FSI Weighted Average Face Value increased 7.3% during First Half of 2008.

The Weighted Average Face Value (WAFV) for Free Standing Insert (FSI) coupons increased 7.3 percent to $1.34 in the first six months of 2008. This increase has become the highest WAFV on record according to Marx Promotion Intelligence, a division of TNS media intelligence.

“In the current climate of economic uncertainty, this new record particularly highlights the importance of promotional strategies to drive consumer demand,” said Mark Nesbitt, chief operating officer at Marx Promotion Intelligence/TNS Media Intelligence.

Marx Promotion Intelligence, the industry standard for tracking FSI coupon activity, reports that WAFV across the Non-Food segment of the Consumer Packaged Goods (CPG) industry increased 5.1 percent to $1.60, driven by the 28.0 percent increase within the Health Care area. WAFV across the Food segment increased 6.1 percent to $0.91, led by the 14.0 percent increase for the Dry Grocery area. All other areas across the Non-Food and Food segments decreased in WAFV for the first half of 2008.

Manufacturers delivered more than $169 billion in consumer incentives as part of 126 billion coupons distributed across more than 100 billion pages during the first half of 2008. Additionally, retailer participation in FSI promotions increased 31.3 percent to over 21.2 billion pages during this period, driven in part by the growth of “co-equity” events that frequently deliver retailer-specific coupons rather than traditional manufacturer coupons.

“Manufacturers continue to leverage FSIs as an effective advertising vehicle to deliver consumer impressions and reinforce brand messaging,” said Mark Nesbitt. “Leading retailers are also increasing their use of FSIs to drive planned shopping trips and build shopper loyalty. Manufacturers and retailers are working together to deliver relevant incentives to their consumers and shoppers during increasingly difficult economic times. Although ‘shopper marketing’ tactics are still evolving, FSIs have definitely emerged as a key component of manufacturer and retailer cooperative consumer promotion support.”

Overall FSI Activity

During the first half of 2008, more than $169 billion in consumer incentives were delivered via FSIs in Sunday newspapers, up 1.4 percent from the same period in 2007. During the same six month period, over 126 billion coupons were distributed within more than 100 billion FSI pages. These trends translate into manufacturers delivering more value within each FSI event to stimulate consumer interest and generate category excitement.

Sector Activity

The CPG sector remains the largest user of FSI pages with a 70.0 percent share, followed by Direct Response, which includes general advertising activity, and Franchise, comprised of restaurants, portrait studios, and other businesses. All three sectors decreased in number of pages distributed resulting in an overall increase in the “share of voice” for individual events within each FSI vehicle.
First Half 2008 Results by Sector versus First Half 2007

CPG Non-Food vs. Food

In the first half of 2008, Non-Food categories distributed more than 77.6 billion coupons to remain unchanged versus a year ago, while Food categories distributed 49.2 billion coupons, representing a decline of 12.9 percent. Health Care and Personal Care were the only two areas with increases in Coupons Dropped during this period.

However, manufacturers are increasing the value of the offers that are being delivered to consumers in both the Non-Food and Food segments. WAFV for Non-Food increased 5.1 percent to $1.60 and was combined with a 1.8 point decrease in Multiple Purchase Requirements (MPR) resulting in Weighted Average Face Value Per Unit (WAFVPU) increasing 6.9 percent to $1.42. Similarly, WAFV for Food increased 6.1 percent to $0.91 and was combined with a 3.5 point decrease in MPR resulting in WAFVPU increasing 9.0 percent to $0.70. Manufacturers have also increased the expiration lengths of these offers for the first time since 2005, up 2.7 percent to 9.7 weeks for Non-Food and up 0.7 percent to 10.8 weeks for Food categories. This increase appears to be a response to economic pressures to increase the consumer value per unit, decrease the total investment required for a qualifying purchase, and extend the offer period to align with consumer purchase cycles and manufacturer promotion cycles.

Top 10 FSI Product Types in First Half 2008 (by Coupons Distributed)

The top 10 product types based on coupons distributed accounted for 33.3 percent of all FSI coupon activity during the first half of 2008. Household Cleaning Products ranked first and increased 7.7 percent to distribute more than 7.4 billion coupons, with 530.7 million coupons being associated with nine new product introductions during the first six months of 2008. Vitamins moved to fourth place with a 25.2 percent increase to 4.8 million coupons. This increase is due in part to 248.1 million coupons supporting eight new product introductions during this period.

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