Paper Coupons: Reports of Our Death Have Been Greatly Exaggerated

If you’ve been listening to digital coupon advocates lately, you might feel like a dinosaur for continuing to use your good old-fashioned paper coupons. But don’t worry. Paper coupon advocates are speaking out as well – and they’re not ready to declare paper coupons dead.

Valassis, the parent company of RedPlum, says it’s doing just fine, thank you. “The consumer reacts differently to the printed message that they get at home than they do anything else,” Valassis Chief Financial Officer Robert Recchia told an investors conference yesterday. “And that’s good for us.”

Various digital coupon companies have been predicting the death of paper coupons for years. “Paper coupons consume 13 million trees every year,” argues Mobeam, a company that’s promoting its mobile couponing technology (read: “Why Are These People Singing and Dancing While Tearing Up Coupons?”). And Safeway’s CEO, in singing the praises of his store’s loyalty program and digital coupon offers, predicts digital will push aside paper coupons within five years (read: “Safeway Chief Predicts End of Paper Coupons”).

Not so fast, says Valassis. “Every time we see gas prices going toward $4, we see more increase in coupon use,” Recchia said. “People have got to stretch their food budget to pay for the increased gasoline or the other things that they have to do.” And if you’re a cash-strapped consumer, you’re not necessarily looking to buy a fancy new smartphone or other device that will allow you to take advantage of all the digital coupon offers promised to us.

Some digital coupon proponents have pointed to the overall decline in coupon use, and concluded that shoppers must be growing tired of paper coupons. Just in the past couple of weeks, mainstream media outlets have begun noticing an NCH Marketing study that you first read about right here, more than six weeks ago (what, doesn’t everyone read Coupons in the News?) The study’s findings that coupon use plummeted 17% last year spawned alarmist headlines like Time’s “Why Americans Are Cutting Coupons Out of Their Lives“.

Consumer analyst Phil Lempert, “the Supermarket Guru”, believes the numbers indicate a shift in the way people coupon. “Couponing has been reduced since the extreme couponing phase,” he told the Cincinnati Enquirer last month, and it’s “becoming boring.” Digital, he argues, is the future – and the future is now. “Look at how quickly we left our records, cassettes and CDs,” he told the Raleigh News & Observer’s Amy Dunn. “When you drop 17 percent in one year, you’re like the Titanic. You better get the lifeboats out or be ready to go down.”

Valassis, which just so happens to own NCH Marketing, counters that last year’s decline was more of a market correction than an industry-crippling iceberg. NCH’s own figures show that the number of coupons that were offered and redeemed skyrocketed in 2009 and stayed at record high levels, as the recession hit and extreme couponing began going mainstream. But “the brands weren’t able to afford it,” Valassis’ Recchia said. “They pulled back on their spending about 10%, which I’ve never seen in my 30 years with the company.”

Manufacturers began offering fewer coupons, and those that were offered had lower values, more purchase requirements and shorter expiration dates. The resulting redemption decline of 17% last year merely brings the numbers back down to earth – though they still remain higher than they were pre-recession.

That would indicate that extreme couponing may have passed its peak, but couponing itself is far from over. And Valassis says manufacturers’ investment in paper coupons is already showing signs of a rebound. “We think the industry is healthy,” Recchia said. “We should see a pretty good year this year.” Valassis is working to grow its own digital offers, but companies “have yet to find anything that works the way print works to activate the consumer.”

For now, it seems everyone who’s predicting the future of couponing is simply defending their own interests. Valassis is one of the leading coupon insert companies, so it remains bullish on paper. Mobile and digital coupon providers obviously have a different view. As couponers, we made our opinions known loud and clear about the appeal of the coupon offers that were made to us last year. But what message, exactly, did we send – that we want better coupons, or digital coupons? The way that coupon providers interpret the numbers, will determine whether we get what we want – or what the coupon providers think we want.