FSI Coupon Face Value Up 7.3% to Record Level, $169B Worth Distributed

July 18, 2008

This article is included in these additional categories:

CPG & FMCG | Free-Standing Inserts & Circulars | Newspapers | Pharma & Healthcare | Retail & E-Commerce

The weighted-average face value (WAFV) for free-standing insert (FSI) coupons increased 7.3%, to $1.34, in the first half of 2008 (compared with 1H07) – the highest WAFV on record, according to Marx Promotion Intelligence, a division of TNS media intelligence.

Manufacturers delivered (via FSIs in Sunday newspapers) more than $169 billion in consumer incentives in 1H08 – up 1.4% from 1H07 – as part of 126 billion coupons distributed across more than 100 billion FSI pages.

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Retailer participation in FSI promotions increased 31.3% over the first half of 2007, reaching over 21.2 billion pages, driven in part by the growth of “co-equity” events that frequently deliver retailer-specific coupons rather than traditional manufacturer coupons.

Among other highlights:

  • WAFV across the non-food segment of the consumer packaged goods (CPG) industry increased 5.1% from the year-earlier period to $1.60, driven by the 28.0% increase within the healthcare area.
  • WAFV across the food segment increased 6.1% to $0.91, led by the 14.0% increase for the dry grocery area.
  • All other areas across the non-food and food segments decreased in WAFV for the first half of 2008.

Sector Activity

The CPG sector remains the largest user of FSI pages with a 70.0% share, followed by direct response, which includes general advertising activity, and franchise, comprising restaurants, portrait studios, and other businesses.

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All three sectors decreased in number of pages distributed, resulting in an overall increase in the “share of voice” for individual events within each FSI vehicle.

CPG Non-Food vs. Food

In, Non-Food categories distributed more than 77.6 billion coupons in the first half of 2008, unchanged from a year ago, while Food categories distributed 49.2 billion coupons – a decline of 12.9%. Healthcare and personal care were the only two areas with increases in coupons dropped during this period.

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However, manufacturers are increasing the value of the offers that are being delivered to consumers in both the non-food and food segments:

  • WAFV for non-food increased 5.1% to $1.60 and was combined with a 1.8 point decrease in multiple purchase requirements (MPR), resulting in the weighted average face value per unit (WAFVPU) increasing 6.9% to $1.42.
  • Similarly, WAFV for food increased 6.1% to $0.91 and was combined with a 3.5 point decrease in MPR resulting in WAFVPU increasing 9.0% to $0.70.

Manufacturers have also increased the expiration lengths of these offers for the first time since 2005, up 2.7% to 9.7 weeks for non-food and up 0.7% to 10.8 weeks for food categories.

This increase appears to be a response to economic pressures to increase the consumer value per unit, decrease the total investment required for a qualifying purchase, and extend the offer period to align with consumer purchase cycles and manufacturer promotion cycles.

Top 10 FSI Product Types (by Coupons Distributed)

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The top 10 product types based on coupons distributed accounted for 33.3% of all FSI coupon activity during the first half of 2008.

Household Cleaning Products ranked first and increased 7.7% to distribute more than 7.4 billion coupons, with 530.7 million coupons being associated with nine new product introductions during the first six months of 2008.

Vitamins moved to fourth place with a 25.2% increase to 4.8 million coupons. This increase is due in part to 248.1 million coupons supporting eight new product introductions during this period.

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