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Digital coupons industry overview

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This presentation provides an overview of the emerging markets for digital coupons in the supermarket and grocery retail channels. It also covers the clearing and reimbursement model for digital …

This presentation provides an overview of the emerging markets for digital coupons in the supermarket and grocery retail channels. It also covers the clearing and reimbursement model for digital coupons.

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  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Complexity of navigating the redemption processChallenge of fairly representing stakeholder in qualifying and reimbursement of couponsAnd intermediary plays an invaluable role in advocating for the retailer in this process
  • Transcript

    • 1. The Emerging Digital Coupon Industry
      Ross Ely, VP Marketing
    • 2. ProLogic Overview
      ProLogic is one of the leading coupon clearinghouses in the industry
      Over 40 years experience in the coupon processing business
      ProLogic processed over 1.1 billion coupons in 2009, which equates to about 35% market share
      We manage over $1.5 billion in transactions for our customers
      The only coupon clearinghouse exclusively dedicated to retailers and wholesalers
      Not a “manufacturer’s agent”
      Singularly focused on the success of the retailer
      An early adopter in digital coupon clearing
      Launched one of the industry’s first digital coupon programs with Shop ‘n Save over a year ago
      ProLogichas processed over one million digital coupons
    • 3. Digital Coupon Definitions
      Internet coupons
      Consumers can download coupons from Internet and print at home
      Redeemed and processed just like any other paper coupon
      Technology ensures that coupons printed only once, protects against fraud
      Accepted at most retailers today
      Not really considered “digital” since they must be printed in order to be redeemed
      Digital coupons redeemed via grocery loyalty card
      Consumers select coupons on a web site which are loaded onto their grocery loyalty card
      Discounts are automatically applied when consumer uses loyalty card at retailer (coupons never exist in paper form)
      Digital coupons redeemed via a mobile device (cell phone, key fob, etc.)
      Consumers select coupons on a web site which are loaded onto a mobile device such as a cell phone or a key fob
      Mobile device is scanned at checkout counter to activate coupon
      Potential issues with reliable scanning of non-standard interfaces such as cell phone screens
    • 4. The Growth of Digital Couponing
      Digital coupon redemption grew over 100% in 1H 2010 vs. 1H 2009
      • Digital coupons now account for ~3% of all coupon redemptions
      200 manufacturers distributed digital coupon offers in 1H 2010, up from 152 in 1H 2009
      > 45 million Americans are now using digital coupons, up from 40 million in 2008
      Characteristics of digital coupon users
      Consumers with an average household income of $96,000 (annually)
      33% of consumers with college degrees
      Consumers who have an annual household income of $100,000 and who have college degrees are twice as likely to use digital coupons
    • 5. Digital Coupon Statistics & Myths
      • Estimates of 2009 growth range from 25% to 300% depending on definitions
      • 6. “Internet” coupons: “print-at-home” coupons downloaded from the web
      • 7. “Paperless” coupons: no paper involved; redeemed via loyalty card or mobile device
      • 8. Myth #1: Digital coupons are rapidly replacing paper
      Fact: Digital coupons represent about3% of all redemptions, on the order of 70-80 million redemptions per year
      • Myth #2: Consumers will redeem digital coupons in supermarkets with cell phones or other mobile electronic devices
      Fact: In supermarkets, digital coupons are being redeemed via loyalty cards or other personal identifiers
      • Myth #3: No one is seeing any volume at all from digital coupons
      Fact: Most retailers are actively engaged with deploying or piloting digital coupon programs
    • 9. Benefits of Digital Couponing
      A new way to deliver discounts to consumers
      How, when and where they want to receive them
      More convenient for consumers
      No need to clip, save, remember, file, etc.
      Reach a younger generation of consumers
      60% of Cellfire’s users are under age 35
      Faster reimbursements from manufacturers
      Reduced processing time compared to paper coupons, fewer denials and mis-redemptions
      Potentially more information available through digital coupon redemption compared to paper coupons
      Page views of digital coupons (impressions)
      “Clips” of digital coupons (interaction and selection)
      Redemptions of digital coupons
      Better for the environment (paperless)
      Eliminates printing, shipping, and waste disposal of paper coupons
    • 10. Life Cycle of a Digital Coupon
      Consumer
    • 11. Who’s Who in the Digital Coupon Market
      Manufacturer
      Content providers that bring digital coupon offers, manufacturer-focused
      Integration with loyalty card or POS system,
      retailer oriented, no offers
      Retailer
    • 12. Safeway Website Implementation
      Print-at-home
      AOL Shortcuts
      Cellfire
      P&G e-savers
    • 13. How Does Digital Coupon Clearing Work?
      No paper involved for coupons loaded onto loyalty cards or cell phones
      Digital coupon publisher provides offer information to retailer and retail clearinghouse
      Retailer provides redemption information to retail clearinghouse
      Clearinghouse validates offers and generates invoices to manufacturers based on redemption files
      Clearinghouse provides reporting back to retailer
    • 14. Benefits of Paper Clearing Process
      Independent of both retailers and manufacturers
      Well-understood & documented processes
      Externally-audited processes (SAS 70 reports, ISO 9001 certification)
      Detailed reporting
      Able to handle huge volumes
      Efficient and cost-effective
      Established relationships throughout the process enable rapid resolution of disputes
    • 15. The Digital Coupon Clearing Process
      Digital coupon publisher
      Retailer
      Manufacturer Agent
      Sends offer codes
      Sends invoices
      Returns offer code status
      Sends redemption files
      Sends payments or denials
      Validates redemption files
    • 16. Digital Coupon Reporting
    • 17. Shop ‘n Save Case Study
      • 70-store chain based in western PA
      • 18. Wholesale & coupon program agreement with SuperValu
      • 19. Selected YOU Technology to implement digital coupon program
      • 20. YOU Technology hosts the digital coupon website and therefore provides ProLogic with both the offer files and the redemption files
      • 21. YOU Technology aggregates offers from other digital coupon providers including Cellfire, AOL Shortcuts, and NewsAmerica/SmartSource
    • SuperValu/Shop ‘n Save Milestones
      Sept 2009 Program launched with YOU Technology
      Oct 2009 File formats for offer files and redemption files agreed upon
      Nov 2009 ProLogic signs contract addendum with SuperValu around
      digital coupon clearing
      Jan 2010 Reached agreement with NCH and CMS about EDI invoice
      formats
      Feb 2010 Final testing completed and program moved into production
    • 22. Economics of Digital Coupons
      No shipping or HTH fees for digital coupons
      Fewer denials and issues with manufacturers?
      Manufacturers continuing to pay the 8¢ per coupon, for the time being
      Clearinghouse costs are a function of IT investments as opposed to facilities, labor and freight
      Will mis-redemption and fraud increase or decrease?
      Basket contents must match offer exactly
      No potential for cashier override