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Couponing in the Digital Age
1. Couponing in the Digital Age: A Playbook for CPG Brands Presented by David Berkowitz Senior Director of Emerging Media & Innovation, 360i July 7, 2011
5. 1) The ‘New Normal’ means couponing is here to stay “ More and more consumers are making digital coupons a part of their shopping routine, accessing them across the entire digital domain. At the same time, brand marketers are increasingly engaging with consumers via digital offers.” - Steven Boal, CEO of Coupons.com Incorporated
10. 6) The Internet has becoming a key part of people ’s everyday lives The average American spends just as much time surfing the web as he or she does surfing channels on TV , approximately 13 hours per week. Source: Forrester Research, December 2010
11. 7) Digital coupons are attracting a different audience than traditional coupons More likely to have a household income of $75K+ compared to the general population. More likely to have college or advanced degrees than the general population *Also, this group skews younger and they are more likely to live in households with more children. Source: Simmons Market Research Bureau 17% 35%
12. 8) The digital coupon industry is growing fast The total of manufacturers that distributed digital coupon offers in 2010, a significant increase over 2009. Source: Marx, Kantar Media The percentage that digital coupon events increased by in 2010 as compared to 2009 across key websites 33.6% 290
13. 9) The ‘Zero Moment of Truth’ shows how consumers are behaving
14. 10) Get ahead of this emerging & enduring shift in consumer behavior "If I'd asked my customers what they wanted, they'd have said a faster horse. “ – Henry Ford
18. There are several key differences that distinguish digital coupons from traditional coupons PROS CONS Sharability User experience barrier New buyers Additional paid media support Speed Doubling down Lower Costs Reach Metrics
19. You can apply the 360i Strategic Lens to your digital coupon strategy
23. Tell-a-Friend programs achieve higher print rates because they are based on recommendations to friends Campaign Microsite Tell-a-Friend Widget Reward Email with Coupon
24. Mobile couponing aps that connect to loyalty cards represents true paperless couponing GROCERY IQ SAVINGSTAR
25. Scanning & tagging for coupons via QR codes or TV spots can connect offline media with digital QR CODES SHAZAM APP
29. Thank you! David Berkowitz Senior Director of Emerging Media & Innovation, 360i P: 212.991.4367 [email_address] @dberkowitz Download the playbook at http://360i.com/digitalcoupons Keep up on trends at http://blog.360i.com & follow us on Twitter @360i
Editor's Notes
Now this is a big one. FSI ’s make around 90% of total coupon distribution. However, Declining readership means marketers have less access to newspaper circulars or free standing inserts (FSIs). This makes a opportunity for digital coupons.
Number refers to a key differentiator for digital coupons. Brands can be much more targeted with digital coupons. Instead of buying the mass reach of traditional FSIs, brands can tailor their approach with the pay for performance model used by digital coupon suppliers. As such, digital coupons have redemption rates that are nearly 20x higher than FSIs and significantly higher rates than direct mail and electronic-dispensed coupons.
Mobile is important because it means access to your consumers and customers anytime and anywhere, and can be especially useful for connecting online and offline components of a campaign. As Smartphone penetration continues to grow and as more and more consumers adopt and become comfortable with smartphones, the opportunities for mobile couponing and shopper marketing will only increase.
Traditional coupons may still hold the lion ’s share of the market, but digital coupons are growing faster. Digital coupon events grew 33.6% furthermore, in 2010, 290 manufacturers distributed digital coupons, an increase of 17%
ZMOT, or the zero moment of truth, illustrates how consumer behaviour has changed in recent years. It was widely believed that the “first moment of truth” – the phrase coined by Procter & Gamble for the three to seven second window when shoppers evaluate a product on a store shelf – was the key decision-making point for a consumer on the path to purchase. Online search and social media now have consumers coming into the store prepared and with intent to purchase particular products based on what they have learned online.
Speaking of consumer behavior, If henry ford asked his consumers what they wanted he would have just build a faster horse. Simiarlly, with digital coupons it ’s important to get ahead of consumer behviour. The day of the Sunday paper is fading, but there is a new generation of consumers that still wants to save. Right now digital couponing has yet to become a fully mainstream behavior, but whoever can make digital coupons more seamless and easy to use for consumers will benefit vastly.
So what makes digital coupons different than traditional coupons? Sharability: Digital coupons can be easily shared and spread around by consumers Another distinction is that digital coupons are better at getting previous non-buyers and attracting more new buyers than print coupons by a margin of 35% (Source: Knowledge Works Trend Report, 2011). And considering how we all live in a society of now, marketers can launch a digital coupon platform in a fraction of the time and for a fraction of the cost that you could with traditional coupons Finnally, digital coupons can offer better tracking opportunities for brands as they can receive information on consumers printing digital coupons right from the beginning of the campaign launch. Traditional redemption information takes approximately eight weeks. On the other hand, given the relative novelty of digital coupons there are some considerations. There are some user experience issues. Users may need to download an application before printing their coupons, and sometimes there are issues with printing, that ’s why most distributors will offer consumers 2 prints. The truth here is that there is a generational divide. If you talk to someone who has be clipping newspaper coupons for their whole life, they think digital coupons are an inconvenience. If you talk to someone who's grown up with digital and is comfortable online, they’ll tell you there’s no greater convenience than being able to search out the coupons you need and want. Other issues you will want to consider are that you may want to support your digital coupon program with paid media support. You ’ll also want to watch out for consumers who are looking to double down on your coupons by pairing them with instore discounts, so you will want to coordinate accordingly. And finnally, if you are looking for pure volume play, traditional FSI’s for the time being will still be your best best. However, it ’s our reccommendation that for most success, you support your traditional coupon campaign with digital coupons
When considering if, when, and how to use digital coupons for you brand, you can apply the same strategic analysis you would for larger digital programs. In fact, the Strategic Lens that was described in previous versions of 360i ’s Social Marketing and Mobile Marketing Playbooks can still be applied to digital coupons. Does it Leverage Your Arsenal? Coupons are not seasonal and can be used anytime throughout the year; however, digital coupons are a great way of connecting digital campaigns to in store trial and purchase. Consider the campaign elements or brand arsenal that you have to work with and incorporate digital coupons to encourage consumers along the decision making process. For example, to launch Cooking Crème, Philadelphia Cream Cheese offered coupons to the existing Paula Deen Real Women of Philadelphia community. Providing more context to a digital coupon campaign will attract more of your consumers than just those seeking coupons. Does it follow the rules of the road? Understanding what digital platforms are most used by your target will help determine where and how to serve them with digital coupons. Because some types of digital coupons are not yet mainstream, knowing your target ’s comfort level regarding various digital platforms and devices will help you achieve success. Mobile coupons, for example, skew towards more early adopters of technology and may not be appropriate for a less digitally savvy group. Does it provide a value exchange? When asking your consumers to undertake an action, they should be rewarded in like value. Executions like progressive coupons and tell-a-friend coupons mean that as consumers work to spread your coupons and brand message they should be rewarded in turn. Ideally, the value you assign to your coupons will be of equal or greater value to the actions necessary to redeem it. There is no single “right” value that all brands can offer, as value is influenced by variety of factors. Brands should consider their coupon budget and what they hope to achieve with digital coupons before assigning a value. If the budget is small and they hope to reach more people, then assigning a lesser value may work. If the product is unknown, a larger value may be necessary to motivate purchase. We recommend testing a variety of different values of coupons to see which offer works best. This testing is something that you can only do with digital coupons. Does it meet your objectives? Knowing what you hope to accomplish with your digital coupon campaign is a very important step. Setting clear objects will inform your decision-making when it comes to determining which coupon delivery system to use. For example, a progressive coupon may be a great way to attract fans to a social community, but if you want to launch a new product and need more reach, a digital FSI may be more appropriate. Setting clear objectives will allow you to determine the success metrics you will ultimately use to analyze your program.
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