While the vast majority of consumer packaged goods (CPG) marketers include digital coupons among their promotional tactics, most firms are using them in a secondary role, according to a new survey by Chicago-based Partners in Loyalty Marketing (PILM) on behalf of the Shopper Technology Institute.

The study found that while 84 percent of CPGs are now using digital coupons, 45 percent reported using them in a “supporting” role because of their limited scale, and 42 percent said that this is a “toe in the water” effort to test platform, according to PILM’s Tanya Bhothinard, senior director of client service.

“Since this is a new and upcoming tactic, I am expecting it to grow as the technology advances,” added Bhothinard. “Thirteen percent of survey respondents said digital coupons play a ‘core role’ in their product promotional activities to ‘amplify an integrated marketing campaign’ or ‘secure incremental merchandising at key retailers.’”

For perspective on the size of the market and digital coupons’ place in it, the study relied on numbers from the Inmar Coupon Topline Trend 2012. There are 311 billion coupons of all kinds distributed annually, with 3.5 billion redeemed. Of those, 273 billion are distributed by freestanding inserts, with 1.5 billion redeemed, and there are 1.2 billion digital coupons distributed with redemption of 200 million. So while digital coupons represent a very small percentage of total coupon distribution — much less than 1 percent — they are over 5 percent of redeemed coupons. This shows that people who take the time to print-at-home or load-to-card digital offers are much more likely to use them.

When asked about digital couponing success, two of three executives (68 percent), said it was too early to tell, selecting “neither successful nor unsuccessful.” None said digital coupons were very successful, 6 percent said moderately successful, 16 percent said moderately unsuccessful, and 10 percent reported their efforts have been very unsuccessful.

The study revealed that digital coupons have significant benefits over paper coupons. While 34 percent of FSI-delivered coupons result in new buyers, 46 percent of digital coupons attract new shoppers. And while 68 percent of FSI coupons result in incremental sales, 77 percent of digital coupons provide additional revenues.

Asked what vehicles CPGs used the most and the least to deliver digital coupons, four out of five methods appeared on both lists. On the list of vehicles used the most, coupon websites are the clear leader cited by 48 percent, followed by emails (16 percent), retailer websites (16 percent), brand websites (10 percent), and social networks (6 percent).

The primary objective for any digital coupon is to drive sales, said Bhothinard, with 61 percent saying they use them to incent purchases. “The redemption rate is much higher than for paper coupons,” one respondent wrote.

Thirteen percent use digital coupons to introduce new products, especially among the younger consumers, since this is a media that they are much more comfortable with, and an area where manufacturers felt they could leverage digital coupons, according to Bhothinard.

More than one-quarter (26 percent) reported using digital coupons for ‘other purposes,’ such as part of an integrated marketing campaign where they are a component, but not the main focus. “Another way people are using it is as a leverage point in talking to retailers,” said Bhothinard. “A CPG might want another facing or special display, and in return, will offer to put a digital coupon on the retailer’s website.”

Asked about evaluating the success of digital coupons, 73 percent based it on traffic and redemption, 40 percent said sales and volume vs. last year, and 23 percent checked sales and volume vs. a control. “To us, the minimum you should track when doing a digital coupon is to look at the traffic or circulation, and then the redemption,” Bhothinard said.

Obstacles to success with digital coupons identified by the study include: lack of distribution control; low unit and redemption volume; limited acceptance; stacking or doubling down, and high settlement costs.

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