First Quarter Coupon Trends Update - inmar.com...© 2012 Inmar, Inc. All Rights Reserved. Not to be...

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Third Quarter Coupon Trends Update October 25, 2012

Matthew Tilley Director of Marketing, Promotion Network

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Matthew Tilley matthew.tilley@inmar.com 336.631.2524

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@matthewjtilley

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Network Orchestrator of Complex Transactions

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•Returns Management •Recall Management •Remarketing •Business Intelligence •Supply Chain Consulting •Field Services •Risk Mitigation

Supply Chain Network

•Digital Promotions •Coupons •Rebates •Promotion Consulting •Business Intelligence

Promotion Network

•Returns Management •Hazardous Management •Recall Management •Pharmacy Reconciliation •Pharmacy Contract

Management •Business Intelligence

Healthcare Network

We operate collaborative commerce networks and make them intelligent.

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Where We’re Going…

• The 4 Key Trends of the Moment –Volatility is the New Normal –Offers Just Aren’t as Attractive –Digital is Quickly Becoming Reality –Shoppers Still Want Coupons

• Looking Ahead • Questions and Answers

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® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Volatility is the New Normal

5

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Unemployment Rate Declines in Q3

6

Reported Unemployment Rate

(US) 7.8%

Coupon Redemption Correlation

65%

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Redemption Much More Impact Than Expected!

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-22.9% 680 million

Q3 2012 vs.

Q3 2011

-7.2% Q1 – 760 million -17.0% Q2 – 720 million -15.7% YTD – 2.17 billion

Source: Inmar Coupon Report 2012

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Redemption Declines Across the Board

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Non-food Food -10.7%

Decline -15.3%

Decline H1

Q3

YTD

-22.3% Decline

-23.9% Decline

-14.4% Decline

-18.1% Decline

Source: Inmar Coupon Report 2012

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ALL Major Methods See Redemption Declines

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Share of Redemption Redemption Volume

Change

Free-standing Insert 37.7% -30%

Instant Redeemable 23.1% -1%

Electronic Checkout 7.9% -7%

Shelf Pad 7.2% -26%

Internet 4.7% -27%

Direct Mail 4.5% -21%

Handout 4.2% -20%

In-pack 2.5% -46%

In-ad 1.7% -25%

Electronic Shelf 1.4% -41% Source: Inmar Coupon Report 2012, Q2 data only

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Distribution Down…Then Up Distribution

-1.5% Q1 – 86.5 billion -7.1% Q2 – 76.5 billion

+1.4% YTD – 246.8 billion

Source: Inmar Coupon Report 2012

+7.6%79.2 billion

Q3 2012 vs.

Q3 2011

10

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Distribution Declines Across the Board

Non-food Food -2.0% Decline

-3.6% Decline

H1

Q3

YTD

+32.2% Increase

-5.1% Decline

+6.1% Increase

-1.6% Decline

Source: Inmar Coupon Report 2012 11

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Many Major Methods See Distribution Declines

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Share of Redemption Distribution Volume

Change

Free-standing Insert 37.7% +14%

Instant Redeemable 23.1% +31%

Electronic Checkout 7.9% +88%

Shelf Pad 7.2% -35%

Internet 4.7% +3%

Direct Mail 4.5% -20%

Handout 4.2% -39%

In-pack 2.5% -31%

In-ad 1.7% -25%

Electronic Shelf 1.4% -4%

Source: Inmar Coupon Report 2012, Q2 data only

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Price Growth Slowing Lately, but Still Growing

-6

-4

-2

0

2

4

6

8

10

12

14

13 w/e12/04/10

13 w/e03/05/11

13 w/e06/04/11

13 w/e09/03/11

13 w/e12/03/11

13 w/e03/03/12

13 w/e06/02/12

13 w/e09/01/12

Fresh Meat

Dry Grocery

Frozen Foods

Total All Depts

General Merch

Non-Food Grocery

HBA

Deli

Fresh Produce

Pkgd Meat

Dairy

Alcoholic Bevs

Source: Nielsen Scantrack, Total U.S. All Outlets Combined; 13 weeks increments (vs. prior year); UPC-coded

Percent Change in Unit Prices

13

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Price Pressures Easing but Still a Factor

4 1 7

2

20 12

56 66

13 19

0%10%20%30%40%50%60%70%80%90%

100%

9/3/2011 9/1/201213 Weeks Ending

% of Categories with Unit Price Change of:

< -0%0% to 4.9%5% to 9.9%10% to 14.9%15% +

Source: Nielsen Scantrack, Total U.S. – All Outlets Combined; 13 weeks increments (vs. prior year); UPC-coded;

117 major category groupings 14

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Prices Up, Promotion Support Down

-12-10

-8-6-4-202468

% Change Unit Price % Change Any Promo Unit Volume

All Departments 32 periods of price gains; 2.3% increase in latest period

Source: Nielsen Scantrack, Total U.S. All Outlets Combined; 4 week increments (vs. prior year); UPC-coded 15

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The Mother of All Volatility: Gas Prices

$0

$1

$2

$3

$4

$5

Weekly U.S. Regular All Formulations Retail Gasoline Prices (Dollars per Gallon)

$4.11 7/7/08

$3.94 4/2/12

$3.97 5/9/11

$1.61 12/29/08 $1.19

8/20/90 $0.91 2/22/99

Source: U.S. Energy Information Administration *prices include all taxes

$3.85 10/9/12

$3.07 9/5/05

$3.04 8/7/06

$3.22 5/21/07

$1.68 6/19/00

$1.71 5/14/01

$1.06 12/17/01

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® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Offers Just Aren’t as Attractive

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Why Else Would Redemption be Down?

• Times are hard • Prices are up • Unemployment is high

-22.9% Q3 2012

vs. Q3 2011

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Q2 Distributed: $1.47/coupon

(-9.3%)

Q3 Distributed: $1.54/coupon

(+0.7%)

Q2 Distributed:

1.53 units/coupon (+2.7%)

Q3 Distributed:

1.63 units/coupon (+9.4%)

Q2 Distributed:

2.1 months (-12.5%)

Q3 Distributed:

1.9 months (-20.8%)

Marketer Tactics Mute Redemption

Average Face Value

Average Purchase

Requirements

Average Redemption

Periods

Source: Inmar Coupon Report 2012, Q2 data only 19

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© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Ugly…and Fewer of Them!

• Q2 distribution down – Q3 redemption driver – Not all of the explanation

• Q3 on the increase • Good Q4 redemption?

-7.1% Q2 2012

vs. Q2 2011

20

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Digital is Quickly Becoming Reality

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What is Digital Promotion?

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• Established method • Paper-based redemption • 4.7% of redemption (-29%) • 0.4% of distribution (+3.1%)

Internet Print-at-Home

Coupons

• Emerging method • Digital-based redemption • Very small base and growing • Less than 1% of redemption

Digital Paperless Coupons

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Quick Growth, Real Substance

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28,000 Rooftops

Over 50 Million* Redemptions in 2012

Equals Geometric Growth

Q3—13.6 million redeemed

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© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Significant User Adoption in 2012 (So Far)

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Regi

ster

ed U

sers

+74% O

ffers

Acq

uire

d

+77%

Offe

rs R

edee

med

+97%

Source: Inmar Coupon Report 2012, Jan.-Sept. 2012

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Digital is an Addition Not a Replacement

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Digital FSI

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Shoppers Still Want Coupons

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Shoppers are in a Better Mood

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+9 Points

7.8%

Unemployment

Consumer Confidence

… but reality is still stark

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All that Glitters May Not be Golden

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0%2%4%6%8%

10%12%14%16%18%

Aug-10

Sep-10

Oct-10

Nov-10

Dec-10

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Oct-11

Nov-11

Dec-11

Jan-12

Feb-12

Mar-12

Apr-12

May-12

Jun-12

Jul-12

Aug-12

Unemployed Underutilized

Source: Seasonally Adjusted U.S. Total Non Farm Employment, Bureau of Labor Statistics

U.S. Department of Labor

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Misery Index Improving, Due to Inflation Drops

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0123456789

1011121314

misery index = unemployment rate + inflation

Source: U.S. Bureau of Labor Statistics; CPI non-seasonally adjusted, unempl. rate seasonally adjusted

® © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar © 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

CPG Price Increases Due to Continue

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2.5%–3.5%

“Food At Home” Inflation

2012 Forecast

Source: USDA

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Shopping is About Planning and Price Comparisons

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9%

41%

47%

52%

60%

42%

29%

25%

28%

21%

42%

23%

17%

13%

13%

7%

7%

11%

7%

6%

Purchase from end-aisle displays

Use coupons

Use store circular

Compare unitprices

Use shopping list

On most trips On some On few On none of trips

Source: Nielsen Homescan survey – Feb/March 2012 (n = 55,678)

How frequently do you …

+ 2 pts

+ 2 pts

Versus Sept 2009

+ 4 pts

NC

NC

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The Next Generation is More Primed Than Ever

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Greatest Gen Boomers Gen X Millennials Using shopping list 63 58 57 59 Compare unit prices 46 51 49 51

Use store circular 45 46 42 40 Use coupons 35 36 41 42 Purchase from display 5 6 7 9

Greatest Generation: Prior to 1946; Boomers: 1946-1964, Gen X: 1965-1976, Millennials: 1977-1994

Source: Nielsen Homescan survey – Feb/Mar 2012

% using on most shopping trips when shopping for groceries

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Savings: What Shoppers Want

• 62% save on gas & utilities

• 57% reduce out of home entertainment

• 57% spend less on clothes • 53% reduce grocery spend • 52% reduce take-out meals • 46% use car less

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• 51% save on gas & utilities • 33% reduce grocery spend • 32% reduce take-out • 30% reduce out of home

entertainment • 28% spend less on clothes • 28% use car less

Did This Past Year Will Continue To Do

Source: Nielsen Global Consumer Confidence & Opinion Survey 3Q’12

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Looking Ahead

34

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+5%

Where is All of This Going?

• Distribution flat • Redemption down ~10%

by year’s end 35

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Looking Ahead…

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Volatility the new normal

Optimize for performance

Digital continues to grow

Coupons still work

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© 2012 Inmar, Inc. All Rights Reserved. Not to be reproduced or distributed without written permission from Inmar

Upcoming Webinar

Everything You Ever Wanted to Know about Coupon

Deductions with Dawn Grubbs

November 15, at 11 am (Eastern)

To register: www.inmar.com/webinars

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For more information:

Matthew.Tilley@inmar.com 336.631.2524 www.inmar.com/couponreport @matthewjtilley

Matthew Tilley

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