Nothing can grow forever -- not even coupon inserts during an economic recovery from hell.
After several years of proliferating coupon inserts, by far the largest channel for coupon distribution, marketers seem to be tapping the brakes on insert volume and concentrating on other coupon tactics.
Inserts' recent growth, of course, has been heady. Inserts included 291 billion coupons in 2010, 7.2% more than in 2009 and 15.2% more than in 2006, according to Kantar Media. Those coupons averaged a value of $1.55, up 9.2% from 2009 and 30.5% above their value in 2006.
But marketers seem to be deciding that piling additional coupons on an already-thick package of promotions won't win as many new consumers as they want. Marketers can also only afford to have so many discount offers floating around at once, one reason they already reduced coupons' average term to 8.5 weeks last year, down 8.9% from 2009 and 13.7% below 2006, Kantar said.
Marketers' distribution spending on inserts in the first quarter of this year declined 17.5% from the first quarter of last year, according to Kantar. "Inserts are starting to stabilize at a new level," said Dan Kitrell, VP-account solutions at Marx Promotion Intelligence, part of Kantar. "I think we are reaching a point of diminishing returns."
Instead of pumping up the volume, marketers are now trying to make their promotions go further by teaming up with stores -- which are happy to coordinate in an environment that has consumers visiting fewer stores each week. "The big focus now is retailer alignment, doing more events with leading retailers," Mr. Kitrell said. "For years Target had been the leading retailer when it came to these cooperative retailer events. But we're seeing more and more retailers get into that across channels. Walmart is becoming more aggressive to win that coupon shopper. We're seeing Walgreens and CVS getting very aggressive."
Manufacturers are also trying out more digital distribution through brand sites such as Kelloggs.com, retailer sites like Target .com and coupon sites like Coupons.com. One of their hopes: younger consumers than those leafing through print coupon inserts.
But don't look for another discount channel, Groupon and its knockoffs in social shopping and daily deals, to eat into big marketers' traditional coupon programs just yet. "When you think of packaged-goods marketers, they typically tend to be risk-averse," Mr. Kitrell said. They don't want to put money into a promotion that may not work or, alternately, may work too well and wind up costing more in discounts than they set aside, he said. "Until it's proven and predictable, it's going to have a challenge in securing mainstream marketing dollars."