Association of Coupon Professionals

A Guide to Internet Coupons

Phase One

Association of Coupon Professionals

www.couponpros.org

The ACP Guide to Internet Coupons . Phase One (May 2001)

Table of Contents
Association of Coupon Professionals

Table of Contents
Introduction Industry Message Overview Benefits of Internet Coupons Risks of Internet Coupons Recommendations for Designing Internet Coupons iii iv v 1 3 10

Copyright 2001 by the Association of Coupon Professionals 1043 Charlene Lane Schaumburg, IL 60193 Phone: 847-922-3782 Fax: 847-985-5670 Email: service@couponpros.org Website: http://www.couponpros.org All rights reserved. This publication may not be reproduced, stored in any information retrieval system or transmitted in whole or in part by any means--electronic, mechanical, photocopy, recording or otherwise-without the express written permission of the Association of Coupon Professionals. Contact the ACP for permission to reprint material in this report.

The ACP Guide to Internet Coupons . Phase One (May 2001) ii

Introduction
Association of Coupon Professionals

Introduction
The Association of Coupon Professionals (ACP) is an industry association consisting of coupon processors, manufacturers, retailers, coupon suppliers and coupon industry consultants whose mission is:
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To provide a forum for the discussion of industry issues concerning the development, distribution and redemption of coupons. To ensure the viability of coupons as a sales and marketing tool through leadership and education.

The goals of the ACP are to:

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Improve coupon industry business conditions. Foster the continuance of coupons as a sales and marketing tool. Provide a forum for the education and resolution of common industry concerns in the development, distribution and redemption of coupons.

The ACP formed the Internet Coupon Task Force to address issues related to this emerging distribution venue. The Task Force included representation from manufacturers, processors, retailers, Internet coupon suppliers and industry consultants. The Task Forces mission was to:
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Develop and publish a comprehensive guide to Internet coupons, discussing risks and opportunities associated with couponing on the Internet as they apply to consumers, retailers, processors and manufacturers.

Phase one of this project will address coupons printed from personal computers. Note, however, that many of the benefits and risks discussed apply to other Internet-based coupon solutions. This phase has been completed, and this guide to Internet Coupons will be published on the ACP web site at www.couponpros.org. In phase two of this project, the Task Force reviewed the Electronic Promotions State of the Industry manual published by the Joint Industry Coupon Committee and determined an update is needed. This update will be the Task Forces next undertaking.

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Industry Message
Association of Coupon Professionals

Industry Message
Coupon industry representatives, who have various opinions on the subject of print-at-home Internet coupons, collaborated to develop these voluntary guidelines. The Task Force consisted of representatives from the following companies:
Allrecipes BrightStreet Campbell Soup Company Carolina Coupon Clearing CMS CoolSavings.com Efficient Marketing Solutions General Mills, Inc. Giant Food, Inc. Hershey Foods Kellogg Company Lees Marketing Services, Inc. Lets Go Shopping, Inc. NCH Pinpoint Data, Inc. Promotion Eyes, Inc. Ralston Purina Company Santella & Associates Save.com Schering-Plough Seven Oaks International, Inc. Target Stores The Quaker Oats Company Valassis

The Task Force agreed that marketers should evaluate print-at-home coupons on the basis of net value, defined as economic benefits versus potential risks. Further, the Task Force agreed that net value could vary depending on marketing objectives, coupon values, range of distribution and other factors of a program. Included in this analysis of net value should be an assessment of the advantages and disadvantages of restricting print-at-home coupons to color only versus using black & white coupons. Finally, the Task Force avoided judging the level of risk associated with Internet coupons, leaving that analysis to the marketer. Using the information provided in this document, each marketer should evaluate the risks of implementing an Internet coupon program. The Internet Coupon Task Force will continue to monitor Internet coupons and will inform marketers of changes in factors affecting the net value of print-at-home coupons.
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Overview
Association of Coupon Professionals

Overview
Not long ago the web was merely a concept and the thought of distributing coupons online was just a seed of an idea. However, marketers quickly caught on to the Internet as an easy, effective marketing tool and Internet coupons have taken root. Today, according to a study by NPD Online Research, nearly one-third of Internet consumers use coupons distributed via the web. These consumers indicate that their use of Internet coupons will increase. The question is not whether online couponing will take hold, but rather how fast it will grow, how big it will become and what new methods of coupon distribution will evolve. Even now, as the use of Internet coupons grows, marketers are developing new methods of cyber discount distribution. Internet coupons allow manufacturers one-to-one interaction with consumers. The Internet provides research and information on the purchase behaviors of individual consumers. In addition, the Internet gives marketers the opportunity to cost-effectively segment their databases using multiple offers to test marketing strategies. As technology continues to make the Internet faster and easier to use, less expensive, integrated promotions allowing marketers to communicate directly with the consumer will evolve. Technology is best when it provides solutions. With respect to marketing, particularly couponing, the Internet provides a viable solution for manufacturers and retailers to reach consumers who are looking for ways to save time and money. In addition, the Internet can be used effectively to complement offline promotions. However, as with any new technology, there is a learning curve associated with online coupon distribution. The information in this document should help marketers navigate quickly through the process to create successful Internet coupon programs. The first phase of this project deals with print-at-home Internet coupons, defined as coupons that are printed by consumers on a desktop printer from an Internet web site. The first phase covers three topics:
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Benefits of Internet Coupons Risks of Internet Coupons Recommendations for Designing Internet Coupons

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Benefits of Internet Coupons

Association of Coupon Professionals

Benefits to Consumers
As technology evolves, consumers continue to respond to value. Coupons provide value in the form of price discounts. Print-at-home coupons add value by giving consumers an easy, convenient way to save money on a variety of goods and services. The benefits of print-at-home coupons to consumers include the additional value of providing consumers with an easy, convenient way to save money on a wide variety of goods and services. The benefits of print-at-home coupons to consumers also include:

Ease of Use
Consumers click on the coupons they want and print them at home. The coupons can be redeemed at any retailer that accepts coupons.

Convenience
Consumers can search for print-at-home coupons when they want--any day of the week, any time of the day.

Relevance
Consumers choose the coupons they want. Marketers can offer coupons and information targeted to individual preferences.

Presentation
Consumers see interactive, enjoyable and unique content.

Information-Rich
Consumers receive more targeted information.

Enhanced Incentives
Consumer interaction can result in additional rewards.

Benefits to Marketers
The Internet is an easy, cost-effective way to reach a mass audience that offers marketers the potential to target individual consumers. This new medium provides marketers with:

One-to-One Marketing Capabilities

Print-at-home coupons can be tailored to individual consumer needs and marketers can learn more about customer buying habits, creating unique one-to-one marketing opportunities.

An Upscale, Educated Audience

Online coupon users are a prime consumer group.

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Benefits of Internet Coupons

Association of Coupon Professionals

Benefits to Marketers, continued

Potential New Coupon Users
The Internet allows marketers to reach a unique audience some of who may not be traditional coupon users.

Links to Company Web Sites

Online coupons can bring consumers back to marketers home pages where they can learn about other products and services, receive helpful advice or obtain additional discounts, helping to create strong brand identity and company loyalty.

Tracking and Measurability

Marketers can conduct tests in real time and measure the results on an individual promotion and/or consumer level.

Relationship Building
Marketers have the opportunity to build ongoing individual relationships with consumers. Consumers voluntarily agree to provide information and, therefore, may be more receptive to the marketers message.

Integration
Print-at-home coupons can be integrated with online programs and offline events.

Flexibility
The Internet allows the continual reshaping of coupon promotions. Additionally, the speed and targeting capabilities of the Internet allow marketers to run last minute promotions and react to changing market conditions.

Benefits to Retailers
Retailer response to online coupons is generally positive as print-at-home Internet coupons are treated like traditional coupons--no investment of time or money is required for additional equipment or new procedures. In addition, print-at-home coupons can provide incremental sales and profits for retailers. However, because of the potential for fraud, retailers are cautious about print-at-home coupons. Still, some retailers are searching for ways to make Internet coupons part of their web-based marketing strategies.

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Risks of Internet Coupons

Association of Coupon Professionals

Risks of Internet Coupons

As a relatively new medium, Internet print-at-home coupons present both new concerns for coupon fraud and the need for new risk management controls. Likewise, print-at-home coupons utilize many of the existing industry standards for controlling and administering marketers coupon promotions. Differences of opinion exist about the marketing strengths versus the risks of print-at-home coupons. The purpose of this section is to offer the reader an understanding of the potential issues regarding print-at-home Internet coupons. By weighing the benefits against the risks, marketers can make their own decisions about Internet coupon promotions. Consumer packaged goods companies are beginning to use Internet coupons as a method for reaching consumers and meeting marketing objectives. Retailers are beginning to issue and accept Internet coupons. The Internet has become a viable coupon distribution method, with print-at-home coupons being one of several options.

Categories of Risk
There are three categories of risk associated with Internet print-at-home coupons:
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Copying of Internet Coupons Manipulation of Internet Coupons Print Quality of Internet Coupons

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Risks of Internet Coupons

Association of Coupon Professionals

Copying
Individuals can make multiple copies of Internet print-at-home coupons by photocopying or scanning and reprinting the original coupon. Replicating an original coupon is not unique to print-at-home coupons, but affects other types of coupons, as well. Consumers can also print multiple copies if the Internet coupon supplier does not have the technology in place to keep consumers from printing several copies. Consumers usually have good intentions when duplicating coupons and will use the replicated coupons to purchase additional products, resulting in increased sales for both the manufacturer and the retailer. Depending on the circumstances, this may or may not be acceptable to a marketer. The primary impact of the increased distribution resulting from coupon replication is the potential for unbudgeted redemption liability. In addition, replicated coupons may not have the same design quality as the original offer. Replicated coupons may not move efficiently through the redemption process resulting in a slow-down at the point-of-sale, reduced checker productivity and hard-to-handle issues that add costs to the clearing process. Again, this problem is not unique to print-at-home coupons, but also affects other forms of coupons.

Industry Initiatives to Manage Copying Risk

Unique Barcode Serialization
An important security measure for print-at-home coupons is encrypted, serialized barcodes that tie to data in a marketers database. Each coupon that is printed can be serialized, making it individually unique for tracking purposes and linking it to a specific consumer. Fraud can be detected through the reconciliation of supplier clearinghouse data feeds to the marketers printactivity database. If a duplicate coupon is detected, it can be flagged. As supplemental data is required for this type of analysis, marketers should contact both the Internet vendor and their redemption agent to understand the additional costs for this level of data and control. Note that detection of replicated coupons occurs after retail redemption.

Control Coupon Display

Suppliers can deter the duplication of offers by not displaying an image of the actual coupon on the home computer monitor. The final coupon should be a product of the print function. Additional time and knowledge are required for consumers to alter a coupon that is not available online, acting as a deterrent to fraud.

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Risks of Internet Coupons

Association of Coupon Professionals

Industry Initiatives to Manage Copying Risks, continued

Offer Capping
Marketers can set predetermined limits on total coupon distribution. For example, a specific coupon offer can be limited to a total of 500 prints or an individual household can be limited to a certain number of prints. After preset limits are exceeded, households will not be able to view the offer again.

Color-Printer Detection
Printing applications can detect whether or not a consumer is using a color printer. Marketers who want coupons printed in color can force consumers to print in color. Color copying can become cost prohibitive to those trying to commit fraud.

Printing Application
Software can control printer diagnostics including page orientation, color capabilities and printing limits. This technology allows marketers and suppliers to maintain control over the printing process.

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Risks of Internet Coupons

Association of Coupon Professionals

Manipulation
With todays technology, coupon face values, expiration dates, barcodes and other factors can be altered. If the technology used by an Internet coupon supplier does not have appropriate controls in place, an online coupon can be manipulated. Coupons can also be scanned and specific components modified. This ability offers individuals the opportunity to create new coupons. Through e-mail, web-based bulletin boards and trading clubs, all coupons have the potential to reach a wider base than originally planned. As a result, coupons other than those intended by the marketer could be introduced into the marketplace, jeopardizing the integrity of the original offer. Unexpected distribution and/or changes in design could cause:
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Increases in promotion liability. Inconsistent or incorrect product messaging. Deductions resulting from discrepancies between retailers expected coupon receivables and a manufacturers authorized reimbursement. Decline in productivity at point-of-sale. Higher cost of clearing due to hard-to-handle issues. Unintended reach with fraudulent coupons going to unintended recipients.

Industry Initiatives to Manage Manipulation Risk

Printing Application
By requiring consumers to download an application that allows them to print coupons, marketers can implement security measures. For example, one print application encrypts data between the marketers server and the consumers computer, making it virtually impossible to intercept the relayed coupon information. The printing application prevents coupon data from being written to the hard drive and displayed on the computer screen, making data and images difficult to capture.

Registry Identifiers
Coupon providers can place a unique identifier which is difficult to delete on a consumers hard drive or registry. If the coupon or data is returned to the supplier for additional analysis, the supplier can reconcile these identifiers to their consumer database to detect fraudulent redemption.

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Risks of Internet Coupons

Association of Coupon Professionals

Print Quality
The print quality of an Internet print-at-home coupon can be compromised by the type of printer used by the consumer. As a result, Internet print-at-home coupons may not scan correctly at any or all points in the redemption process, including point-of-sale, retailer clearinghouse or manufacturer clearinghouse, and may result in consumer ill-will, slow-downs at checkout and hard-to-handle issues that add costs to the clearing process.

Industry Initiatives to Manage Print Quality Risk

Control Print Quality
A downloaded printing application is a tool that ensures that print quality standards are met. The application controls all printer diagnostics, including page orientation, color and printing limits. It disables the consumers print dialogue box during coupon printing, giving the marketer control over printing for the specific session. The plug-in also allows for high resolution printing of coupons using vector text and lines for greater fraud deterrence. Studies conducted by Internet coupon suppliers indicate that most home printers are of high quality and can be purchased relatively inexpensively. These studies also indicate that even the lowest resolution printers will produce barcodes with a high degree of scannability. Also, the use of color printers at home can improve print quality and minimize the risks associated with printing black and white coupons.

Barcode Quality
The ability of suppliers to accurately control the print quality of the barcode is critical.

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Risks of Internet Coupons

Association of Coupon Professionals

Additional Industry Initiatives to Manage Risk

Recommended Design Standards Security Measures
Manufacturers and retailers can deter consumers and/or retailers from engaging in the fraudulent duplication or manipulation of coupons by requiring Internet suppliers to adhere to the recommended design standards outlined in this document. Using consistent design components for Internet coupons will assist in discouraging misredemption activity, as abnormalities may attract attention throughout the redemption process.

Redemption Data Analysis

When evaluating Internet print-at-home suppliers, manufacturers and retailers should gain a complete understanding of the misredemption control analysis capabilities provided by these vendors. The existing coupon EAN-128 barcode and Internet vendor-specific security codes provide marketers with the ability to capture additional data components for analysis. If a coupon carries specific consumer demographic information, the information can be obtained through the manufacturers agent as part of the redemption process or the physical coupons can be forwarded directly to the Internet print-at-home supplier for additional data capture. In either case, this information can be utilized to determine if fraudulent activity has occurred at either the consumer or retail level. Currently, this type of fraud analysis takes place after the coupon has been redeemed by the consumer and processed for payment by the manufacturer or their agent. As supplemental data is required for this type of analysis, manufacturers should contact both the Internet vendor and their redemption agent to understand the additional costs for this level of data and control.

Redemption Agent Controls

Manufacturers agents provide their clients with various services that help minimize exposure to fraudulent coupon activity. Verifying submitters and matching the characteristics of the retail outlet to those of their coupon shipments are the responsibilities of the coupon redemption agent and will help uncover fraudulent activity at the retail level, regardless of the distribution vehicle used by the manufacturer. In addition, manufacturers agents review coupon shipments for evidence of physical misredemption such as photocopied coupons. Due to the quality of photocopied coupons, they can be difficult to identify. Manufacturers should work with their agents, as well as third party organizations, to implement misredemption controls.

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Risks of Internet Coupons

Association of Coupon Professionals

A Final Note on the Risks of Internet Coupons

Regardless of the distribution method chosen, the marketer is responsible for any liability associated with the redemption of their coupons. The stated risks and security measures, in combination with the benefits outlined in the previous section, are intended to provide manufacturers and retailers with the foundation necessary to evaluate Internet print-at-home coupons. Similarly, marketers may wish to evaluate the risks of other coupon promotions and measure the benefits of meeting the promotional objectives of the marketer. Should a manufacturer, retailer, Internet vendor or agent identify or uncover fraudulent coupon activity of any type, they are encouraged to contact the following national organizations or the corresponding local divisions:
US Postal Inspection Service National Headquarters 475 Lenfant Plaza, SW Washington, D.C. 20260 (202) 268-2000 http://www.usps.gov/postalinspectors/

Coupon Information Center 115 South Street, Suite D Alexandria, Virginia 22314 (703) 684-5307 http://www.cents-off.com

Both agencies are available to assist in evaluating the level of potential fraud and potential action steps.

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Designing Internet Coupons

Association of Coupon Professionals

Recommendations for Designing Internet Coupons

All Internet coupons should follow standard coupon design requirements and standards. The following are recommended voluntary guidelines for developing an effective Internet coupon. For more information, please refer to the Joint Industry Coupon Guidelines.

Purchase Requirement
The purchase requirement should be prominently shown and stated in simple, easy to read language. Multiple purchase requirements should be clearly stated and shown next to the face value. Avoid complicated offers, where possible.

Face Value
The face value should be prominent. Face values should be based on the UCC approved value code listing. The coupon should offer specific savings or, if it offers free products, the maximum value should be stated. The use of free coupons should be limited. In a black and white environment (like newspaper run-of-press, print-at-home, etc.), free coupons are discouraged due to their high value and ease of copying. Free coupons are considered hard-to-handle.

Product Name and Logo

The product name should be placed in the center of the coupon and the product logo should be included if space permits.

Manufacturer Internet Coupon Title

The words Manufacturer Internet Coupon should be placed at the top center of the coupon in bold type. To help checkers and agents (both retailer and manufacturer) clearly distinguish Internet coupons from other black and white coupons, the Task Force recommends that this new title Manufacturer Internet Coupon be used to clearly identify Internet coupons (as we do today for InAds).

Internet Coupon Labeling

The words Internet Coupon, shaded in gray, should appear behind the legal wording of all Internet coupons, thereby increasing the difficulty for consumers to manipulate the coupon and giving the retailer a way to distinguish or identify the coupon as an Internet coupon rather than a photocopied Free-Standing-Insert (FSI).

Size
The coupon should be 6 x 2 1/2 (with a tolerance to 3 x 2 1/16). Larger coupons are hard-to-handle and smaller ones are difficult to read. The coupon should include a dotted line to indicate the need for cutting so the consumer does not give the checker the entire page of coupons for redemption.

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Designing Internet Coupons

Association of Coupon Professionals

Designing Internet Coupons, continued

Expiration Date
The expiration date or the words No Expiration Date should be placed at the top center next to the words Manufacturer Internet Coupon. Always include the month, day and year of expiration. The use of No Expiration Date coupons should be limited.

Web Site Name and Logo

The name of the web site issuing the coupon and the site logo should be printed on the coupon (preferably underneath the amount in the top right corner). An image is easier for someone handling the coupon to identify and is also more difficult to replicate.

Picture of the Product

A picture of the product should always be displayed.

Color
The coupon should be four-color and stand out from any advertising. Do not use distracting background colors. Many Internet coupons will be printed in black and white, even if shown in color on the web site. UCC scan guidelines for color should be adhered to as color impacts scannabilty.

Terms of the Offer

The coupon offer should be clear, specific and visible, including the purchase requirements such as quantity, size, etc. The legal terms for the offer should be simple and easy to read. They should state the handling fee, the name of the manufacturer and the P.O. Box address where the coupon should be sent for reimbursement. Consider including language such as coupon valid only for items indicated, any other use constitutes fraud, may not be combined with any other offer and duplicated or altered coupons will not be accepted.

UPC Code
The Universal Product Code (UPC) should be placed in the lower right corner of the coupon. The UPC must be in black on a white background, should be at 100% magnification and have sufficient quiet zones on both sides of the barcode. Use the standard 12-digit UPC code which includes the Number System Character 5; your Manufacturer Identification Number (MIN); Family Code; Value Code and Check Digit. All coupons must conform to UCC Coupon Code guidelines (Application Standard for UCC Coupon Codes).

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Designing Internet Coupons

Association of Coupon Professionals

Designing Internet Coupons, continued

UCC/EAN-128 Extended Barcode
Always use the extended barcode which can be in one of 5 different formats and may include a 5 digit Offer Code; 4 digit Expiration Date; 8 digit Household ID; or a 2 digit Null Code, however, the Null Code format is not recommended. Marketers should include either a consumer code or household identification code on all Internet coupons utilizing the EAN-128 code or Internet vendor-specific security codes. The offer code that is placed in the barcode should also appear in printed form above the barcode in the event that the coupon is not scannable. Space allowing, the household ID number should also be printed on the coupon.

Legal Copy
Coupons are a contract between the issuer of the coupon and the retailer, as well as between the issuer and the ultimate consumer. Therefore, the legal copy on the coupon is intended to protect the issuer from fraud and misredemption. Use of the words, void if altered, copied, transferred, purchased or sold is recommended. See the example below:
Retailer: We will reimburse you the face value of this coupon plus $X.XX handling provided it is redeemed by a consumer at the time of purchase on the brand specified. Coupons not properly redeemed will be voided and held. Alteration or reproduction of this coupon is expressly prohibited. (ANY OTHER USE CONSTITUTES FRAUD.) Mail to: ABC Company, 122 Main Street, Anytown, USA 00000. Cash value $.XXX. Void where taxed or restricted. LIMIT ONE COUPON PER ITEM PURCHASED.

Direct Mail
Coupons selected from an Internet web site and mailed directly to the consumer should be printed on copy-resistant paper if copying is not desired.

Fraud Notification
Place prominent disclosure on the web site issuing coupons stating the consequences of altering a coupon. Below is a sample notification:
It is illegal to alter, reproduce or manipulate these coupons in any way. Coupons not properly redeemed will be voided and held. Alteration or reproduction of this coupon is expressly prohibited. (ANY OTHER USE CONSTITUTES FRAUD.) Anyone who uses the Internet to commit fraud is subject to prosecution under the Federal Wire Statute. Unauthorized interceptions of Internet communications are prohibited by the Electronic Communication Privacy Act.

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Designing Internet Coupons

Association of Coupon Professionals

Designing Internet Coupons, continued

Sample Coupons
Sample coupons are shown below:

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Association of Coupon Professionals

The ACP Guide to Internet Coupons . Phase One (May 2001)