CPG Coupons: The Consumer Perspective Association of Coupon Professionals April 16, 2015 NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Agenda Headlines Data Sources The Coupon Media Landscape FSI Coupon Insights Digital Coupon Insights The Millennial Coupon User Key Conclusions and Implications NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Headlines Coupon users are CPG’s most important consumers* Despite declines in newspaper circulation, consumers are still committed to using FSI coupons** Millennials are not heavy CPG coupon users and are not as digitally focused for coupon usage as many marketers think** *Based on GfK analysis of average spend on CPG products by coupon and non-coupon users, 2014; ** Based on Coupon Attitude and Usage Study, ECI, 2014 NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Data Sources All research information is consumer packaged goods coupon focused National CPG Coupon Attitude and Usage Study; conducted in April, 2014 among 860 CPG Coupon users (defined as using 2 or more CPG coupons in the past 30 days) GfK’s National Shopper Lab Frequent Shopper card analysis; analyzed over 180,000 FSI-redeeming households and compared to non-coupon using households – July, 2014 Coupon distribution and redemption by vehicle data from 2014 NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Consumer Coupon Media Landscape NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Share of Past 30-Day CPG Coupon Usage 70% of CPG coupon users use FSI 59% of CPG coupon users use Digital 30% use FSI coupons, but not digital, and 19% use Digital and not FSI By using both, you can reach 89% of all coupon users Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by Evaluative Criteria Incorporated based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels Base: Total Past 30 Day CPG Coupon Users (n=859) Q3) Even if you already mentioned it, which of the following sources of coupons have you used in the past 30 days? Of the 11% that do not use FSI or digital, 3% use in-store, 4% use checkout coupons and 4% use retailer circulator coupons. Others include direct and magazine coupons. NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15 6

Four attitudinal segments identified CPG Coupon User Segments: Incidence (1) & Key Differentiating Attitudes Four attitudinal segments identified Casual Coupon Users Low coupon involvement Prefer coupons downloaded to loyalty card FSI Budget Constrained Prefer FSI from paid newspaper Need to use coupons in order to meet budget 28% 27% Coupon Strategizers Enjoy using coupons, worth the work, love the challenge to see how much can save, tight budget Use both internet and paper coupons about equally FSI Enthusiasts Enjoy using paper coupons but financially not required to do so Coupons provide knowledge about new products 25% 20% Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels. Base: Total Past 30 Day CPG Coupon Users (n=859), (1) 775 of the 859 classified into a segment re-percentaged to = 100%. NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Average Annual Dollars per Household FSI and Digital Coupon Users spend substantially more on CPG products than the average household Average Annual Dollars per Household $3,596 $3,013 $3,982 FSI Coupon Shoppers spend 19% more than the average shopper Digital Print at Home Shoppers spend 32% more Than the average shopper Source: GfK Shopper, July, 2014; FSI: Across 290 campaigns vs. GfK database | n=2,166,383 HH’s for all shoppers | n=184,799 FSI Coupon shoppers | 52 weeks ending 4/30/2014 Digital: Across 160 campaigns vs. GfK database | n=2,165,499 HH’s for all shoppers | n=63,155 Digital Coupon shoppers | 52 weeks ending 12/31/2013 NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15 8

Percent of redemption volume FSI Coupons account for 39% of all CPG Coupon Redemption; Digital coupons (PAH/D2C) account for about 5% of all redemptions Internet print-at-home coupons ranked #7 in terms of volume redeemed, at 3.5%; direct to card coupons ranked #9 accounted for 1.8% of all coupons redeemed Percent of redemption volume 1Source: Inmar, 2015: http://www.prweb.com/releases/2015/coupon-trends-webinar/prweb12466628.htmInmar; only the top 9 distribution methods as rated by redemption are shown. The methods not shown account for 16.6% of all redemption NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

CPG Coupon Clipping Decisions Clip Coupons … For brands already use To Try New Items/ Brands For new items by familiar brands To try new brands that just came out Those with higher coupon value amounts To try existing brands/items never tried Based on requests from others in household (e.g., spouse, kids, etc.) That have long expiration dates For special occasions / holiday / entertaining items Coupons are clipped primarily for brands already use or to try a new brand or item Coupons clipped for brands already used may tip the balance to the promoted brand when used by switcher consumers who have a consideration set of several brands in a category Higher value coupons also take priority Base: Total Past 30 Day CPG Coupon Users (n=859); Q.18 How do you decide which coupons to clip? Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

If a couponed product is out of stock, there can be lost sales opportunities to brands and retailers Come back to the same store on another occasion to use coupon Buy another brand Go to another store Not buy anything Base: Total Past 30 Day CPG Coupon Users (n=859) Q.35 If you have a coupon for a product but it is out of stock in the store, which of the following would you be most likely to do? Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

FSI Consumer Behavior: Fast Facts 96% of FSI readers read most or all of the FSI 59% of FSI readers read the booklet at least 2 times 67% of FSI readers read the booklet the same day they receive it 61% of FSI readers clip the coupons immediately 1.8 adults on average read each FSI booklet Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels; results for the 602 respondents who use the FSI NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Ways Used Online CPG Coupons Base: Past 30 Day Internet/Mobile Coupon Users Mentioning A Source (n=461) Q.23a: How have you used coupons online or from your mobile phone in the past 30 days? Q.23b: And which one is the main way you have used coupons online or from your mobile phone? Ways Used Online CPG Coupons Download to store's frequent shopper card to use Access on mobile phone to scan when check out Main Way Used Total Ways Used In Past 30 Days Print out on paper to use Download to store's frequent shopper card to use Access on mobile phone to scan when check out Print out on paper to use Print to paper is the leading way Internet coupons are used. Downloading to shopper card follows Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Consumers use Many Different Types of Websites to get CPG Coupons Q.22b: Which of these sources have you used to obtain coupons online or from your mobile phone in the past 30 days? Consumers use Many Different Types of Websites to get CPG Coupons Dedicated coupon websites have the highest usage of Internet coupon sources. Coupons from retailer websites follow. Note that traffic to individual sites within each type is probably much lower than the type total Total Users Base: Aware of Internet/Mobile or Cell Phone CPG Coupon Sources (676) % Internet / Mobile Coupon Source Past 30 Days Usage Any (net) 81 Websites (subnet) 73 Dedicated to coupons 47 Retailer website 42 Company's or brand's website 35 Social media website (e.g., Facebook) 16 Newspaper website 9 Emailed to you None of these 19 Mean 2.4 Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Provides Product Information Q.7: Since you use both coupons found in the newspaper as well as coupons found online, please tell us how the following statements describe your experience with both newspaper and internet coupons. Newspaper Delivered Coupons are Rated Better by Dual Users on Convenience and Providing Information Users of both Newspaper and Internet coupons favor Newspaper coupons for the following: Source I trust Use regularly Easy to use Provides Product Information Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Heavy FSI Coupon Users are Bigger CPG Spenders than Heavy Digital Coupon Users FSI: Across 290 campaigns vs. GfK database | n=2,166,383 HH’s for all shoppers | n=184,799 FSI Coupon shoppers | 52 weeks ending 4/30/2014 Digital: Across 160 campaigns vs. GfK database | n=2,165,499 HH’s for all shoppers | n=63,155 Digital Coupon shoppers | 52 weeks ending 12/31/2013 FSI: Digital: FSI: Digital: FSI: Digital: 36% 60% 48% Spends Over Spends Over 35% $3.5k $3.0k More Trips are Made Than The Average Shopper More Dollars Spent Per Trip Than The Average Shopper More Than The Average Shopper FSI: 89 Trips or 1.7 Trips/Week Digital: 90 Trips or 1.7 Trips/Week All: 66 Trips or 1.3 Trips/Week FSI: $72.77 per Trip Digital: $67.06 per Trip All: $45.37 per Trip FSI: $6,488 per Year Digital: $6,008 per Year All: $3,013 per Year Source: News America Marketing Heavy Coupon User Analysis , July 2014; research fielded by GFK based on 290 FSI Campaigns and 160 Digital Campaigns GFK’s Frequent Shopper Card Database of HH who used more than 90 coupons of any type in a year NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15 16

Millennials NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Millennials are Lighter Users of CPG Coupons Source: News America Marketing Coupon Attitude and Usage Study, April, 2014; research fielded by ECI based on 859 past 30 day users of CPG coupons (2 or more) recruited using nationally representative internet panels. Note: The survey sample was demographically representative of the U.S. population.  However, survey completion rates may vary by demographic group. All indices are based on Total US (Census). Base: Used 2+ CPG coupons in Past 30 days, (n=859) indexed to Total Census NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15

Share of Past 30-Day CPG Coupon Usage Mix: Millennials Base: Total Past 30 Day CPG Coupon Users (n=182) Q3. Even if you already mentioned it, which of the following sources of coupons have you used in the past 30 days? Share of Past 30-Day CPG Coupon Usage Mix: Millennials 63% of Millennial CPG coupon users use FSI 66% of Millennial CPG coupon users use Digital 22% use FSI coupons, but not digital, and 25% use Digital and not FSI By using both, you can reach 88% of all coupon users NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15 19

News America Marketing Perspective: Key Conclusions and Implications Coupon users are important CPG consumers Continue to include couponing as a key tool within the marketing mix Consumers use coupons from a variety of sources, but the FSI remains an important source of coupons Use a diverse mix of coupon delivery media with FSI and digital coupons as components Millennials are lighter coupon users and are not as heavily digital as perceived by some marketers Include coupon vehicles to reach Millennials, including FSI and digital; make sure to reach other important demographics as part of a brand’s promotion strategy NAM Proprietary and Confidential/For Client Use Only/Not to be reproduced without written permission/M. Peiser/Final/ 3 26 15 20