U.S. Mid-Year 2013 CPG Coupon Industry Facts - Reported By NCH, July 2013

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Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report …

Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report

>> "CPG Coupon Distribution Volume Trending Modestly Upward In 2013, Driven By An Increase In The Non-Food Segment.
>> The Food Segment Has Maintained Coupon Distribution
Volume While Non-Food Continues To Grow In 2013.
>> FSI Grew From 89.7% To 91.1% Of All Coupons Distributed While Digital Coupons Sustain Double Digit Growth Rates.
>> Overall CPG Average Face Value Offered Has Increased, Driven By The Non-Food Segment Marketers.
>> Non-Food Is Increasing Multiple Purchase Requirements While Raising Face Values; Food Product Coupons Continue To Use Multiple Purchase Requirements Extensively.
>> Face Value Redeemed Decreased Due To A Shift In Mix Including More Non-Food Coupons Distributed With Higher Purchase Requirements, Which Drove Down Redemption Volume From That Segment And Lowered The Overall Average.
>> Offers Are Expiring More Quickly, Driven Down By Food
Coupons That Reduced Average Duration By Nearly One Week.
>> The Rate Of Redemption Decline Has Slowed In 2013 As Marketers’ Corrections Begin To Stabilize, Following The Recession-Driven Years Of Unusual Redemption Growth.
>> The Redemption Volume Decline Is Larger In Non-Food Due To Greater Distribution Of FSIs And A Higher Saturation Of Very Short Expiration Dates For Products With Long Purchase Cycles.
>> FSI Continues To Represent The Majority Of Redemption Volume, And Digital Coupon Formats Have Grown, Reaching 6.1% Of The Total For Internet Print At Home And 2.5% For Paperless.
>> While All Channels Are Experiencing Some Redemption Decline, Differing Shopper Audiences And Business Strategies Affect The Rate Of Change Within Some Retailers."

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  • 1. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity U.S. Mid-Year 2013 CPG Coupon Industry Facts Reported By NCH, July 2013
  • 2. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity CPG Coupon Distribution Volume Trending Modestly Upward In 2013, Driven By An Increase In The Non-Food Segment (First Half Total U.S. CPG Coupon Distribution Volume, In Billions / All Media) 158 178 167 165 168 First Half 2009 First Half 2010 First Half 2011 First Half 2012 First Half 2013 Chart 2 +12.7% -6.2% -1.2% +1.8% +12.1%
  • 3. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity 63 63 102 105 First Half 2012 First Half 2013 Non-Food Products Food Products The Food Segment Has Maintained Coupon Distribution Volume While Non-Food Continues To Grow In 2013 (First Half Total U.S. CPG Coupon Distribution Volume By Segment, In Billions / All Media) +2.9% FLAT 165 168 Chart 3 62.5%37.5% Share Share Volume Volume 61.8%38.2%
  • 4. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity 8.9% 91.1% Chart 4 Handout In-Store 3.5% Magazine 1.8% Direct Mail 1.9% Remaining* <2.0% All Other Media (See Pie) Free Standing Insert (FSI) All Other Media FSI Grew From 89.7% To 91.1% Of All Coupons Distributed While Digital Coupons Sustain Double Digit Growth Rates (Percent Of First Half 2013 Total U.S. CPG Coupon Distribution Volume By Media Type) *Remaining Includes: Newspaper, All Digital Formats, Handout Away From Store, In/On Pack & Cross-Ruff, Military And Miscellaneous, Where No Individual Media Format Exceeds One Share Point Of The Total Market. Retailer In-Ads Excluded.
  • 5. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity Overall CPG Average Face Value Offered Has Increased, Driven By The Non-Food Segment Marketers $1.55 $1.62 Average CPG Face Value Offered (Average Of Total U.S. CPG Distribution / All Media) First Half 2012 First Half 2013 +4.5% Chart 5 $1.01 $1.88 $1.00 $1.99 Food Non-Food Average Segment Face Value Offered (Average By Segment / All Media) First Half 2012 First Half 2013 First Half 2012 First Half 2013
  • 6. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity Non-Food Is Increasing Multiple Purchase Requirements While Raising Face Values; Food Product Coupons Continue To Use Multiple Purchase Requirements Extensively Chart 6 43% 17% 42% 18% Food Non-Food Segment Multiple Purchase Requirement Frequency (Percent Of Segment Coupon Distribution) First Half 2012 First Half 2013 First Half 2012 First Half 2013 27% 27% CPG Multiple Purchase Requirement Frequency (Percent Of Total U.S. CPG Coupon Distribution) First Half 2012 First Half 2013 Flat
  • 7. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity $1.15 $1.24 $1.28 $1.31 $1.27 First Half 2009 First Half 2010 First Half 2011 First Half 2012 First Half 2013 Face Value Redeemed Decreased Due To A Shift In Mix Including More Non-Food Coupons Distributed With Higher Purchase Requirements, Which Drove Down Redemption Volume From That Segment And Lowered The Overall Average (First Half Total U.S. CPG Redeemed Coupon Savings In Billions Of Dollars / All Media) $2.2 $2.0 $1.8 Chart 7 $2.1$1.8 Total Consumer Redeemed Savings (In Billions) $2.2 $2.0 $1.8$2.1$1.8
  • 8. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity Offers Are Expiring More Quickly, Driven Down By Food Coupons That Reduced Average Duration By Nearly One Week Chart 8 10.8 8.4 10.1 8.3 First Half 2012 First Half 2013 First Half 2012 First Half 2013 Non- Food Segment Average Offer Fuse (Average Segment Duration In Weeks / All Media) Food 9.3 9.0 First Half 2012 First Half 2013 Average CPG Offer Fuse (Average Duration In Weeks For Total U.S. CPG Distribution / All Media) -3.2%
  • 9. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity The Rate Of Redemption Decline Has Slowed In 2013 As Marketers’ Corrections Begin To Stabilize, Following The Recession-Driven Years Of Unusual Redemption Growth (First Half Total U.S. CPG Coupon Redemption Volume, In Billions / All Media) 1.575 1.700 1.750 1.550 1.425 First Half 2009 First Half 2010 First Half 2011 First Half 2012 First Half 2013 Chart 9 +7.9% +2.9% -11.4% -8.1% +18.9%
  • 10. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity 0.900 0.850 0.650 0.575 First Half 2012 First Half 2013 Non-Food Products Food Products The Redemption Volume Decline Is Larger In Non-Food Due To Greater Distribution Of FSIs And A Higher Saturation Of Very Short Expiration Dates For Products With Long Purchase Cycles (First Half Total U.S. CPG Coupon Redemption Volume By Segment, In Billions / All Media) -11.5% -5.6% 1.550 1.425 Chart 10 40.4%59.6% Share Share Volume Volume 41.9%58.1%
  • 11. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity 17.0% 13.1% 17.6% 52.3% Internet Print At Home 6.1% In/On Pack & Cross-Ruff Military 2.3% Direct Mail 4.1% Remaining* 2.0% Handout In-Store Free Standing Insert FSI Continues To Represent The Majority Of Redemption Volume, And Digital Coupon Formats Have Grown, Reaching 6.1% Of The Total For Internet Print At Home And 2.5% For Paperless (First Half 2013 Percent Of Total U.S. CPG Coupon Redemption Volume By Media Type) Chart 11 Paperless 2.5% *Remaining Includes: Newspaper, Magazine, Handout Away From Store, And Miscellaneous Where No Individual Media Format Exceeds One Share Point Of The Total Market. Retailer In-Ads Excluded. All Other Media All Other Media (See Pie Chart) (FSI)
  • 12. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity -11.1% -10.5% -17.5% -10.8% -4.0% Grocery Stores Mass Merchandisers (Includes Supercenters) Drug Stores Military Commissaries All Other (Includes Convenience, Warehouse Club, Variety/Discount – i.e. Dollar Stores) While All Channels Are Experiencing Some Redemption Decline, Differing Shopper Audiences And Business Strategies Affect The Rate Of Change Within Some Retailers (Percent Change In Class Of Trade Of Total U.S. CPG Coupon Redemption Volume First Half 2012 vs. First Half 2013) Chart 12
  • 13. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity All CPG Average First Half 2013 Middle-Half Range First Half 2013 Average Free Standing Insert 0.3% – 0.9% 0.7% Newspaper 0.1% – 0.6% 0.7% Magazine 0.2% – 0.9% 0.8% Direct Mail 0.4% – 2.8% 3.3% Regular In-Pack 0.5% – 2.8% 3.3% Regular On-Pack 2.2% – 9.0% 10.6% In-Pack Cross-Ruff 0.7% – 1.9% 1.9% Instant On-Pack 7.8% – 34.3% 22.0% Instant On-Pack Cross-Ruff 1.8% – 13.7% 10.3% On-Shelf Distributed 2.7% – 15.4% 11.3% Handout Electronic Checkout 1.6% – 7.5% 6.8% All Other Handouts In-Store 0.5% – 3.4% 3.6% All Other Handouts Away From Store 0.6% – 3.2% 3.0% Internet Print At Home 5.6% – 19.8% 14.2% Paperless 3.1% – 12.1% 8.7% Military 1.1% – 12.4% 9.8% Forecasted Final Redemption Rate As A Percentage Of Active Coupon Offers Representative Of First Half-Year Time Period. Chart 13 CPG Average Redemption Rates By Media Type For Offers Distributed In First Half 2013
  • 14. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity Food Products Average First Half 2013 Middle-Half Range First Half 2013 Average Free Standing Insert 0.4% – 1.1% 0.9% Newspaper 0.2% – 0.9% 0.9% Magazine 0.3% – 1.0% 0.9% Direct Mail 0.8% – 9.4% 6.2% Regular In-Pack 0.5% – 2.7% 3.1% Regular On-Pack 2.5% – 6.9% 7.0% Instant On-Pack 6.6% – 29.7% 20.5% Instant On-Pack Cross-Ruff 1.6% – 12.7% 9.1% On-Shelf Distributed 3.0% – 16.4% 11.6% Handout Electronic Checkout 1.8% – 7.9% 6.9% All Other Handouts In-Store 0.6% – 4.3% 4.3% All Other Handouts Away From Store 0.9% – 5.6% 4.6% Internet Print At Home 8.7% – 21.9% 16.5% Paperless 4.6% – 13.7% 10.0% Military 1.3% – 17.3% 11.5% Chart 14 Food Products’ Average Redemption Rates By Media Type For Offers Distributed In First Half 2013 Forecasted Final Redemption Rate As A Percentage Of Active Coupon Offers Representative Of First Half-Year Time Period.
  • 15. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity Non-Food Products Average First Half 2013 Middle-Half Range First Half 2013 Average Free Standing Insert 0.2% – 0.6% 0.5% Newspaper 0.1% – 0.3% 0.3% Magazine 0.2% – 0.7% 0.7% Direct Mail 0.4% – 1.4% 1.7% Regular In-Pack 0.6% – 2.9% 3.6% In-Pack Cross-Ruff 0.8% – 4.1% 3.6% Instant On-Pack 11.0% – 42.5% 27.2% Instant On-Pack Cross-Ruff 7.4% – 21.9% 20.1% On-Shelf Distributed 1.6% – 11.5% 9.4% Handout Electronic Checkout 1.4% – 6.6% 6.5% All Other Handouts In-Store 0.4% – 2.6% 2.6% All Other Handouts Away From Store 0.5% – 2.9% 2.4% Internet Print At Home 2.5% – 13.6% 10.1% Paperless 1.2% – 5.2% 3.8% Military 0.8% – 3.7% 5.4% Chart 15 Non-Food Products’ Average Redemption Rates By Media Type For Offers Distributed In First Half 2013 Forecasted Final Redemption Rate As A Percentage Of Active Coupon Offers Representative Of First Half-Year Time Period.
  • 16. Source: NCH Marketing Services, Inc., Mid-Year 2013 Coupon Facts Report Projections Based Upon NCH Measurements and Proprietary Modeling of Market Activity NCH Coupon Facts™ Methodology And Source Description About the Publisher NCH Marketing Services, Inc., a Valassis Company (NYSE: VCI), is the global leader in business solutions for the redemption, settlement and analysis of promotion offers. Each year, NCH protects the financial integrity of nearly $4 billion in promotional funds transfers between trading partners across the globe. NCH: 155 Pfingsten Road, Suite 200, Deerfield, IL 60015. (847) 317-5500. For more information about NCH, visit www.nchmarketing.com or follow us on Twitter @NCHMarketing. About Our Methodology With the volume of coupons processed by the company in the United States and worldwide, NCH is in a unique position to deliver the most accurate analysis of coupon promotional trends. Coupons distributed and redeemed in the U.S. Consumer Packaged Goods (CPG) marketplace are studied utilizing our manufacturer client databases, data cleared via our retailer processing operation and other independent sources. Our proprietary methodology utilizes rigorous controls and statistical standards to maintain the integrity of the information contained in this report, as well as all other information tools supplied by NCH. Data points from client and market sources are dynamic. As such, projections are based on the most current information available at the time of publication and may be revised in the future. Also, due to rounding, the sum of certain percentages may not equal 100 percent. The scope of this report includes Manufacturer Coupons of all paper and paperless media formats that are most typically funded by CPG marketing budget allocations for consumer promotion. Retailer In-Ad coupons are not included in this report, as they are most often funded by trade dollars. Consequently, In-Ad distribution and redemption are less precisely tracked by manufacturers. How To Use This Report Syndicated data suppliers, strategic media partners and promotional agencies are best positioned to help you review competitive marketplace conditions, consumer behaviors and promotional strategies – all of which are contributing factors to the results that your company or brand may experience with coupon promotions. Use this report for understanding the total market picture, including the dollars to be protected as they are transacted between trading partners, and for comparing your results to the industry averages. To obtain additional information about this report, please send an email to NCHAnalyticalServices@NCHMarketing.com. Acknowledgments A special thanks to Marx, a Kantar Media solution, whose data is included in the analysis conducted to produce this report. Marx is the leading provider of syndicated coupon distribution information to manufacturers of consumer packaged goods. Marx delivers brand and category-specific promotion intelligence for both advertisers and coupon industry vendors.