Watch CBSN Live

Insignia, Valassis Sign Up SuperValu; NAM's Monopoly Crumbling?

Insignia Systems (ISIG) quietly issued a notice to the SEC before Thanksgiving stating that the tiny supermarket advertising agency had added 1,000 SuperValu stores to its point-of-purchase network, starting in May 2010.

Sounds boring unless you know the history: The stores come via Insignia's alliance with Valassis (VCI), which actually cut the deal with SuperValu (details here from Progressive Grocer). That deal comes after Valassis won a $300 million verdict against News America Marketing, the Rupert Murdoch-owned coupon giant that previously held a virtual monopoly on supermarket advertising.

So the Valassis-Insignia-SuperValu deal appears to show that since the verdict, NAM's hold over supermarkets is crumbling. Why might that be? Three possible reasons, ranked in descending order from least to most likely:

  1. The verdict was wrong -- NAM never had a monopoly over supermarkets as this deal proves.
  2. NAM has toned down its monopoly pricing practices that made it prohibitively expensive to advertise in its supermarkets if they didn't also buy newspaper coupons from NAM. So clients and supermarkets are taking advantage of the new, fairer price competition and some are falling Valassis' way.
  3. Supermarkets don't want to anger their food and packaged goods suppliers by going with NAM. Ever since the trial Valassis and Insignia have doubtless been remind their clients and supermarkets of NAM's more dubious tactics -- such as bumping up prices for companies that refused to go with NAM's coupons, a tactic that cakemaker Sara Lee described as "they are raping us and they enjoy it." Doubtless not everyone wants the NAM experience, no matter how large the company may be.
View CBS News In