Internet                  .5%

Note: Table made from pie chart.

Source: Promotion Marketing Association