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Rebates key for retail software sales

Retail software sales have been stalled for several years, pushing publishers to turn to rebates as a way to pull in customers, according to a new report.

Software publishers have turned to rebates as a way to boost retail sales and lock in customers, according to a new research report.

The report, from advertising tracking company Beyen, found that 60 percent of the software sold through major retailers comes with a rebate offer. Deals range from a few bucks off the purchase to "net-to-zero" deals, in which the customer gets the product for free after the rebate.

Roger Lanctot, a researcher for Niagara Falls, N.Y.-based Beyen, said retail software sales have been stalled for several years. Attractive rebate offers draw customers to stores and give retailers a reason to prominently display a publisher's products

"It's important to publishers that they have exposure in the stores...to find new users of computer hardware and software," Lanctot said. "To justify their presence there, they need to be building traffic. One way to do that is to have very generous rebates."

Rebates work as well as actual price cuts in driving store traffic, but they have the added benefit for the publisher of providing useful customer information from completed rebate coupons, Lanctot said. Such information is valuable enough to publishers that they'll pay the added expense of hiring fulfillment centers to process rebate requests.

"It's an expensive exercise--that's how important new users are to the publisher," Lanctot said. "At the end of the day, it gets to be a wash for the publisher if the rebate price is around $19. Beyond that, it's starting to cost them money."

Productivity software, including antivirus programs, system utilities and tax preparation software, were the most common category for rebates, with more than 75 percent of all products advertised carrying rebate offers. Rebates were least common for entertainment software, including the booming PC game sector, with 28 percent of ads there carrying rebate deals.

The report was based on a survey of recent retail advertising in 102 daily newspapers serving 85 U.S. metropolitan areas.