Boodle VP Responds to E&P Column About Online Coupons

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By: Jeff Beliveau

Jeff Beliveau, the vice president of Affiliate Relations for online coupon company Boodle, has responded to a column earlier this week by SAGE’s Leo Shapiro, Steve Yahn and Erik Shapiro. Below is the full text of his letter.

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The article “SAGE Advice: Newspapers Caught in Web as Clippers Click E-Coupons” (March 13, 2007) contained some valuable data and presented the problem well. We agree that this is an important — and overlooked — content area. However, many newspapers have responded to this challenge already. The article failed to mention any of these steps.

Couponing really needs to be divided into two distinct types: consumer packaged goods (CPG — the coupon FSI most papers get each Sunday), and local merchants (restaurants, repair shops, etc.). These are very different coupons. Each type has different issues requiring different solutions.

The current FSI model is terribly wasteful for CPGs. Only 1% of the distributed coupons are ever redeemed. There is no targeting. And the brands estimate that at least 20% of the redeemed coupons are actually retailer fraud ? coupons turned in for payment on products that never were actually sold. Grocers get reimbursed the face value plus a handling fee, so there is a massive incentive for grocers — typically “mom & pops” — to cheat.

Online redemption rates are 15 to 20 times higher. Coupons can be targeted and fraud detected. The brands don’t have to pay to print and ship a physical product. All of this represents hundreds of millions of dollars in savings. The brands realize this and are shifting distribution to online. To help drive this new behavior they are utilizing a number of methods, including making the value of online coupons higher than the value in the FSIs. They can afford to pay the consumer more because of those enormous cost savings.

Coupon FSIs don’t just provide significant revenue to papers; they drive Sunday circulation. Papers are not ignoring this issue. Over 500 sites currently distribute CPG coupons online using our Boodle product. But more could be done.

Local merchant coupons are a different matter. They don’t have the CPG security issue (there is no reimbursement). But they also don’t just show up on the loading dock courtesy of Valassis or NewsAmerica. Papers have to work to get this revenue. In many cases these are smaller accounts that historically have been ignored by newspapers. They aren’t being ignored by Google or Valpak or a host of other competitors. We believe that if newspapers truly want to be LOCAL they need to look to the corner pizza shop and nail salon, not just the car dealers and major department stores.

Some papers are indeed going after this business — some using our technology, some using homegrown tools. But not enough is being done. Sales commission structures discourage sales to small businesses. Promotion is allocated only to the “big three verticals”. Print reps still do not sell print/online combos. Many solutions just point to re-purposed ad images, creating a creaky user interface that looks dated and lacks any of the capabilities online presents such as links to maps and driving directions.

We also are helping integrate print and online. Through a “reverse publishing” tool, papers can create both print and online coupons from a common interface. The Sunday coupon FSIs can be made more effective through an online “coupon organizer”. And that tool can be further enhanced by linking those coupons to grocery store sales items; with this system consumers can find numerous items for free or nearly free every week. All they have to do is hop online and then go buy the paper. But, as with local merchant coupons, this too requires more than “business as usual” thinking.

Yes, there is still much to be done to ensure newspapers remain the primary conduit for savings. They cannot ignore this area much longer or it will be lost to them forever. But the signs to point to an awakening of understanding about this critical content area.

Jeff Beliveau
VP Affiliate Relations
Consumer Networks —- boodle.com

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