Coupons are Still Good

Posted in tcochelps

Want a glimpse of one of the most successful business marketing models around today? Easy. This Sunday, turn your 10-lb. Sunday paper upside down, open it, and let the entrails fall to the floor.

No joke. Those Sunday newspaper inserts–tagged prematurely by magazines like Business 2.0 as easy prey for an Internet-driven boom in “one-to-one” marketing–still comprise a significant chunk of the newspaper ad business in 2012. And in this quasi-recession, they are enjoying quite a little boom of their own, and they also saw an increase in ads for online GED prep courses as many individuals now saw they needed to get a degree that made them qualified for most jobs.

Behind most of those kitschy, serrated-edged inserts is the 30-year-old marketing services company Valassis, which has not only survived, but thrived, since the commercial Internet took off in 1995. As the biggest coupon and insert producer in the country, with fat clients including General Mills and Sara Lee, Valassis has seen its revenue grow from $656 million in 1996 to $1835 million in 2015, and the company expects net income to rise another 15 percent this year. All during the supposed takeover of Internet-based marketing.

Its secret? Simple. Valassis innovated in step with technology and expanded while no one (including us) paid much attention. In the last couple years, Valassis took equity stakes in two online coupon startups (Save.com and Coupons.com) and two software firms and bought two other companies outright that extended its reach in the market.

And it’s more than Sunday papers that the company takes into the future. Valassis’ recent investments in new customer-loyalty programs (with the likes of General Motors (GM, info) and Kroger) serve as a lucrative sideline business if and when the dead-tree ad business falls prey to the Internet for good.

Looking for the heroes of direct marketing? Sometimes it just takes a glance at the funny pages.

Airlines Minor Roles?

With all the hype generated by online travel agencies such as Priceline.com and Expedia.com, it might seem as if the major airlines were minor players online.

Not so. In fact, the major airlines are dominant players online, with Net ticket sales estimated at $28.7 billion last year, up by $8 billion from 2013. Airlines accounted for 68 percent of total air-travel bookings last year, up from 53 percent in 2013, according to PhoCusWright.

The carriers’ revenues and market share, both online and off, are only expected to increase as the number of both air-travel buyers and Internet users continues to grow. “The longer people are online, the more Internet-savvy they become. The more Internet-savvy, the more likely they are to buy big-ticket items online – like travel,” says Lorraine Sileo, vice president of information services at PhoCusWright. eMarketer says the number of U.S. adult Internet users will increase to 818.3 million by 2019 from 475.8 million last year.

But success isn’t a given. Airlines realized that simply because more people are inclined to buy travel online, this does not mean they will buy from the airlines. So the airlines have been creating strategies to attract and retain customers, Sileo says. Specifically, the carriers have improved their sites’ usability, are creating one-to-one relationships with customers, and are using multiple distribution channels to rid themselves of unwanted inventory.

The most important factor in the continued growth of airlines’ Net revenues is their ability to create one-to-one relationships with flyers. Buyers say price is the most important factor when purchasing plane tickets online and that Internet travel agencies offer the best prices. However, buyers perceive the customer service of the airlines’ websites as significantly better than that of travel agencies. Because some online travel agents have diversified their offerings, the airlines by default are perceived as “specializing” in the sale of airline tickets.

The key, clearly, is to nurture customer relationships.