Fortunate to work with some of the largest & most sophisticated CPGs in the space, my team routinely receives all manner of questions regarding the digital promotion landscape:
- "How close are digital coupons to overtaking paper?" (not even)
- "When will mobile coupons achieve scale?" (when retailers cooperate, lol)
- "What's the right redemption rate?" (the one you forecast)*
- "I thought newspapers were dying; why are manufacturers still so reliant on such an archaic method?" (it's true; it's complicated, but FSI remains one of the few, true methods of mass coupon distribution. It's death by a thousand cuts, but we're still only at 642 so… keep rowing)
- "Is load to card the only way to do digital paperless?" (in theory, no; in practice, kind of. How do you feel about data, auditing and/or redemption controls?)
*Sounds sarcastic but actually sincere. Anybody who advocates that 12% is objectively "good" and 0.43% is therefore "bad" simply doesn't understand promotion dynamics..
Separating fact from fiction is a legit challenge for several of my clients, large and small: yes, digital is growing like crazy; no, it's not a huge share of redemption at this point. Yes, the potential for data and insights are there! No, the retailer won't be sharing basket data for free now. Yes! You can track shopper behavior across retail (in-store and web). No, sorry, you, Mr. Client, with your actual budget, probably cannot actually do any of this. Yes! Clients are spending - mandating, even - portions of budget into digital programs. No, that doesn't mean it's being spent efficiently, or widely, or at scale. Despite what your sales guy told you.
One of the principle lessons I learned producing and delivering industry coupon trends is this: the data can truly be misleading. Look over here at digital redemption growth! Pay no attention to its meagre scale. Is print at home finally in decline? Probably not. It's just becoming… something else. Not to provide a sense of hopelessness (all you need is a good data sherpa - I've got the best - with tenacity and a nose for insights) but rather to convey how truly slippery "trends" can be when wielded by untrained hands. For pete's sake, don't get your insights from your sales guy! (sorry, sales guys)
It's not fun to have these kinds of frustrating conversations with clients. These are big players in the space with significant budgets to activate. Digital mandates to hit. And not being able to do it. Where the *hell* is digital? Didn't I see (proj.) 898% redemption growth as recently as 2011? (Umm… not from me) Didn't we see 141% YOY redemption growth as recently as 2013? (This is true. Thanks for reading Trends!) So what the heck is up with a lackluster, meagre 57% growth in digital redemptions for the first half of 2015?
These are actual conversations I've had! And no, they haven't been the most fun. There's a lot of harrumphing in the room. And you definitely give the Governor a harrumph. But the question is becoming more common, and it's being asked more loudly:
what's holding back digital growth?
Here's my attempt at an answer.
In digital promotion land at this point significant digital growth is realistically only going to come from three sources:
Net new retailers adding true (open-network) L2C rooftops and functionality available from any number of digital coupon providers. (full disclosure: my employer is one of those providers) The current universe is pretty well understood at this point: Kroger, Safeway, Publix, Meijer & a few other retailers provide the overwhelming majority of digital paperless coupon volume redemption. Until Walmart (no digital paperless), Target (cartwheel is a closed network) or some other significant retailer lights up their rooftops, the days of significant triple digit annual growth are over for the foreseeable future.
Net new manufacturers entering the space. Moar budgetz plz. A lot of vendors and platforms are currently jockeying for chunks of digital budgets across the CPG and shopper marketing landscape. Agencies are also starting to figure this out. (We'll be over here when you're ready, guys! Whenever you wanna talk more than just layout & headlines…) Most of the big dollars have already been plucked from the trees, but there are still plenty of nickels on the ground for those willing to look.
Net new shoppers adopting digital coupons and taking up the habit. At first glance, this looks like the weakest booster of the growth rocket. The growth simply isn't there any more. Why? digital+mobile adoption is mature. The shoppers are already there. You can't see gangbusters growth when everybody's already bought in. Key rings and loyalty IDs in hand. Did somebody call shopper adoption growth weak? More like a mature, built-to-last growth engine. (It's all about perspective. Be careful with Trends, y'all.)
That's my guess, and honestly: it's #1. Want to see digital scale? It's all about the retailers. Offering a digital paperless solution manufacturers can access, with audits and controls, just like their FSI and at-shelf coupons. Want scale? There it is. Call Walmart. Call Target. And somebody call the (mostly indy) 250,000 c-store locations across the US, and tell them to get with the digital coupon program. And can you make mobile barcodes happen while you're at it? It's a battle of rooftops. We only need about 300,000 more.