February 15, 2012
CPGmatters: CPG Marketers Ready to Roll with Holograms
Through a special arrangement, presented here for discussion is a summary of a current article from the monthly e-zine, CPGmatters.
The jig is up for counterfeiters of free and high-value coupons.
Most consumer packaged goods marketers will issue coupons bearing a special standardized hologram sometime during the first half of 2012, said Bud Miller, executive director of the Coupon Information Council (CIC).
Holograms are three-dimensional photographic images that are printed on a special foil. Their use on the free and high-value coupons is expected to deter the distribution of unauthorized copies, which has been a nettlesome issue for years. With some individual counterfeit coupons defrauding a company of more than $1 million apiece, holograms are likely to save the industry big money.
“Holograms are the only tool in our toolkit that cannot be easily circumvented by people using business or home office equipment,” Mr. Miller noted. “Everything else we’ve seen either can be replicated, or adjusted to the point where you can’t really tell the original from the attempted replica, or it is just too esoteric and people won’t notice the difference.
“A hologram is instantly recognizable. All a cashier just has to do is take a look at it. If they know what they are looking for, they will be able to verify that there is the CIC hologram on the coupon as quickly as their eye can see it,” he said.
There is an extra cost to putting the hologram on coupons — some estimate it to be two or three cents each — so it is not cost-effective to use it on every one. Said Mr. Miller, “But when you have very high-value coupons, the exposure can be significant. A single counterfeit — if it gets into a runaway condition — can easily cost a company more than a million dollars. You have to weigh the cost versus the benefits.”
A debate ensues on whether the hologram technology should be used on only “high-value” coupons — those that usually represent a more significant reduction of a product’s cost than an ordinary coupon.
Retailers are monitoring the hologram development. “This is a leading technology that, while it doesn’t have enough penetration in the marketplace yet, it has the potential to be a deterrent against fraud,” said Heather Garlich, a spokesperson for the Food Marketing Institute, Arlington, Va. “We’ll be watching this technology.”
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Discussion Questions
Discussion Questions: Are holograms the answer to coupon counterfeiters? Should retailers be picking up any of the added costs involved with using this protective technology?
Poll
This sounds like a commentary on paper coupons, only with no mention of their proportion in the world of couponing, or to what extent counterfeiting has had an impact.
And what happens to digital coupons? Isn’t it the case that retailers are sending coupons onto our smartphones for use in the store?
I look forward to my colleagues’ discussion on this.
Certainly a good interim step in creating something that is visually distinct and doesn’t tie up the checkout line, but it gives me pause that we’re still looking at paper based solutions for paper based coupons. Instead of retailers funding this, I’d like to see them turn their time and attention to developing coupon smart cards and mobile solutions that provide instant seamless solutions for all parties concerned. Mobile redemption is still challenging in most retail environments, but reverting back to “stop and print” is not a shopper-centric solution.
Counterfeiting is the root of evil as often as the fruits of it. There is an incentive for the persistent counterfeiters. The test is who is better at that game; the counterfeiters or the preventers. Since the former seem more dedicated than the latter, don’t bet on holograms being saviors just yet.
Should retailers pick up any added costs in using this still unperfected process? I blush in abstention.
Holograms will drive amateurs out of the counterfeit coupon business, but true organized retail crime professionals will find a way to continue counterfeiting them (as an example, fake drivers licenses have not gone away as a result of holograms). There is probably enough upside to add holograms to high-value coupons; manufacturers will have to negotiate cost issues with retailers. One option could be some kind of incentive where retailers pay a percentage based on how many (or few) counterfeits pass through the system.
Please, stop the madness! The whole couponing system is broken. Having to carry around tiny shreds of paper to purchase an item which has an artificially jacked-up price makes no sense. Let’s concentrate instead on creating digital brand relationships that allow customers to announce their affinity to a certain product, then reward them with a slightly lower price.
I am reminded of the saying “in the race between arms and armor, arms always wins.”
If the incentive (read: coupon value) is high enough, counterfeiters will figure out how to forge the hologram, too.
This has happened with Microsoft software and NFL logos, and it will happen with these holograms too.
And no matter what, this will add cost to each and every coupon distributed, which adds up fast. CPGs we work with report an all-in cost per redeemed coupon that is generally well over $1 (over and above the face value) — and often over $4 — once all costs are factored in (design, printing, distribution, handling fees, clearing fees, etc.). Even adding one half-cent per coupon printed for the holograms can add another $0.25 or more per redeemed coupon, depending on redemption rate.
Shopper-identified digital load-to-card offers are the only long-term solution.
Coupon fraud — especially involving high-value offers — is a major problem that results in millions of dollars in losses for marketers. I applaud the Coupon Information Council for its leadership on this issue on behalf of manufacturers.
Digital coupons are hot nowadays and will likely continue to grow. But here’s a reality check: the total quantity of digital coupons don’t yet exceed 1% of all coupons distributed in the U.S.
Efforts to improve print coupon distribution and redemption are welcome. There is more work to be done.
Holograms will deter only the amateur counterfeiters. I’d anticipate some short-term protection until the determined professionals learn how to adapt. That may indeed be worthwhile, but I’d counsel practitioners not to rest there. Fully closed-loop distribution with unique identification and real-time redemption will be a more enduring answer — for both paper and electronic offers.
The only cost retailers should incur is for up-to-date POS card readers that accept “tap-and-go” NFC interactions with mobile wallets. Since this is the new standard anyway, they will be replaced in the routine cycle without concern. Faster payment from redemption will more than make up for any costs.
How are holograms applied to coupons from FSIs, computer-generated, and digital versions? How are cashiers to be notified about which coupons they should be examining for holograms? Since this is supposedly a “CPG Matters” matter, at what level is a CPG coupon considered high-value? What is a real-world example of a CPG coupon being counterfeited at a cost of $1 million? Inquiring minds want to know.
There is definitely added cost end-to-end, and I do not see any value-added from putting a hologram on a coupon.
Maybe I’m far to the right but I believe there is no such thing as a counterfeit coupon. In order to use a coupon a purchase has to be made, which I thought was the intended effect.
Consumers still love to hold the paper coupons in their hands. It has an intrinsic value. This will help the challenge, however, the cost will have to come down over time to make it stick.
They are decidely not the answer unless retailers stop accepting print-at-home coupons, which continue to be on a high growth curve, in my opinion. They may help with fraud prevention for FSI delivered coupons, but until they have the ability to blanket all forms of CPG couponing, fraud will continue. As for retailers picking up any incremental cost, please. You clearly don’t know retailer behavior….
Holograms will help as long as the retailer front line pays attention to the document itself. However, as many of the high-value coupons are issued by customer service departments, another great control resource is a CRM solution that can help to identify fraud.
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This sounds like a commentary on paper coupons, only with no mention of their proportion in the world of couponing, or to what extent counterfeiting has had an impact.
And what happens to digital coupons? Isn’t it the case that retailers are sending coupons onto our smartphones for use in the store?
I look forward to my colleagues’ discussion on this.
Certainly a good interim step in creating something that is visually distinct and doesn’t tie up the checkout line, but it gives me pause that we’re still looking at paper based solutions for paper based coupons. Instead of retailers funding this, I’d like to see them turn their time and attention to developing coupon smart cards and mobile solutions that provide instant seamless solutions for all parties concerned. Mobile redemption is still challenging in most retail environments, but reverting back to “stop and print” is not a shopper-centric solution.
Counterfeiting is the root of evil as often as the fruits of it. There is an incentive for the persistent counterfeiters. The test is who is better at that game; the counterfeiters or the preventers. Since the former seem more dedicated than the latter, don’t bet on holograms being saviors just yet.
Should retailers pick up any added costs in using this still unperfected process? I blush in abstention.
Holograms will drive amateurs out of the counterfeit coupon business, but true organized retail crime professionals will find a way to continue counterfeiting them (as an example, fake drivers licenses have not gone away as a result of holograms). There is probably enough upside to add holograms to high-value coupons; manufacturers will have to negotiate cost issues with retailers. One option could be some kind of incentive where retailers pay a percentage based on how many (or few) counterfeits pass through the system.
Please, stop the madness! The whole couponing system is broken. Having to carry around tiny shreds of paper to purchase an item which has an artificially jacked-up price makes no sense. Let’s concentrate instead on creating digital brand relationships that allow customers to announce their affinity to a certain product, then reward them with a slightly lower price.
I am reminded of the saying “in the race between arms and armor, arms always wins.”
If the incentive (read: coupon value) is high enough, counterfeiters will figure out how to forge the hologram, too.
This has happened with Microsoft software and NFL logos, and it will happen with these holograms too.
And no matter what, this will add cost to each and every coupon distributed, which adds up fast. CPGs we work with report an all-in cost per redeemed coupon that is generally well over $1 (over and above the face value) — and often over $4 — once all costs are factored in (design, printing, distribution, handling fees, clearing fees, etc.). Even adding one half-cent per coupon printed for the holograms can add another $0.25 or more per redeemed coupon, depending on redemption rate.
Shopper-identified digital load-to-card offers are the only long-term solution.
Coupon fraud — especially involving high-value offers — is a major problem that results in millions of dollars in losses for marketers. I applaud the Coupon Information Council for its leadership on this issue on behalf of manufacturers.
Digital coupons are hot nowadays and will likely continue to grow. But here’s a reality check: the total quantity of digital coupons don’t yet exceed 1% of all coupons distributed in the U.S.
Efforts to improve print coupon distribution and redemption are welcome. There is more work to be done.
Holograms will deter only the amateur counterfeiters. I’d anticipate some short-term protection until the determined professionals learn how to adapt. That may indeed be worthwhile, but I’d counsel practitioners not to rest there. Fully closed-loop distribution with unique identification and real-time redemption will be a more enduring answer — for both paper and electronic offers.
The only cost retailers should incur is for up-to-date POS card readers that accept “tap-and-go” NFC interactions with mobile wallets. Since this is the new standard anyway, they will be replaced in the routine cycle without concern. Faster payment from redemption will more than make up for any costs.
How are holograms applied to coupons from FSIs, computer-generated, and digital versions? How are cashiers to be notified about which coupons they should be examining for holograms? Since this is supposedly a “CPG Matters” matter, at what level is a CPG coupon considered high-value? What is a real-world example of a CPG coupon being counterfeited at a cost of $1 million? Inquiring minds want to know.
There is definitely added cost end-to-end, and I do not see any value-added from putting a hologram on a coupon.
Maybe I’m far to the right but I believe there is no such thing as a counterfeit coupon. In order to use a coupon a purchase has to be made, which I thought was the intended effect.
Consumers still love to hold the paper coupons in their hands. It has an intrinsic value. This will help the challenge, however, the cost will have to come down over time to make it stick.
They are decidely not the answer unless retailers stop accepting print-at-home coupons, which continue to be on a high growth curve, in my opinion. They may help with fraud prevention for FSI delivered coupons, but until they have the ability to blanket all forms of CPG couponing, fraud will continue. As for retailers picking up any incremental cost, please. You clearly don’t know retailer behavior….
Holograms will help as long as the retailer front line pays attention to the document itself. However, as many of the high-value coupons are issued by customer service departments, another great control resource is a CRM solution that can help to identify fraud.