• by Joe Mandese , January 4, 2012

In what could be an important lagging indicator that Madison Avenue is continuing to emerge from the effects of the global economic recession, coupon volume declined significantly in 2011, reversing an upward trend of the previous couple of years as marketers shifted to more consumer promotion strategies to stimulate consumer purchasing.

Some 272 billion free-standing insert (FSI) coupons were distributed in 2011 -- a decline of 6.5% from 2010, according to estimates released today by WPP’s Kantar Media unit.

The 2011 decline follows two consecutive years of annual increases, including a 7.2% gain in 2010 and an 8.0% gain in 2009.

The decrease may be a positive indicator for the advertising marketplace, since marketers historically shift budgets from brand-building advertising into consumer price promotions during periods of weak consumer demand. During 2011, Kantar estimated the value of the coupons distributed was worth more than $421 billion in consumer price incentives.

Another strong indicator: the average “face value” of coupon offers did not increase during 2011. It actually declined slightly from 2010. At $1.55, the average face value per coupon distributed in 2011 was down 0.2% from 2010.

Coupled with declines in another important metric -- the average expiration time per coupon offer, which fell 5.2% from 2010 -- this indicates "that manufacturers are managing their financial exposure by maintaining current offer values, reducing the number of coupons distributed, and shortening the length of time that these offers are available in the market,” Kantar said.

Despite the overall decrease in 2011 coupon activity, Kantar said the number of retailer promotion pages within FSIs recorded a 30.7% increase to more than 17.0 billion pages in 2011. That trajectory continues the significant annual increases in retailer promotion activity, which began in 2007.

“Consumer packaged goods manufacturers continue to include FSI coupons as part of their marketing mix to reach millions of households with a relevant brand message and purchase incentive during a specific week,” stated David Hamric, general manager, Kantar Media Marx, explaining: “Increasingly, manufacturers and retailers are participating in cooperative events to influence the shopper on their path-to-purchase, making FSI coupons an important lead indicator of competitive promotion tactics, creative brand messaging and retailer promotion alignment.”

On a negative note, the volume of coupon campaigns supporting new product introductions also declined in 2011. Kantar estimated that FSI coupons supported 291 new product introductions in 2011, down from 344 during 2010.

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Source: Kantar Media