Mobile couponing can be likened to the white whale of the mobile advertising industry. Over the last few years, I’ve heard about a number of tests of mobile coupon delivery — particularly for consumer packaged goods (CPG) companies. However, much of this talk reminds me of something Malcolm Gladwell said a few years ago at a Slate.com symposium on online media and the future of journalism:
Suppose we reversed things and all we had were computers and iPods and we didn’t have paper and I came along and I said, “I’ve got this really great idea, which is, we’re going to print this stuff on this thing called ‘paper,’ and you’ve never heard about it, but it has some real advantages. It’s incredibly cheap, it’s really light, you can stick it in your bag, you can take it with you, it doesn’t need any electricity, it’s pretty permanent, you can manipulate it, it’s tactile, you can fold it, you can do all these amazing things.
What would people say? They would say, “Oh my goodness, what an extraordinary breakthrough.”…Masses of funding [would come] from venture capitalists…who were suddenly enthused with this extraordinary thing called paper, and we realized, you know what, oh my goodness, we can send it through the mail really quickly and cheaply. It doesn’t cost that much…
Mr. Gladwell was talking about newspapers, which are in rapid decline, but he could also be talking about coupons. The latest figure reported by the Audit Bureau of Circulations shows newspaper readership in October was down 10.6 percent from a year ago and is now at its lowest level since 1941. Just 40 million Americans receive the Sunday paper. Yet, people still love their old-fashioned paper coupons. According to an April 2009 comScore report on the state of the U.S. online retail economy, the most common way that consumers get coupons is still by clipping them from newspapers. Forty-seven percent of consumers still get coupons this way. This comScore report didn’t track mobile couponing specifically, but the majority of ways that people used coupons involved paper — clipping from flyers, direct mail, coupons on receipts, and coupons on packaging, were all used by more than 30 percent of consumers. By contrast, a report from Scarborough Research showed that only 8 percent of U.S. consumers used mobile coupons. That’s fewer than comScore reported as using entertainment booklets.
It’s great to hear about the number of ways that advertisers can benefit from mobile coupons: cost savings from digital distribution, possibility of an ongoing one-on-one relationship between marketer and consumer, and more personalization. They can also be tied to other media by adding a scannable code to a print ad or a text message address to a TV spot or billboard. But, while these advertiser benefits are great, we need to think about the consumer. And consumers seem to prefer paper by a large margin. Paper coupons have many advantages. They’re light, fold up, and you can carry them in your purse or wallet. Paper coupons operate without a battery or Internet connection, and the consumer can use them no matter what model, operating system, or data plan they have. Old-fashioned coupons also are pretty good for marketers, because they can carry barcodes (trackable!) and they can be easily delivered through the mail or handed out in a store (they’re location aware). Also, paper doesn’t require large technology upgrades at the checkout counter. The checkout process is fraught enough without adding a layer for store and shopper.
In the short term, mobile couponing makes the most sense for certain types of retailers, such as casual dining and quick service restaurants, some clothing and department stores, and retail services, like hair salons. In most of these cases, a simple coupon code can be delivered via text message, much the way these companies already use coupon codes delivered via e-mail or online. These don’t require technology upgrades to link back to loyalty cards or consumers to download a special application. These companies should be aggressively testing mobile coupons now, because they control their own checkout lines and the volume in those lanes is going to be relatively low.
It’s going to be a longer road for many CPG companies and grocery stores to get this thing figured out. The barriers are high, and right now, mobile coupons just aren’t the best delivery mechanism. That crown still belongs to paper. Speaking of, I just got coupons in the mail today. So I’m off to Home Depot to use a 10 percent off coupon, and maybe I’ll use that 20 percent off coupon from Bed Bath & Beyond if I have time.