Monday, January 2, 2012

U.S. Coupons: Distribution cost 250% of Face value?!...

I might be making a fool of myself here, and would be happy (or, as you'll see, maybe not too happy business-wise, but still - would like to) hear corrections by coupons/promotional marketing experts - and as happy to get links to a wider coupon market research than what my amateur Googling efforts resulted.

Anyway, it seem to me that an actual U.S coupon distribution cost is more than double than it's Average Face Value - and almost 200 times of the coupon production/distribution cost. Here goes:

      - The cheapest coupon channel in the U.S. is FSI (Free Standing Insert), via Shared ("Junk") mail - or Newspapers. The distribution cost per 1,000 (CPM). is $5-$60 - or $0.005 to $0.06 per single distributed coupon.

       - Any other distribution will cost much more. Direct mail, for instance, costs $0.40-$1.50 per single postcard - or up to $1,500 CPM.

        - Coupons have to be printed. Basic printing cost is $10-$20 per 1,000, or $0.01-$0.02 per coupon.

         - And here's the main point: Average FSI redemption is 0.57%! It means that only one of about 175 distributed coupons is redeemed.

So? Let's take some minimal per-coupon costs into consideration. Say:

$0.01 for printing
$0.01 ($10 CPM) for Shared Mail/Newspaper distribution

Total is two cents. Doesn't sound much, ah?

Now, let's imply the 0.57% redemption rate - or double the two cents by 175 - and we're getting $3.5 per redeemed coupon. That's over twice as much as the $1.43 average U.S. coupon Face Value! 

And no, as you can see in the chart below - no other common coupon delivery method is cheaper. On the contrary.

Considering the above outrageous cost, and contemporary coupon delivery methods in development and/or currently on offer, this looks like business opportunity - ask ShopKick, they'll tell you. But does it worth the effort? Is there enough market, even at much lower cost? Well, over 330 Billion coupons are distributed annually in the U.S. Let's take the minimal cost of 2 cents per coupon - we're talking $6 Billion a year, easy - actually substantially more, since many of those coupons are distributed at much higher CPM than our junk mail friends. So the answer is - yes, there is. Definitely worth the trouble.

As some of you know, one of the main features of Picalogo (www.picalogo.com) is coupon delivery merely by taking a picture of the business logo - faster, easier and more idiot-proof than anything on this emerging market. If you're in this (or some relevant) business - contact us. We're just getting out of the shallow Bootstrapping waters, are looking for partners - and will go a long way to start and establish ourselves as a leading coupon delivery solution.





2 comments:

  1. Is there enough market, even Sanuk Coupon Codes 2013 at much lower cost? Well, over 330 Billion coupons are distributed annually in the U.S.

    ReplyDelete
  2. Can you please directly link to the source of this research for the cost of distributing coupons? I would much appreciate it :)

    ReplyDelete