It’s the Rodney Dangerfield of the marketing world: It just can’t get no respect. Or recognition, anyway.

Couponing is many things, but a glamorous business it isn’t. Indeed, compared to their counterparts in the ad industry, couponers are all but invisible. And this despite the fact that coupons have existed for better than a century now.

According to Wayne Mouland, vice-president of Markham, Ont.-based NCH Promotional Services, the first known coupons were issued around 1895. Hence the theme chosen for the 13th annual Canadian Couponing Forum, taking place in Toronto on Oct. 15: ‘The Second Hundred Years of Couponing.’

Jointly hosted by the Audit Bureau of Circulations (abc) and the Coupon Industry Association of Canada (ciac), this event brings together industry leaders to discuss ways of growing the direct-to-consumer couponing business and helping to raise its profile.

While the industry itself may not possess a lot of cachet, its products clearly hold considerable appeal for consumers. Last year, Canadians redeemed approximately 130 million coupons, with a value of nearly $104 million. Research by nch indicates that more than 80% of Canadian consumers used coupons at least once in 1997.

Currently, there are four major vehicles that manufacturers and retailers use to get coupons into the hands of consumers: direct mail (co-op and targeted); free-standing inserts (fsis); in-store couponing; and Internet couponing. Below, we’ll look at the trends in each of these areas.

Direct Mail

Direct mail couponing can assume many forms. There’s the solo drop, in which a single coupon is delivered to a household. There’s the co-op mailing, in which the envelope contains coupons from a number of different retailers and manufacturers. And there are the targeted mailings to specific customers.

If the past is any sort of indicator, direct mail couponing will continue to flourish – particularly co-op mailings.

‘The market is very exciting for couponing now, because baby boomers are now in their late thirties to early fifties – prime couponing years,’ says Terry Shaw, president of Toronto-based Action-Pak/Q-Ponz, a co-op mailing house that delivers to all 1.6 million homes in the Greater Toronto Area each month. ‘They spend a lot, make home improvements, buy lots of groceries and have higher incomes. We should enjoy another 10 to 15 years of this.’

Ten years ago, says John Petrella, general manager of Telemedia Procom’s co-op house Open & Save, packaged-goods brands dominated co-op mailings. Since then, however, Open & Save – which reaches as many as 8.5 million homes across Canada with every mailing – has widened its base of users considerably.

‘Now it’s a mix of retailers, service-providers, restaurants and the odd packaged goods product,’ he says.

Patrick Frye, manager of national sales for Val-Pak of Canada, another Toronto-based co-op mailing house, says he also sees a growing range of categories making use of this vehicle – a trend that he considers responsible for a jump in the company’s revenues over the past two years.

The Val-Pak mailing goes out six to 10 times a year, across the country, with distribution concentrated heavily in major urban centres. Approximately 60% of Val-Pak’s current clients are retailers.

Frye says the continued appeal of co-op mail couponing lies in the ability to offer mass reach at a relatively modest cost, since distribution expenses are shared among several advertisers. Clients also appreciate the opportunity to measure the results of their efforts immediately, he adds.

‘The attractive thing is that clients absolutely know how it’s working,’ Frye says. ‘The redemption of the coupon by the retailer makes it definitive, as opposed to something like print media advertising.’

Still, to get consumers to redeem coupons that come in the mail, you have to get them to actually open the envelope. Therein lies the challenge.

Open & Save, for one, features contests and giveaways on the outside cover of the envelope as a stimulus to prompt consumers to break the seal.

Once they’ve got an envelope open, Petrella says, research indicates that the average consumer will rifle through its contents – at which point it’s the quality of the coupon offer that will determine whether the consumer takes action.

Creative, too, plays a part. Shaw says that coupon creative should adhere to what he calls the two-second rule.

‘If the consumers know in two seconds what is being offered, where they can access it, and how they can get it, then it will be successful,’ he says.

FSIs

Free-standing inserts in weekend newspapers are fast becoming the coupon distribution vehicle of choice for the packaged goods industry. In 1997, they accounted for 54% of all coupons distributed directly to Canadian consumers.

John Morrell, president of Toronto-based News Canada Marketing, says there’s still plenty of room for growth in this area – especially as other categories besides packaged goods begin to get into the game.

‘The fsi is the second most-read section of the newspaper,’ he says. ‘And aside from being very affordable, it provides excellent advertising and communication value.’

One need only look south of the border to gauge the potential of fsis. According to Wayne Mouland, nearly 80% of all coupons in the u.s. are distributed through inserts. Indeed, on prime weekends such as Thanksgiving or the Super Bowl, it’s not uncommon to see $400 worth of coupon offers stuffed into a single newspaper.

Here in Canada, one of the most important steps in the evolution and growth of fsis was the Audit Bureau of Circulations’ decision to introduce coupon distribution verification during the mid-1980s.

Robert White, abc’s senior vice-president, Canada, says the service was launched at the request of advertisers, many of whom were worried about a lack of security, and wanted some mechanism to ensure accountability on the part of the newspapers delivering their inserts.

‘If you have 800,000 inserts going in a newspaper, each containing $10 worth of coupons, then you have a liability of $8 million sitting on the newsroom floor,’ White says. ‘Multiply that by 80 papers, and the potential for theft and abuse is greatly increased.’

White says verification serves to enhance the credibility of the newspapers – some of which now reap as much as 40% of their revenues through fsi distribution.

As in direct mail, creative contributes significantly to the effectiveness of advertising and couponing efforts in fsis.

Mouland says the same principles used in developing billboard creative apply to fsis as well: be quick, direct and striking.

In-store

Although the popularity of in-store couponing has slipped somewhat in recent years, it still accounted for 11% of all Canadian coupon distribution in 1997.

Les Salnick, executive vice-president of Metrospot Marketing, a Toronto-based in-store promotions company, says the basic objectives of in-store couponing are still the same as ever: ‘We’re looking to grab the consumer’s attention when he’s in the aisle where the product is located, with money in his pocket, and in the shopping mode.’

While in-store efforts haven’t changed a great deal in recent memory, Salnick says that innovations are afoot.

Metrospot, for example, plans to introduce three-dimensional shelf talkers later this year as a means of making coupons more visible to shoppers.

In any in-store program, certain fundamentals apply. For one, Salnick says, coupons always work best when located beside the product in question. (Coupon dispensers located near supermarket entrances have been tried in the past, without much success.)

Good creative is essential to attract the consumer’s attention, he adds – but the offer also has to be valuable enough to warrant that attention.

Internet couponing

Traditionally, coupons have not been used extensively as a vehicle for data capture. But that may change, as couponing moves onto the Internet.

The on-line medium promises to have a dramatic impact on the couponing business, says Chris Larsen, vice-president of Toronto-based Gallop & Gallop Worldwide, whose Internet advertising arm, the Virtual Billboard Network (vbn), serves as advertising representative for close to 200 Web publishing affiliates.

‘If you look at the things couponing needs to do, and can’t with existing media, the Internet represents a significant breakthrough,’ he says.

To illustrate the benefits, Larsen offers a simple example.

Imagine, he says, that Crest wants to issue an on-line coupon. The first step would be to post a banner ad offering consumers savings on their next toothpaste purchase. When consumers click on that banner, they would be delivered to another Web page and asked which toothpaste brand they currently use: Crest or Colgate.

Consumers who select Crest might be offered a coupon for a relatively small discount, since they are already predisposed to purchase the brand. (The coupon can be printed out from the individual’s own home computer.) Those who click on Colgate would be offered more substantial discounts. Different price points could be tested, to see which prove the most effective.

There are complicating factors, however. For a start, you don’t have to be a hacker to figure out how to ‘modify’ such a coupon’s value. And since there’s little to distinguish a printed coupon from a photocopy, many retailers refuse to redeem them.

Larsen, for his part, says there’s a simple solution. Once consumers click on the coupon, they could be prompted for their name and address. vbn would collect the data and forward it to a third party supplier such as nch, which would create a personalized coupon and mail it to the customer. The data could also be used to help construct a customer database.

Still, it’s not entirely clear whether consumers would embrace a system like this. Most Web surfers, after all, are accustomed to getting immediate gratification – not waiting days or weeks to receive a coupon in the mail. And unless there’s some significant long-term benefit, many may be reluctant to divulge personal information.

Other emerging technologies may play a part in the future of couponing as well. Earlier this year, for example, Transcontinental e.media, a division of Montreal-based GTC Transcontinental Group, unveiled an interactive marketing platform that will enable consumers to download coupons onto smart cards. A network of kiosks designed to dispense these electronic coupons is supposed to be introduced into a major retail chain in Western Canada later this year.

Like many of his counterparts, News Canada’s Morrell says he’s watching such developments carefully.

Technological change, he says, is likely to have considerable impact on coupon distribution in the near future. But the venerable print coupon can also be expected to stick around for some time to come.

Also in this special report:

Ÿ NCM consolidates under SmartSource: Brand covers all the company’s couponing and media products p.D22