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US marketers explore digital versions of "discount coupons"
Date: 27/02/2009
According to the Promotion Marketing Association's Coupon Council, Americans redeemed about 2.6bn paper coupons last year, worth almost $3bn. But this was less than 1 per cent of the estimated 317bn coupons issued by branded goods companies and retailers.
Redemption levels have been dropping for several years - in 1993, the redemption level was about 2.3 per cent - reflecting both changing habits and declining newspaper readership.
The increased interest in digital coupons in part reflects a frugal mood among US consumers and the maturity of secure technology to handle coupon distribution. But it is also the result of a more fundamental shift in the traditional couponing industry, due to the profound decline of the newspaper business.
According to Steven Boal, who founded Coupons Inc, some clients are now increasing the share of their direct promotions budget allocated to his online printable coupons to as much as 40 to 50 per cent, from a normal level of 10 to 20 per cent.
Laura Keely, director of marketing promotions at Kimberly-Clark, whose brands include Huggies and Kleenex, says changes in the age of the audience that is reading newspapers - and clipping coupons - is a significant factor in her interest in online couponing.
"What we're seeing is that younger consumers aren't buying a Sunday newspaper and clipping those coupons," she says. "The numbers drop off significantly when you are looking at an 18-24 consumer. If she's not reading the paper and cutting that coupon, where is she? She's online."
As the coupon clipper moves on to the web, printable internet coupons appear to be emerging as the dominant strategy for reaching younger consumers, although not all companies are convinced. Procter & Gamble, for instance, says it has opted not to issue printable online coupons because of concerns over potential counterfeiting fraud. Instead, P&G mails coupons to customers who apply online. It is also operating a system for loading coupons on to loyalty cards at both Kroger and its rival Safeway.
But Mr Boal at Coupons Inc argues that fully mobile shopping is still five to eight years off. Meanwhile, printing out coupons, rather than storing codes on a mobile phone to show to a cashier, is the most attractive option for a busy supermarket shopper, he says. "Mum doesn't text a box of cereal to get a coupon. She's busy stopping her two children pulling things off the shelves."
Cellfire's offers, many of which deliver a bar and text code that needs to be shown to a retailer at the checkout, have redemption rates of 20 to 30 per cent, against a rate of less than one percentage point for newspaper coupon inserts.
Other companies are also increasingly interested in the intersection of the mobile phone and shopping. Kraft, the largest US food company, launched an iPhone application this year that includes menus and a shopping list facility.
Source: Financial Times
WFA's Digital Network, comprising Global/ Regional Interactive Marketing Directors from within our membership regularly exchange insights on harnessing the value of new digital platforms. For more information, please contact Robert Dreblow: [email protected]
