Digital Coupons

Digital Coupons

In marketing, a coupon is a ticket or document that can be redeemed for a financial discount or rebate when purchasing a product.

Customarily, coupons are issued by manufacturers of consumer packaged goods or by retailers, to be used in retail stores as a part of sales promotions. They are often widely distributed through mail, coupon envelopes, magazines, newspapers, the Internet (social media, email newsletter), directly from the retailer, and mobile devices such as cell phones. Since only price conscious consumers are likely to spend the time to claim the savings, coupons function as a form of price discrimination, enabling retailers to offer a lower price only to those consumers who would otherwise go elsewhere. In addition, coupons can also be targeted selectively to regional markets in which price competition is great.

Overview

It’s not uncommon to see coupon redemption rates rise during a recession, but recently there has been significant growth and innovation in the market for digital and mobile coupons. In 2010, the use of digital coupons by manufacturers grew 60% according to Kantar Media Group; however digital coupons only represent 1% of total distribution.

A key thing to note about digital coupons is that they have redemption rates close to twenty times higher than free-standing inserts and significantly higher than direct mail and electronic dispensed coupons.

Traditional coupons may still hold the lion’s share of the market, but digital coupons are growing faster. Retailers are using digital coupons to drive consumers to their websites, but brands can benefit from the shorter lead times that digital coupons offer as well as getting around any exclusivity restrictions, among other benefits (Source: Ad Age). In this POV we’ve provided a summary of available digital coupon varieties including information on mobile coupons.

Where can you find digital coupons?

Digital coupons can be delivered to consumers through a variety of channels:
Coupon aggregator sites like Coupons.com, Red Plum, Coupon Cabin, Coupon Mom, Dealery.com and countless others allow users to easily browse coupons that can be localized to their zip code and then print them out — the modern equivalent to a Sunday circular. The deals are activated when users bring their printed out coupons to the register.

Brand Websites: By partnering with vendors like Coupons.com, marketers can provide printable coupons to visitors on their own sites (for example, serving Kraft coupons directly from Kraftfoods.com).

Retailer Websites: Retailers like Kroger and Safeway are making coupons available directly from their sites, and allowing consumers to connect them to their loyalty cards or print them out. The benefit of going directly to the retailer site is that consumers know these coupons will be accepted at the register (See an example of a coupon call to action on Kroger.com at right).
Digital Display Media: Consumers can be alerted to finding digital coupons through online banners and display media, with calls to action such as “click for a coupon.”

Social Media: Social networks and communities are great venues for coupons as consumers are already expecting to receive some added value for joining brand communities. Furthermore, coupons distributed socially have the potential to be spread virally. One example of how to leverage a social media coupon is putting a coupon offer on a non-fan Facebook landing page in order to encourage fans to Like your page and buy your product.

Email: Many sites will offer email newsletters that deliver coupons directly to consumers who have opted in, and brands can integrate them into their email marketing.

Digital FSI’s: A digital FSI (free-standing insert) is a way of spreading your product’s coupon or promotion across a large content network, similar to placing a media buy with an ad network. 

Several coupon vendors have large established “coupon content networks” and offer mass reach. Some offer geo-targeting and pay-for-performance deals. 

An interesting way of delivering some of these coupons is to integrate them into highly relevant content such as within online recipe ingredient links. 


Which consumers are using digital coupons?

Consumers who are using digital coupons represent a desirable consumer group:-
Digital coupon printers are 35% more likely to have a household income of $75K+ compared to the general population

They are better educated: digital coupon printers are 17% more likely to have graduated college or more than the general population

They are also younger and more likely to live in households with more children

Pros & Cons
Pros of using digital coupons:

Convenience: Consumers no longer have to pay and wait for Sunday newspapers to clip coupons

Metrics: Digital coupons can offer better tracking opportunities for brands

Speed: Digital allows brands to create offers/coupons with shorter lead times

Lower costs: Digital coupons pass the cost of printing on to consumers. Also, brands can set a print limit per IP address so consumers can only print a single coupon

Capture demand: Marketers can use digital coupons to take advantage of consumers that are searching for a particular product or brand

Higher redemption rates: Better targeting leads to improved redemption rates

Sharability: Digital coupons can be easily shared by consumers
Cons of using digital coupons:

Reach: Traditional coupons still reach more users, even among Internet users

Audience: Keep in mind that your traditional coupon clipping target may not be the same as your digital coupon audience

In-store Experience: Not all retailers accept printed coupons, and for printed coupons consumers will still have to remember to bring the print outs

Application Download: Some coupon programs will require users to download an application in order to access the offer, additional steps may cause users to drop off

Paid Media Support: Often times additional paid media support will be necessary to achieve your campaign print goals

Mobile Coupons

Mobile coupons can be delivered via text message, custom apps, barcodes or other formats. Coupons delivered via a mobile device are gaining attention; however, their use is somewhat hampered by the lack of infrastructure at retail locations to implement them at the register.

Earlier this year, Target became the first major retailer to process and accept mobile coupons. To date it is the first large scale retailer to allow consumers to redeem coupons via mobile barcodes that can be scanned at the register 

A more seamless way of connecting mobile users to coupons is by connecting them via loyalty cards. Companies like Cellfire and Cardstar will send shoppers coupon offers directly to their mobile device (including iPads) to browse, select, and then load them directly on their loyalty cards.

Audience:

Like digital coupons, mobile coupon users are younger than traditional coupon clippers 

Pros of mobile coupons:

Convenience: Mobile coupons offer the ultimate convenience, as they are easier to work with than traditional coupons; no searching, sorting, clipping or remembering to bring them to the store necessary. Also, there is no need to have another loyalty card in your wallet or on your keychain.
Cool factor: Having access to mobile coupons may attract a younger/more affluent target that does not believe in the merits of traditional coupon clipping.
Cons of mobile coupons:

Limited Audience: This has yet to become mainstream usage among consumers; it’s still an early adopter activity. According to eMarketer just under 15% of mobile phone users have ever used a mobile coupon.

Lack of Adoption In-Store: Few retailers have the infrastructure to scan mobile coupon codes.

Other forms of digital coupons

Groupon: Groupon began in 2008 as an email-based service for local deals that were only activated when a certain threshold of users sign up for that deal. Today, Groupon has 25 million subscribers worldwide (15MM in North America) and there are many imitators out there following in their footsteps like TheDealist, LivingSocial, and several other brands and retailers. For example, Walmart recently launched Crowdsaver on their Facebook Page. Crowdsaver works similar to Groupon, putting the success of achieving a deal in the hands of the consumers. Walmart will set a threshold of “likes” that an offer must reach before the deal becomes available to those who “liked” it.

Foursquare: The heavily buzzed about location based social network often allows retailers, restaurants, bars and other locations to offer local specials based on where users check into. They are now expanding their services in a partnership with Safeway and PepsiCo. Foursquare is piloting a test program where Safeway visitors can link their loyalty card accounts to their Foursquare accounts. When they check in to Safeway Stores, they will receive PepsiCo related coupons that print right at the cashier. The second component of this program actually links to user behavior, where consumers who check in to the gym often will receive coupons for gym related products, such as Sobe Lifewater.


E-Commerce Coupon Codes: With the growth of e-commerce has come the growth of searching for coupon codes before making purchases online. Consumers are increasingly conducting online searches, such as “Orbitz Coupon Codes,” prior to booking travel with the hope of attaining a promotion code that will save them money upon checkout. Some of the better-known sites for this type of coupon are RetailMeNot.com and DealTaker.com.

Facebook Deals: Facebook is offering four types of deals that marketers can post connected to Places that they own:

Individual: These are for one-off deals such as a discount or a free gift with a purchase. For instance, JCPenney is offering Facebook Places users $10 off any $50 purchase. Marketers can limit reward recipients to a certain number of people who check in.

Friend: Businesses can reward groups of up to eight people checking in together, with the goal of generating more News Feed exposure.

Loyalty: Marketers can reward consumers who check in between two and twenty times with this punch-card type of program.

Charity: Each time a visitor checks in, a business can donate to a partner charity.
 For instance, The North Face will donate $1 to the National Park Foundation when any Facebook Places user checks in to a North Face retail store or one of roughly 400 national parks. There are no costs involved for deals, and as this is rolled out more broadly,

 Place owners will be able to create a deal with a one-page form on Facebook’s site (not the mobile versions). More than 20 marketers are offering deals at the outset, and all are listed on Facebook’s blog.

 Concluding Thoughts

Why does digital couponing make sense for marketers?

“The New Normal”: Many researchers believe that because of the recession and slow recovery, many consumers will not abandon their newly adopted frugality and continue to use money-saving techniques like coupons. This may bring concern to many marketers, but when leveraged correctly digital coupons can be a great way to drive trial and usage, and digital coupons allow manufacturers to set limits to prevent issues with over-redemption.

Social Network Benefits: Not only are digital coupons great at driving trial but they are also a great way to increase you Facebook fan base. Many brands have used digital coupons as an incentive to get new fans or followers. In fact, a recent report from ExactTarget and CoTweet revealed that the top reason consumers will “like” a company or brand on Facebook is to receive discounts and coupons 

Battle against Private label: Competition with retailers and their private label brands is intensifying. Digital coupons can provide brands with a way to keep their consumers interested in their products.
Growth of Smartphones: Technology is making shopper-marketing efforts more important than ever. When considering long-term growth, marketers should look to digital and mobile coupon efforts to stay ahead of the curve.

What are call to action buttons?

Call-to-action (CTA) buttons are the buttons you use in your website and on your landing pages to guide users towards your goal conversion. It's the part of the landing page that the user needs to click in order to take the action you want them to take.