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What's On Sale?: Coupons and Sales Circulars Move Online
Borrell Associates Inc., Dec 2009, Pages: 22
Promotional coupons have been with us for a long time, falling out of our Sunday newspapers since before we can remember. They persist because they work: people armed with money-saving coupons will go out of their way to use them. It is difficult to picture 400 billion coupons – the number that will be distributed in the U.S. this year. Laid edge-to-edge at 3x4 inches apiece they would make a ribbon 26 feet wide from here to the moon. Only one in 50 of them will be redeemed, but together they will save consumers $40 billion – and motivate many times that amount in total purchases.
Borrell Associates includes the redeemed value of coupons as part of promotions, which they track separately from advertising. Promotions also include the cash value of discounts, contest prizes, samples, and other short-term incentives. In 2008, U.S. companies spent $346 billion on promotions and $265 billion on advertising. By 2014 Borrell Associates expect spending on advertising to decline 7.5 percent to $245 billion, while spending on promotions will rise 24.0 percent, to $430 billion – for a combined increase of $63 billion, or 10 percent.
This year three major trends are combining to boost coupon distribution – and coupon redemptions – to new peaks.
- The ragged state of the economy has made clipping coupons more fashionable. More than three quarters of U.S. adults used a coupon in the past six months, and redemptions are up 36 percent from last year
- Coupons are spreading out from the grocery check-out stands and into non-food items; almost 40 percent of coupon users redeemed them for non-food items.
- Distribution is shifting toward online as marketers look for more ways to get coupons into the hands of the people most likely to use them. Although online coupons represent only 4.6 percent of redemptions this year, they will account for 20 percent of the value of all redeemed coupons – up 50 percent this year and an additional 169 percent by 2014.
The rise in coupon use will likely outlast the economic downturn as marketers come to understand their effect on shopping behavior more fully, and as more companies learn how to employ them. Local businesses are embracing coupons this year, with the value of their coupons jumping more than 50 percent.
Given this surge in the use of online coupons, it is not surprising to see a number of players jumping into that segment of the market. Traditional distributors of circulars such as Valassis and Valpak are being joined online by media companies such as ShopLocal.com (Gannett), YourLI.com (radio group on Long Island) and Zip2Save (19 newspaper companies), to name a few. A plethora of pure-play Internet companies is also vying for a share of this sector as well.
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