May 7, 2013

Free Standing Inserts (FSI) and how to support Wal-Mart distribution

Tony Treadway

We solved a a frequent dilemma recently when a regional brand wanted to demonstrate its support of new distribution via Wal-Mart. Here was the challenge. This food manufacturer’s distribution footprint was basically only the Mid-Atlantic region. They had just earned a significantly broader distribution into Wal-Mart Distribution Centers (DC) that deliver products to Wal-Mart SuperCenters within a 250-mile radius. On a limited budget how do you educate consumers about the value of your product in new markets and drive them to Wal-Marts carrying their products (and hopefully to other supermarkets in the area that currently don’t carry their products)?

Unglamorous as they may be, Free Standing Inserts (FSI) are still the lowest-cost entry into branding for a broad reach. If you don’t know FSIs, they are the four-color inserts in your Sunday newspaper touting everything from canned and frozen foods to dishwashing liquids and offering discount coupons to promote trial. While circulation of newspapers to American readers is now less than 18%, more than 75% of all supermarket coupons that are redeemed comes from FSIs. At less than $4 CPM for a 1/2 page FSI, you can achieve a broad reach to those who know to look each week for discount coupons utilizing this vehicle.

Our client knows that his products must sell in his new “pioneer” markets and sell quickly to maintain his new Wal-Mart distribution in Ohio, Louisiana, Florida and Texas. Our first step was to assess each Wal-Mart DC to determine how many supercenters could be served with the newspaper distribution of our supplier. The initial numbers showed that we would need to purchase more than 32 million insertions to fully support the new distribution. That simply wasn’t possible. Next, we started to pull in the radius of the circles around the most valuable DC markets until we hit the affordable budget number. We arrived at five DCs that we could get the most bang for our buck from at about a 50-mile radius of the DC. That meant that we could reach about seven million consumers. Our supplier explained to me that this is the first time an ad agency has used this methodology to specifically target DCs. Oh well.

We did have the option to tell shoppers to specifically find the products by mentioning Wal-Mart and utilizing the Wal-Mart logo. That would cost extra and our strategy was to not only support Wal-Mart but to entice consumers to go to their favorite supermarket with our 50¢ off coupon to potential spark something we term as forced distribution. It seldom occurs, but we have experienced our clients getting phone calls from retailers who experienced disappointed customers who could not find the clients item in their stores. The upside of the FSI investment could thus spark new distribution – especially in new markets.

It was a smart, cost-effective solution for this client and Wal-Mart should be happy with the support by the manufacturer in pulling the product through initial distribution via the coupon. FSIs are an old-school science that is slowly giving way to other forms of couponing, but in the right situation can be a good option.

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Tony Treadway


President & CEO

Regarded in the advertising and PR industry as a top strategist, Tony is considered one of the most respected marketing minds in the business, especially in the $600 billion foodservice industry. As president, he leads Creative Energy in serving a variety of regional and national accounts in the textile, hardware, building materials, electronics, nuclear power and health care markets.