Online Coupons Gain Market Share

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By: Lucia Moses

A few years ago, online coupons were more novelty than convenience. Who but the most avid coupon clippers would order them online, then wait days for them to show up by snail-mail? Packaged-goods makers, worried about misuse, mostly shunned them.

Today, online coupon services let shoppers print coupons themselves, while safeguards prevent coupons from being altered or copied. In this tight economy, the online-coupon redemption rate is up, to 3.1% last year from 1.1% the year before.

Newspapers have taken note. Gannett Co. Inc., Copley Press Inc., and Landmark Communications Inc. all have invested recently in online coupon companies. In a boost for the concept, Gannett lately rolled out online coupons using Consumer Networks’ program at most of its papers.

Michael O’Neal, director of business development for couponer News America, a unit of News Corp., said, “I just had appointments stacked on top of one another” at a January newspaper-marketing conference, while deals to sign a couple of major newspaper groups to his SmartSource Online Savings Network are “on the horizon.”

Grocers, too, are starting to see the Web’s targeting and tracking potential. Unlike traditional coupons, each online coupon is unique, theoretically letting the manufacturer match the redeemed coupon to the shopper, who has supplied demographic data to retrieve the coupons. Thus, about 10% of its 600 packaged-good-maker clients are “actively experimenting” with online coupons, reported Lorraine Gallaher, marketing director for Carolina Manufacturer’s Service, a coupon clearinghouse.

But while online usage is growing fast, it’s from a small base. The number of coupons distributed online jumped 110% last year, but is still less than 1% of the 336 billion coupons distributed, Gallaher said. Shoppers have to download software in what can be a clumsy process, and coupon services haven’t gotten around to offering Apple Macintosh-compatible technology.

Generally, a newspaper gets a small share of the revenue from the manufacturers’ coupons that are printed using its site. Papers report that while coupons draw site visits, revenue is insignificant. Some aren’t even getting the traffic payoff.

“People just aren’t going there,” said Fraser Van Asch, vice president of business development for Nando Media, the McClatchy Co.’s online unit, of the company’s online-coupon foray. Lack of promotion may be one reason, but he also believes “people are creatures of habit. … On weekends, I’m not wanting to go upstairs to save 25 cents on a bar of soap.”

While national advertisers’ coupons may have been slow out of the starting gate, Gannett papers are selling lots of coupons to non-newspaper advertisers — even churches — using Consumer Networks’ local-ad application. “There’s significant revenue,” said Nicole Lawson, Gannett online retail sales manager. “Some of our markets are selling annual commitments.”

On the bright side, barriers to online-coupon use by consumers and manufacturers alike suggest papers needn’t worry that grocers will stop buying inserts anytime soon in their dead-tree editions. Said Tamara Oliverio, a spokeswoman for coupon giant Valassis, “Right now, everyone’s looking at ROI [return on investment], and they’re kind of staying with things they know will work.”

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