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CSI meets FSI


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Busting The Myth About The Quality Of Free Standing Insert Coupon Redemption

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CSI meets FSI

  1. 1. CSI Meets FSI: Busting The Myth About The Quality Of Free Standing Insert Coupon Redemption By Valassis Marketing Intelligence DepartmentJanuary 2011 1
  2. 2. Myth: Free Standing Inserts (FSIs) only reward current brand buyers.Reality: New and lapsed brand buyers make up the majority of FSIcoupon redemption.Coupon distribution and redemption have experienced a resurgence in popularity withthe economic downturn that started in Q3 2008, yet marketers still havemisperceptions. Therefore, an in-depth analysis has been conducted; consider it aCoupon Success Investigation (CSI) of the Free Standing Insert (FSI). The followingpaper confirms through primary analytical findings by Valassis that coupon offersdelivered through FSIs do not solely reward current brand buyers (a common belief ofmarketers), but also drive purchases among new and lapsed brand buyers. The studyillustrates that 57% of FSI redeemers are either new or lapsed consumers of thepromoted brand, which validates the FSI as an effective vehicle for generating trialand conversion.WHAT IS THE FSI?For nearly 40 years, the Cooperative Free Standing Insert (FSI) has enabledadvertisers to run four-color print ads and coupon offers delivered in the newspaper,or in some cases in the mail. Consumer Packaged Goods (CPG) manufacturers (i.e.Grocery, Health & Beauty), Grocery Retailers, Direct Marketers, Restaurants, Retailand many other industries have grown accustom to leveraging the FSI’s national andregional distribution flexibility to drive traffic and incremental sales for their brands.According to the 2010 NCH Topline Coupon Facts clearing and redemption study, the 1FSI represents 87.7% of all CPG coupon distribution .PERSISTENT MYTHIn the last four decades, during every rise and fall in economic times, advertisershave leveraged the low-cost, mass-reach FSI to drive brand awareness and producttrial as part of their overall marketing strategy. In classic form, during the most recenteconomic recession starting in 2008, brands increased distribution of coupons throughthe FSI in record breaking year-over-year numbers. Despite the trends, an age-olddebate looms about the “quality of response” the FSI is generating among consumers.For years, CPG advertisers have wanted to understand if FSI redemption is onlyrewarding loyal (current) brand buyers, or is it also encouraging non-brand buyers(lapsed or new) to buy the product? White Paper: CSI Meets FSI 2
  3. 3. The ideal scenario for brands is to minimize rewarding customers that currentlybuy the brand (loyals), yet keep awareness top of mind while driving new customersto their featured products with enticing coupon offers. Until now, the challenge hasbeen proving that the FSI is driving both current and non-buyers to the promotedbrand. In the past, brands or retailers could only capture Point-of-Sale (POS) dataand did not connect it to consumer purchase behavior tied to FSI redemption. Theconnection between coupon redeemers and prior purchase behavior could only bederived by qualitative studies – asking coupon users in the FSI drop zones howrecently they have bought the brand and if they used a coupon to make the purchase.This leads to directional insights at best.SOLVING THE MYTHFSI Redeemer Segmentation using Grocery Retail Frequent Shopper Card DataIn 2007, through a collaboration among grocery retailers, CPGs and Valassis,a breakthrough in measurement methodology was conceived which now allowsadvertisers to measure the effectiveness of redemption driven by the FSI using POSdriven Frequent Shopper Card (FSC) data. This enhanced data allows us to lookat a broader spectrum of consumer behavior - their purchase habits andredemption tendencies.For approximately four years, Valassis has aggregated response data from over420 FSI events amounting to nearly 17 billion in FSI circulation. The responsedata is mined through a proprietary data collection system which tracks FSI couponredemption at specific grocery retailers that have FSC programs and identifies if theredeemer is either a new, lapsed or current brand buyer.HOW IT WORKSQuality of Redemption Analysis Defined:Quality of Redemption (QOR) is essentially a redemption segmentation analysisthat ties FSC purchase history to the FSI coupon transaction to enable marketers tounderstand whether the promotion is driving new, lapsed or current customers to thepromoted brand.For a majority of the FSIs analyzed, the following redeemer type classifications areused, but there are some cases when a seasonal item may require a custom set oftimeframes to define each segment. White Paper: CSI Meets FSI 3
  4. 4. Redeemer Types Defined:Purchase history of the promoted brand drives the definition for whether a consumerthat received the FSI coupon and redeemed it is either a new, lapsed or current buyerof the promoted brand. New Brand Buyers: Have not bought the promoted brand in the 12 months prior to redeeming the FSI coupon. Lapsed Brand Buyers: Have not bought the promoted brand in the 6 months prior to redeeming the FSI coupon, but did buy the promoted brand in the previous 6 months. Current Brand Buyers: Have bought the promoted brand in the 6 months prior to redeeming the FSI coupon.In addition to these three primary redeemer types, a fourth redeemer type emergescalled Switchers. This group represents redeemers who are new to the brand butwere already buying in the category.Data Collection:The purchase history of redeemers is aggregated using grocery retail frequentshopper card data. Valassis established proprietary partnerships with several groceryretailers that offer FSC programs which now make up a standard network of dataproviders for QOR measurement. Leveraging these partnerships with retailers usingopt-in consumer purchase data provides CPGs a consumer-centric and non-invasivemethod of accurately measuring the quality of FSI redemption.Quality control measures are also applied to the data to ensure that store cashiers’and managers’ cards are excluded.Projection of the Data:To insure the data can be projected to the U.S., only nationally covered programsare evaluated. The minimum circulation is typically 30MM while the maximum reachis around 60MM. The minimum level of coupons analyzed per event is 1,000redemptions across the entire retailer network.Additionally, the demographic make up of FSC users within the retailer network hasbeen examined through BIGresearch via the Simultaneous Media Usage Survey andis confirmed to be demographically similar to total U.S. grocery shoppers. White Paper: CSI Meets FSI 4
  5. 5. PROVEN REALITYFSI Redeemers Are New Or Lapsed Brand BuyersThe most recent data, aggregated over the last 4 years, clearly shows that theFSI drives trial and awareness of the promoted products with 57% of FSI couponredeemers classified as new or lapsed to the promoted brand. Further, the FSI alsobuilds the promoted brand’s category where 29% of redeemers are new or lapsed to 2the category .In more detail, 46.8% of redeemers are new brand buyers and 10.1% are lapsedbrand buyers. Brand switchers make up 27.4% of FSI redeemers; these are 2households who have purchased the category but not the promoted brand . White Paper: CSI Meets FSI 5
  6. 6. Quality Of Redemption: By DepartmentAmong departments tracked that have sufficient sample sizes to report, Health andBeauty Care (HBC) ranks highest with 63% of redeemers being new or lapsed to the 2brand, followed closely by Frozen (59%), Edible (57%), and Non-Edible (52%) .Edible has the highest percentage of brand switchers (29.5%), followed closely by 2Frozen (28%) . Non- *Other Key Measures Edible Frozen HBC Edible Total Number of Events 218 49 61 78 14 420 Average % New/Lapsed - Brand 56.7% 58.9% 63.0% 51.9% 56.9% Average % New/Lapsed - Category 26.1% 31.6% 42.4% 25.2% 29.0% Average Brand Switchers 29.5% 28.0% 22.7% 25.4% 27.4%*Other departments tracked including Dairy (13 events) and General Merchandise (1 event) will be reportedin future releases once a sufficient sample size is established.Loyalty Churn: Where Have My Loyal Shoppers Gone?Quality of redemption analysis not only proves that the FSI is engaging with new andlapsed brand buyers, but deeper analysis also shows that among loyal brand buyers(defined as the top 30% of customers in terms of brand spend) only 34% are still inthat top 30% one year later. Furthermore, 22% of loyal brand buyers switched to 2competitive brands one year later (i.e category only shoppers).This downward shift in spend among loyals is known as “loyalty churn,” a spendingmigration measure that identifies when a loyal brand buyer (the top 30% in spendingfor the brand) becomes non-loyal after a one year period. The buyer either dropsbelow the top 30% in brand spend, becomes a competitive brand buyer, no longershops the category, or simply is no longer shopping at the store. 6 White Paper: CSI Meets FSI
  7. 7. To improve your coupon success or further investigate the QOR analysis and theadditional benchmarks tracked for the FSI, please contact Valassis at 1-877-529-5001or VALASSISValassis is one of the nation’s leading media and marketing services companies,offering unparalleled reach and scale to more than 15,000 advertisers. Its RedPlum™media portfolio delivers value on a weekly basis to over 100 million shoppers across amulti-media platform – in-home, in-store and in-motion. Through its digital offerings,including and, consumers can find compelling national andlocal deals. Headquartered in Livonia, Michigan with approximately 7,000 associatesin 28 states and eight countries, Valassis is widely recognized for its associate andcorporate citizenship programs, including its America’s Looking for Its MissingChildren® program. Valassis companies include Valassis Direct Mail, Inc., ValassisCanada, Promotion Watch, Valassis Relationship Marketing Systems, LLC and NCHMarketing Services, Inc. For more information, visit:, or NCH, a global leader in business solutions for redemption, settlement and promotional analysis.2 Valassis, a leading U.S. media and marketing firm that designed the proprietary data collectionmethodology for FSI Quality of Redemption Analysis using FSC transaction data presentedin this paper. White Paper: CSI Meets FSI 8