While Newspaper Ad Revenue Plunged, FSI Coupons Hit Record Levels in 2009

By: Mark Fitzgerald Even as newspaper advertising revenue was falling off the cliff in 2009, retailers were ramping up their use of free standing insert (FSI) coupon by eye-popping rates, according to the best-known FSI measuring organization, Marx Promotion Intelligence.

In a year when consumers looked for every shopping advantage and traded down in brands and stores, discount retailers greatly increased their buy of FSI pages with coupons.

Dollar General, for instance, increased its number of pages by 386.2% with more than 885 million pages. It was third among the top ten retailers measured by FSI "pages circulated," up from 10th place in 2008.

Family Dollar, which ranked just 17th among retailers in 2008, took sixth place last year with a 227.4% increase in FSI pages.

Target remained the top retailer using FSI coupons, with more than 1.8 billion pages -- up 43.9% from 2008. It was followed by PetsMart,
Dollar General, Walgreens, CVS/pharmacy, Family Dollar, Kroger, Publix, Safeway Food & Drug and Rite Aid.

Overall FSI "coupon activity" measured by the number of coupons dropped grew 8% during 2009 to more than 272 billion, said Marx, a division of TNS Media Intelligence. The 2009 level of activity surpassed the second-highest annual drop of 257 billion in 2007.

Retailer promotion pages also jumped 37.7% to 9 billion pages in 2009, continuing what Marx said has been a pattern of substantial annual growth rates begun in 2007.

"As consumers adapt to new economic realities, marketers are increasing their use of FSI coupons within their marketing mix to deliver advertising impact, influence consumer behavior, and secure retailer distribution and merchandising," TNS Media President Mark Nesbitt said in a statement. "Leading retailers are also increasing their use of FSI vehicles to drive planned shopping trips and build shopper loyalty."

All those coupons in 2009 amounted to consumer incentives delivered by FSI totaling more than $385 billion, a 15% increase from the year before.

The average face value of an FSI coupon increased 6.5% from 2008 to $1.45. But shoppers were hurried to use the coupons, which on average expired in 9.3 weeks, down about 4% from 2008.

This higher face value with a shortened expiration period -- known as the Fuse in the industry -- shows manufacturers are delivering more coupons with higher value, "but are managing their financial exposure by reducing the length of time that these offers are available in the market," Marx said.