Advertiser deployment of coupons grows: Report

By Mickey Alam Khan

March 11, 2008

Neil Strother is analyst for JupiterResearch

Advertiser deployment of mobile coupons is growing as consumers show increasing interest in receiving such offers on their handsets, according to a new report.

JupiterResearch found that an estimated 30 percent of consumers are interested in receiving coupons on their mobile phones. However, at 1 percent, mobile coupons’ penetration is low.

“What seems to be working now are fairly low-cost items, restaurant-type mobile coupons,” said Neil Strother, Kirkland, WA-based analyst at JupiterResearch.

Recent efforts from fast-food chain Subway and hair salon giant Supercuts is evidence that mobile coupons work for categories that require repeat visits from customers (see Subway story and Supercuts article).

JupiterResearch expects more advertisers to use mobile coupons and promotions next year. But growth will be in the single digits.

Text book offer

To gain wider usage, mobile coupons must focus on highly relevant offers, deliver value, manage frequency and give the consumer control, JupiterResearch said in its report titled, “Mobile Coupons: Identifying New Opportunities Beyond Early Trials.”

Features such as geo-targeting, real-time offers, personalization, time-of-day redemption, lower cost of delivery and a trigger for impulse purchases make mobile coupons more attractive than their print variants.

That said, redemption issues hobble widespread advertiser adoption of mobile coupons.

Not many retailers have systems that can read coupons directly from handset screens. This inability means that point-of-sale systems need another method to verify and track mobile coupons.

Redemption and tracking of mobile coupons is currently not as sophisticated the print coupons process. The store sales clerk has to enter the code manually in a cash register, match it with a customer’s loyalty card number or write it on paper.

“In practice, you can’t necessarily take a phone with a coupon on it to a redemption point of sale and have a machine read it,” Mr. Strother said. “So what has to happen is a sales clerk has to match a code or write. The tracking of the coupon can be tricky at this point.

But that can’t be stopping mobile coupons – it’s just one of the hindrances, he said.

“It’s one of those chicken-and-egg things,” Mr. Strother said. “At any given store you could walk in to a store with a cell phone with a coupon it and show it to a clerk who would write it down and that would be cumbersome if there were a lot of people in line behind you.

“As mobile couponing scales, these rudimentary redemptions wouldn’t work,” he said. “Over time, that hurdle will be figured out as the need grows.”

With mobile there is activity required both from the consumer and the advertiser side.

“It’s not that the market is failing on mobile coupons,” Mr. Strother said, “but that as with any new form of advertising, it takes time for consumers to adapt.”