1. Emerging Technologies: Are we there yet? Presented by: David Diamond David Diamond Associates

2. Agenda: 1)Definitions and Terms 2)Where we want to go 3)What we need to do to get there 4)How we implement a shared vision 5)The real future – what comes next?

3. Definitions: Traditional Paper Coupons: FSI, on-pack, in-pack, etc. – life in 1995 Internet print at home coupons: Delivered via the web into a “controlled” environment and printed at home – redeemed as a paper coupon Digital Coupon: Complete process from set-up through redemption is digital. No paper manifestation at all Traditional Clearing: The process of capturing, counting, tracking and billing a paper coupon, as a paper coupon Electronic Clearing: The process from check stand to reconciliation executed via POS and other data rather than hard copy. Can be used for any sort of coupon

4. An Interesting Twist In most technological advances, the technology is created, and the technology determines the path the industry takes But in our world, most agree what the end-point is, and what technology is needed, but no one can agree on how we get there To a certain extent, it is like the moon mission in 1961 – we know where we want to go but do not know how to get there.

5. The Shared Vision Many in the industry share a vision of where we want couponing to go: –Fully digital process from program inception through redemption and reconciliation –Delivery to consumers on the device of the consumers choice – most likely a mobile device of some sort –Communication to consumers throughout the process – before shopping, en route, in the store –Consumer opt-in to avoid privacy issues –Individually consumer identifiable to avoid fraud

6. The Shared Vision Many agree that the shared vision should include targeting to the micro level –Integration with frequent shopper and other databases –Segmentation by consumer loyalty –Value determined to just drive incremental sales or just stave off disloyalty – consumer-by-consumer –Delivery via consumer’s preferred method –Driving volume for retailer and manufacturer –Maximizing profitability for retailer and manufacturer

7. How we get there Technology – but not really. Everything we need exists, we just need to agree on standards, deploy the technology and use it Retailer/Manufacturer cooperation – really. That is where the issues really lie –Who is in charge, who is in control? –Who gets veto power? –Who owns the customer? Retailer/Manufacturer trust – really, really. This is why progress has been so elusive. It is just not there. And it is a requirement Retailer/Manufacturer Alignment – forget about it.

8. Alignment We all come to conferences and agree that there needs to be retailer/manufacturer alignment But when it comes to coupons, it can never be achieved, and will never really exist –Pepsi really wants you to buy Tropicana Orange Juice – and really does not care where you buy it –Kroger really wants you to buy Orange Juice at Kroger – and really does not care which brand We need to accept this and move on understanding that there is not exact alignment between manufacturers and retailers The only way is accommodation and compromise

9. Moving Forward The industry needs to formally agree on a shared vision and shared implementation plan including operating standards The industry needs to develop approaches which accommodate both the retailer’s needs and the manufacturer’s needs, and stop pretending that they are the same, when they are not When those two things are done, the technical standards will be easy to identify and straight- forward to implement And then we can start working on the real future

10. The Real Future First, we must get some version of the shared vision implemented – it is a necessary prologue to the implementation of further technological progress We cannot jump to the next step – we need to complete the first step first. But once we have a real plan, we can start looking at the next level of new technology and implement that on top of the shared vision

11. The Real Future New innovations should include, but will not be limited to: –Sophisticated geo-tracking via GPS, linked to specific messaging –Self-correcting algorithms, which find programs, down to the consumer level, which are not working and adjust on the fly –Database integration, which integrates behavioral and attitudinal data to better understand individuals –Integration of new touch points and new devices –Integration of media, joining advertising and promotion, once and for all

12. The Real Future The shared vision is ambitious, and difficult But it is achievable And it not only provides a giant step forward for the industry But it also provides a great platform for tons of incremental innovation

13. Thank You David Diamond – david@ddiamondassociates.com