Mobile couponing goes mainstream

Even as mobile advertising struggles to gain acceptance amongst carriers, brands and consumers, the mobile phone is quickly becoming a replacement for the 300 billion paper coupons issued every year in the United States. Industry forces are converging in today’s market to create the perfect storm for mobile coupons to take off: Consumers are increasingly price-sensitive, revenue is harder to come by and mobile phones are nearly ubiquitous.

In the past month, big names like Burger King, Dairy Queen, Victoria’s Secret, Unilever and ShopRite have gotten on board with mobile coupons in various forms, and according to Juniper Research analyst Howard Wilcox, where the big brands go, the rest of the industry will soon follow. Juniper expects coupons issued via mobile phones to increase by 30% during the next two years alone.

In the US, mobile couponing is emerging in three ways, said Jeff Orr, ABI Research senior analyst. Most common is through SMS text messages as an affinity program in which consumers text in a short code and receive a coupon in return, popular with the text-centric younger generation. Second is through an MMS message in a multimedia format. This less-widely supported method sends a two-dimensional bar code in an MMS message with an image, logo or brand in a barcode to be redeemed when scanned in-store. The third and least widespread example is Web-based fulfillment where the coupons appear on mobile Web sites, Orr said. Combined, these forms of mobile couponing are taking off in a way that mobile advertising has yet to.

“Generally, the majority of US consumers are opposed to mobile marketing,” Orr said. “They don’t think they’d want to participate, but that has been decreasing year-over-year. The number of consumers who said they would be willing to participate or accept some incentive, which suggests a coupon, goes up when it feels like it’s something they’d use every day –like a burger or coffee shop.”

The attractiveness of mobile couponing lies in the ability to make the coupons targeted and personal. Coupons on the mobile phone typically offer a much better redemption rate and are more cost-effective, Wilcox said, making them a win-win approach for retailers. For consumers, outside of the environmental benefits of going paperless, it is appealing insomuch as it is explicitly opt-in and targeted to their particular interests. The combination of an existing interest, a convenient delivery mechanism and money savings is making the market desirable for consumers as well, he said.

MOBILE COUPON INDUSTRY EXAMPLES

Mobile couponing technology is gaining traction in the Far East, specifically in Japan and Korea, according to Wilcox, but North America is catching up. Examples of services already taking hold in the US come from multiple verticals and vendors, each with a different take on mobile.

Globatel Media enables the delivery of e-coupons, contests and giveaways or location-based advertising from the PC to mobile phone. The service works by advertising a short code and a keyword to send to it. When a consumer responds, thus opting in, they begin to receive targeted coupons based on their particular brand preferences.

“Our belief is that text is the only technology besides voice that can reach every one of the 3.6 billion cell phones out there,” said president and CEO Robert Sanchez. “Only 9% of phones have data on them if you are trying to target an audience that requires an Internet connection or WAP. You have to use mobile couponing.”

Sanchez said that on 95% of Globatel’s campaigns, there is a return rate of better than 97% for all texts sent out, with only 3% of people opting out of the service.  Four-year-old Cellfire is experiencing similar unusually high return rates. Dan Kihanya, Cellfire’s vice president of consumer marketing, said the vendor consistently returns redemption rates in the teens compared to paper coupons’ return average of less than 1%. Cellfire is available on every mobile carrier and integrated into the decks of 10 top US carriers, and the service works with brands including supermarkets Kroger and Safeway and retailers Sears and Best Buy.