Q&A: The Circular Evolution

p2pi undertone
Ben Flaccus, managing director, retail & CPG commerce, Undertone

We recently caught up with Ben Flaccus, managing director, retail & CPG commerce, Undertone, to discuss the evolution of circulars and how many retailers still haven’t made the full transition to digital circulars.

P2PI: What is the current state of the circular, from Undertone’s perspective?

Flaccus: There are massive challenges in the space. For many retailers, the circular is already the largest single line item in the marketing budget with CPMs [cost per thousand impressions] ranging from $25 to $120 for newspaper inserts, all the way up to $200 in CPM for household-level mailing. With print, paper and postage costs increasing, and more printers closing shop, it’s become harder than ever for retailers to cover their trade areas efficiently, even as economic anxiety and inflation concerns increase consumer demand for exactly these offers. Now, more than ever, retailers must look beyond print to distribute this valuable content.

P2PI: The move from print to digital circulars is not a new issue, by any means. Why is this still an issue so many years after digital circulars first began to appear?

Flaccus: While most retailers have taken the first step — digitizing and hosting the weekly ad on their site — adoption of digital media channels to distribute deal messaging is still in its infancy. Digital marketers don’t simply know what’s possible and often aren’t aware that they have access to this content. On the other side of the table, few digital providers are capable of the complexity to ingest and display offers that change on a weekly basis and, in many cases, must align with dozens of store-level pricing zones. Those digital providers who have experience in the space can be incredibly valuable resources, helping retailers apply best practices and guiding them toward increasing data-driven personalization and more engaging formats and channels.

P2PI: Are any retailers continuing to resist the move away from print circulars? If so, why?

Flaccus: The circular has traditionally sat at the center of the retailer marketing ecosystem and there is real fear around letting go of a channel that has been effective in driving store traffic and sales for decades. Shifting into the digital space often requires collaboration between internal stakeholder groups that haven’t historically worked together. Savvy marketing leaders are recognizing the need to bring these siloed teams together if they want to address the challenges in the space.

P2PI: Is it practical for some retailers to continue to have both versions co-exist?

Flaccus: Absolutely. Printed circulars can and should play a role, but with increasing trade area outages and rising costs, digital is moving quickly from a nice-to-have to an essential part of the circular marketing mix. It’s critical for retailers to begin testing into the digital space immediately if they don’t want to be left behind by the competition. One way to do this is to simply reapportion circular investment: Half the budget can remain in print while the increased efficiency of digital allows the remaining half to be split between digital distribution and cost savings that the retailer can reinvest elsewhere. This is a great way to address specific trade area outages while demonstrating the efficacy of digital to drive store traffic, omnichannel sales and return on ad spend. 

P2PI: How have digital circulars continued to evolve?

Flaccus: Digital solves the acute challenges around distribution and efficiency, but also presents a massive opportunity to evolve the circular concept and break free of the constraints of the print medium. Advantages include:

  • Granular targeting to reach specific audiences, stores, day parts, weather conditions.
  • Personalized content, messaging and offers based on first- and third-party data inputs, purchase history, location, weather, local competitors, etc.
  • Cross-channel distribution and optimization across standard and high-impact display, online video, CTV, social, audio and DOOH.
  • Unique insight into performance of products, offers, categories and messaging.
  • Opportunity to combine offer content with brand messaging, to create full-funnel ad experiences.
  • Measurement against omnichannel outcomes.
  • Flexibility to add/remove/adapt offers based on inventory, supply chain and other factors in near-real time.
  • Expansion of available offers, beyond what fits into the printed circular.

P2PI: Undertone has conducted research related to this topic. What did you learn?

Flaccus: Not surprisingly, we found that consumers are hungry for promotional content and eager for more ways to engage with it. Consumers are troubled by the impact of printed materials on the environment and frustrated with the number of circulars they receive as well as the relevancy of the majority of offers contained in them. Forty-nine percent of U.S. adults would opt out of receiving printed circulars if they could. Additionally, 64% stated that their ideal way to learn about weekly deals is an alternative to the printed circular, including digital, video and in-store. The results show that the winner in the weekly deals space will be the one that can offer a highly engaging, personalized experience that provides relevant information to the consumer.

P2PI: What does the future hold for print vs. digital circulars? Will we still be talking about this in five, 10 years?

Flaccus: I think it's fair to say that marketers will always see value in delivering promotional content. Access to more data, advancements in AI and increasingly complex decisioning engines will allow brands and retailers to micro-target consumer segments, delivering more relevant, curated promotions on a near 1-to-1 basis. Meanwhile, the inherent diversity of consumer media preferences will demand that this content be distributed through a multitude of channels, some of which have yet to emerge.

About Ben Flaccus: As Undertone's managing director, retail & CPG commerce, Flaccus combines a decade of digital media experience with a consultative and strategic approach to client partnerships. With extensive background in the retail category, he has seen firsthand how more relevant, dynamic content, messaging and offers drive the outcomes that matter most to advertisers while yielding unique and actionable insights. Prior to joining Undertone, Flaccus served as VP, sales, at Eyeview, where he led a cross-regional retail and CPG sales team.