Promotional labeling is a broad term. In general, this market is the intersection between sales, marketing and converting. Brand owners want to sell as much of their product as possible, and turn to marketers to come up with clever ways to do so. Then, converters bring their vision to life.
Though the list of what’s considered a promotional label is quite long – coupons, games, scratch-off tickets, hang tags, bumper stickers, and so on – coupons are the most commonly used promotional label. They’re used on practically everything – from individual grocery items with extended information labels to mass-mailed, company-specific coupons complete with bar codes and/or QR codes. And, they’re used by practically everyone.
According to NCH Marketing Services of Deerfield, IL, USA – a global business that focuses on the redemption, settlement and analysis of promotional offers – coupons have a well-documented, multi-generational appeal. Erin Aydelott of NCH Marketing Services says that, while baby boomers continue to have the largest influence on the American economy (they account for a remarkable 50% of US spending), the next generation of spenders is quickly starting to catch up.
“As the new generation comes forward, marketers are finding that echo boomers are very different from their parents. While the oldest baby boomers (those born between 1946-1964) are nearing retirement age, the oldest echo boomers (born between 1982-1994) are just entering the work force and living independently for the first time. These generations are known for having different attitudes and different media consumption habits,” Aydelott says.
Despite these generational differences, NCH’s most recent Consumer Survey suggests that coupons are an effective method for influencing the purchase decisions of both baby boomers and echo boomers.
In fact, 88% of baby boomers report using coupons at supermarkets, compared to 86% of echo boomers. Among those who use coupons, Aydelott says, 94% of baby boomers and 82% of echo boomers say that coupons influence their shopping lists. The most interesting fact for converters, however, is that nearly 90% of shoppers in both groups get their coupons from in-store media. Downloadable coupons are popular, at approximately 64%, but have a long way to go before they catch up with the tangible, immediately gratifying promotions found in stores.
Given the universal appeal of coupons and other promotional labels, it’s a market worth paying attention to for converters.
Here, three companies with a combined 75 years of experience in this market share their perspective on its past, present and potential.
Luminer Converting, based in Lakewood, NJ, USA, has been in the promotional market for about 18 years of its 22-year existence. According to Tom Spina, president and CEO of Luminer, the company’s multi-web capabilities are really what got it into this market.
“The promotional market is really made up of two categories: in-pack and on-pack,” he says. “Luminer is in both areas. The in-pack area for us has been predominantly kids promotions in products such as cereals and TV diners. This market had its heyday in the early- to mid-2000s. Cost cutting and on-pack promotions has really reduced this market over the last several years. Moms were not happy paying more for their children’s cereals just to get some sort of tattoo or sticker game in the box.”
According to Spina, in-pack products consist of many different raw materials including skin contact inks, clean release products, color and temperature-changing inks, lottery numbering, scratch off inks, and many different type of web materials not specifically associated with the label printing industry. “Ones ability to manage these materials in a high-speed converting environment is what determines success or failure in this market,” he says.
To lessen cost and to generate more shelf appeal, Spina says, many consumer brands have turned to on-pack promotions. Typically, these promotions would be clean-release coupons, or folded coupons that can be applied during high-speed applications. In this case, the promotional product is on the outside of the box or bottle, allowing for immediate customer interaction.
“Again, the ability to handle multi-web processes in-line is critical to deliver cost effective promotional products to the typical consumer product company,” he says.
While the economy negatively affected many markets as a whole, Spina says that the promotional label market is different. The dual nature of the market – in-pack and on-pack – allowed for some fluctuation.
“I would say the downturn negatively effected the in-pack promotional products as they were typically more expensive and added cost to the consumer product brand – not a good image in the downturn,” he says. “However, for the same reason, the downturn allowed for growth in the on-pack market. These couponing label type products allow for instant cross-brand selling, instant money off at the register, (which is always a selling point), and immediate customer interaction, giving the brand differentiation from its store shelf rival. And this was all at very cost effective prices to the consumer products companies.”
In addition to the cross-brand or combination coupon labels (for example, “buy one, get one 50% off”), Spina says that a big area of growth is promotional labels that increase customer interaction and knowledge.
“For instance, if you buy a steak, underneath the label might be a great grilling recipe,” he says. “And of course there is always the ‘lottery game’ use. We all know the McDonald’s Monopoly game.”
Spina adds that this is one market in which converters are uniquely positioned to contribute to the marketing and sales strategy, which is a huge plus in a competitive climate. “Growth is for promotional label converters who bring these ideas to their customer base and show them how to incorporate these promotional ideas into their current label products. This was an area where only the large CPCs were involved, but now any product on the shelf in a retail store can use this technology,” he says.
Buffalo, NY, USA-based JH Bertrand has been in the promotional label market for 31 years and, according to CEO Jeff Bertrand, the company was one of the early leaders in this space. In his years of experience, Bertrand says that the market has changed quite significantly over the last few years, though due more to technology than the economy.
“QR codes and smartphones are taking some of the promotional business,” he says. “On the face value, a QR code on the package is considerably less expansive than a promotional extended content label. You don’t have to apply it. You can print it directly on the package as part of the existing artwork, so it costs nothing.”
Bertrand says, however, that there are some significant drawbacks to a QR code. For starters, he says, it takes a smartphone scanner
to activate it.
“You have to take the phone, find the scanner app, turn on the scanner and scan it – so there are steps to get to the information. And not everyone has a smartphone. Furthermore, QR codes can be missed by a consumer because they often blend into the package.”
Conversely, he says, promotional pieces are attention-getting by nature. They are designed to stand out. “They are physical in a world that has moved so much to cyberspace,” he says.
Ultimately, Bertrand sees the two options as valuable tools to for promotions. He believes that in the near future, brand managers will realize that smart phones, QR codes and promotional extended content labels can work together to create very powerful promotional campaigns.
In addition to changing technology, Bertrand says that a changing economy has created a more cautious consumer population. “Furthermore,” he says, “more people are in the business right now so this is creating a fierce competitive environment for promotional extended content labels. Label converters can never see much greater than one month out. Recently, we have seen an upswing in promotional opportunities.”
The most common request from JH Bertrand’s promotional customers are standard label extended content labels, typically three or four printed panels with four-color process on both sides, laminated over a clear PS base label.
“About 35% want four-color process over one-color for their promotion,” he says. They are also asking for quicker delivery times. “They are ordering more frequently with less quantity.”
Bertrand says that he doesn’t have to look very far to know what the future of promotional labeling will hold. “I watch my kids make decisions about what products they want using their phones and tablets,” he says. “Certainly, social media has a big influence and will continue to grow because of friend recommendations.”
However, Bertrand believes that there is a strong segment of “savvy young people” who are now are also attracted to traditional on-product promotions like coupon labels. He says he believes deeply that packaging will always help in the decision-making process, particularly as today’s generation grows up, gets jobs and starts making their own buying decisions.
“Both promotional and extended content, in combination with the smartphone or whatever technology, will be a big part of the future,” he says. “I know this because everybody was so crazy about getting things online and getting rid of physical printing. Now, the direct mail business is on the upswing because business people recognize that physical printing still helps drive decisions. I think packaging is a critical part of a consumer’s decision-making process, unless the day comes when a package doesn’t need a label. Then, of course, all bets are off.”
Labels West, Woodinville, WA, USA, has been producing promotional labels for more than 25 years. Recently, John Shanley, president of Labels West, says that a popular promotional label strategy has been to encourage people to visit a website that which futher convey promotional messages.
Labels West, he says, has invested heavily in variable print capabilities in order to be able to customize each individual label, if necessary. While information could be printed directly on the package, Shanley says that using a label makes more sense.
“It is ultimately cheaper to add the label to an existing generic package because of the flexibility it allows,” he says. “Many times a small test market is chosen for the promo. Other times, the company wants to have a slightly different message across different markets. It would be very expensive to print multiple versions or very short run lengths of the entire package when a small inexpensive label would work just fine. If the promotion isn’t working or needs to be changed, it is relatively easy to change or eliminate the label.”
While Shanley says that he is not at liberty to speak for the entire promotional market, he does say that Labels West experienced growth throughout the recession, though this wasn’t common.
“When times are difficult many companies look to reduce their marketing budgets as a quick way to save money. They really should be doing the opposite. I have noticed expanded content labels being used more for instruction purposes and less for promotional purposes over the last few years. IRC’s (immediately redeemable coupons) have grown in popularity during the same time period. They are less expensive to produce but do have less space for printing your message. As things have recovered, we are seeing more money spent on promotional labeling for sure.”
Shanley believes that the future of promotional labeling will be bright, given the possibilities it offers. “The ability to add a promotional message to existing, generic packaging in the exact quantity required is a big advantage. If a promotion is looking like it is successful then it is easy to print more labels and increase the quantity of packages going out with the message.
“At the same time, if a promotion isn’t working out the way it is supposed to, the labels can stop being applied or the message can be easily changed without having to throw away a bunch of expensive pre-printed packages.”
Shanley adds that the ability to personalize or make each label unique in some way will undoubtedly become more and more popular with marketers. And, with the trend towards digital, many converters will be ready and able to help.