Couponing in the Digital Age: A 360i Playbook for CPG Brands

Table of Contents
˺ Digital Coupon Landscape p3

˺ Foreword p4

˺ Acknowledgements p5

ArTiCles

˺ Digital Coupons Overview: Ten reasons digital coupons matter right now p6

˺ The digital coupon target p9

˺ Evaluating digital coupons for your brand p11

˺ Digital Incentives: A clarification between coupons & offers p13

˺ The Basics of Digital Couponing p14

˺ The differences between digital & traditional coupons p15

˺ Considerations for using digital coupons p17

˺ Digital Coupons: A strategy or a tactic? p20

˺ Digital Coupon Delivery p21

˺ Couponing Innovations p23

˺ Measuring Success p32

˺ Conclusion p33

ConTribuTor ArTiCles

˺ Spotlight On: Kraft Foods p10
an interview with Joan Francolini - Sr. Director, Brand and Customer Engagement and
Ed Kaczmarek - Director of Innovation, Consumer Experiences

˺ Spotlight On: Coupons.com p18
an interview with Steven Boal, CEO

˺ Spotlight On: MyWebGrocer p30
an interview with Gregg Vincent, VP of Consumer Products
02 blog.360i.com / @360i

Digital Coupon Landscape

03 Couponing in the Digital Age: A Playbook for CPG Brands
Digital Coupon Landscape
blog.360i.com / @360i

Foreword

F rom the recession has emerged a new budget-
conscious America that is driving a marked shift
in consumer behavior around coupons. Today, digital
Digital coupons are more flexible, efficient and more
effective at enticing new buyers. They also appeal to
a more attractive demographic (Millennials and other
coupons represent a growing portion of the overall digital natives). Beyond this, the benefits of digital
coupon market. Given the pace of change in media and coupons are many. They offer improved personalization,
the mobile landscape in particular, digital coupons protection against fraud, opportunities for socialization,
present tremendous opportunities for marketers with a greater convenience, and more.
vision.
This playbook focuses on the most prevalent digital
A new generation of digital-minded consumers prefers to coupon and incentive programs available for
read news online and via mobile devices, as opposed to packaged goods marketers, with the goal of creating a
via the traditional Sunday newspaper, which for decades comprehensive guide to the various opportunities. In
has been the main distribution outlet for traditional the pages that follow, we present an overview of the
coupons. This generation of digital natives will not landscape in addition to tips for maximizing marketing
spend their time clipping coupons in the kitchen. They objectives through the use of digital coupons.
will instead explore new ways to engage with coupons
digitally. — June 2011

Foreword

Acknowledgements

S everal individuals graciously lent their time and talents to the production
of this report. We’d like to take this opportunity to thank them for their
contributions.

To our featured columnists: Steven Boal, Joan Francolini, Ed Kaczmarek and Gregg
Vincent – thank you all for sharing your keen insights with us and our readers. We
would also like to recognize Coupons.com, SmartSource, Cellfire and SocialTwist for
their valuable input.

Thanks also to the 360i team who wrote, edited, designed and managed this report:
Andy Amendola, Gerardo Aquino, David Berkowitz, Amanda Bird, Kelly Dudine, Sarah
Hofstetter, Dave Jacobs, Irina Kondrashova, R.G. Logan, Lee Maicon and Katie Perry.

And advanced thanks to the readers who are moved to comment, share, critique,
tweet, scan, blog or generally discuss the contents herein. We encourage you to
reach out and share your thoughts directly with us any time at editor@360i.com, via
feedback on our blog at blog.360i.com or on Twitter @360i.

sHAre THis PlAYbooK on:

Acknowledgements

Digital Coupon overview:
Ten reasons digital coupons matter right now
us Adult online Coupon users, 2009-2013 % of inTerneT uSerS ADulT online CouPon uSerS (MillionS)

96.8m
88.2m 92.5m
83.6m
77.4m

46% 47% 48% 49%
44%
2009

2010

2012

2013
2011
By 2013, 96.8 million adults will redeem an online coupon. Source: eMarketer, May 2011.

1. The new normal means couponing is here to stay. The person holding up the line with his or her coupons
Because of the length of the recession and slow recovery, is no longer frowned upon or pitied because of tough
many people will not abandon their newly adopted times; instead, they are seen as a savvy shopper. Digital
frugality and continue to use money-saving techniques empowers these types of consumers, giving them the
like coupons. It’s becoming part of their daily routine. tools to find the very best deals available.

"
More and more consumers are making digital 3. newspaper readership is declining, meaning less
coupons a part of their shopping routine, accessing access to newspaper circulars or free standing inserts
them across the entire digital domain - including the web, (FSIs), the coupons you find in your Sunday newspaper.
in social media, with consumer electronics, via their mobile FSIs are distributed by two key players in the traditional
phones, etcetera. At the same time, brand marketers are coupon industry – News Corporation’s SmartSource
increasingly engaging with consumers via digital offers, (News America) and Valassis. In 2010, FSIs represented
wanting to influence shoppers throughout their path to over 87% of total coupon distribution. As the Sunday
purchase.” –Steven Boal, CEO of Coupons.com newspaper distribution declines at a faster and faster
rate, digital coupons will become an increasingly
2. Couponing and saving have cultural cachet. Saving effective way to supplement traditional coupons (Source:
is becoming an expected behavior among Americans. Valassis).

Digital Coupon Overview: Ten reasons digital coupons matter right now

4. Digital coupons are more efficient and have higher 7. Digital coupons are attracting a different audience
redemption rates. Brands can be much more targeted than traditional coupons. Consumers who are using
with digital coupons. Instead of buying the mass reach digital coupons represent a desirable group. Digital
of traditional FSIs, brands can tailor their approach coupon printers are 35% more likely to have a household
with the pay-for-performance model used by digital income of $75K+ compared to the general population.
coupon suppliers. As such, digital coupons have They are also more educated. Digital coupon printers
redemption rates that are nearly 20x higher than FSIs are 17% more likely to have college or advanced degrees
and significantly higher rates than direct mail and than the general population. Additionally, digital coupon
electronically-dispensed coupons. users are younger and more likely to live in households
with more children (Source: Simmons Market Research
5. smartphone penetration is increasing. Mobile means Bureau).
access anytime, anywhere, as people have their mobile
phones on them all of the time. Greater smartphone 8. The digital coupons industry is growing fast.
adoption paired with constant technological innovation Traditional coupons may still hold the lion’s share of
is critical to the growth of digital coupons and shopper the market, but digital coupons are growing faster.
marketing as a whole. Mobile is a great platform to Retailers are using digital coupons to drive consumers to
reach and interact with consumers in or near the their websites. Brands can also benefit from the shorter
purchase phase of the shopping cycle via location-based lead times that digital coupons offer, as well as getting
programs. As more and more consumers adopt and around any exclusivity restrictions, among other benefits
become comfortable with smartphones, the opportunities (Source: Advertising Age, November 2010). According
for mobile couponing and shopper marketing will only to 2010 research from Kantar Media, digital coupon
increase. redemptions are expected to grow 25% this year.

6. The internet has become a key part of everyone’s 9. The Zero Moment of Truth shows how consumer
daily lives. A Forrester research report from December behavior is changing. It was was widely believed that the
2010 found that for the first time ever, the average “first moment of truth” – the phrase coined by Procter
American spends as much time surfing the web as he or & Gamble for the three to seven second window when
she does surfing channels on TV, approximately 13 hours shoppers evaluate a product on a store shelf – was the
per week. As consumers spend more time online, they key decision making point for a consumer on the path to
will naturally seek out more deals and coupons while purchase. Evolution of consumer behavior has changed
online. The popularity of daily deal sites such as Groupon this. Online search and social media now have people
and the myriad copycats is further evidence of this trend. coming into store prepared and with intent to


in-STore Before enTerinG

75% 83% 83%
60%
40%
25% 17% 17%

2007 2008 2009 2010

A study from Symphony IRI Group found that more than 80% of shoppers make their purchase decisions before ever entering the store.

"
purchase particular products based on what they While the first moment of truth is still
have learned online. Given this shift, Google has coined important, the rise of full Internet adoption
a new term: the “Zero Moment of Truth,” or ZMOT. and increased search engine use often lead to
many brand interactions taking place between a
10. You can get ahead of this emerging and enduring consumer and a brand before that consumer ever
shift in consumer behavior. The day of the Sunday paper sees a product on a shelf.” –Google CPG Blog
is fading, but there is a new generation of consumers
that still wants to save. Right now digital couponing
has yet to become a fully mainstream behavior, but
whoever can make digital coupons more seamless
and easy to use for consumers will benefit vastly.


The digital coupon target
360i Persona: "Coupon Carla"

T he Insights & Planning team at 360i recently
analyzed the persona of a typical digital coupon
user, informed by Nielsen @Plan. The market size this
Gender: 66% female; 34% male
Average Age: 46
Marital Status: 61% married
audience was found to be 19.6% of all online audiences. Average HHi: $72K
employment: 70% employed full/part-time
Consumers who download online coupons tend to be education: grad/post grad 166 index
married women in their mid-30s to late 40s who are more
likely to be college educated. They are task-oriented TeCHnologY AnD MeDiA ProFile
users of the Internet, looking for specific information and
online and social Coupon Carla is highly engaged
using the web as a means to stay organized. They are also
online, always in the know among her social networks,
well-versed in navigating necessary search tools, blogs
sharing links and information.
and forums to retrieve relevant information. Couponers
are highly social and tend to be creators, interacting with staying informed Coupon Carla uses the Internet as
user-generated videos, posting photos and commenting a means to gather data - to keep her organized and
on blogs, forums and social networks. informed about best deals, local happenings, new
entertainment news and movie releases, recipes and fun
Right now, these consumers tend to be offline coupon tid-bits to keep her household running smoothly.
clippers as well. Beyond saving money, coupons let them
oFFline ProFile
try new products and provide a thrill for the bargain
hunters among them. green lifestyle She is more enviromentally aware, and
feels good about shopping for green products. Tending
Aside from a generic “coupons” keyword search, the most to her vegetable garden is one of her favorite leisure
prevalent coupon searches are “printable coupons” and activities, plus, fresh produce keeps her diet going!
“online coupon codes.”
A socialite Coupon Carla loves to entertain informally
at home, visit parks and attend various cultural events.
When she saves money on buying products, she spends
it on fun experiences with her friends and family.

The digital coupon target

spotlight on: Kraft Foods
an interview with
Joan Francolini - Sr. Director, Brand and Customer Engagement
Ed Kaczmarek - Director of Innovation, Consumer Experiences

What’s one example of how Kraft is using digital coupons from being used more by marketers?
today?
The most powerful benefits of digital coupons are
Kraft is using digital coupons via digital FSIs and retailer the ability to 1) target consumer offers based on their
programs. We are using them to drive purchases, reach purchase habits, and 2) execute a quick-to-market coupon
new audiences and tap into the growth of coupons offered strategy at a lower non-working cost. It’s likely that
digitally. Moving forward, we’d like explore how to reduce some marketers are concerned about fraud (i.e. copying
the costs of direct-to-card backend processing and coupons) and the increased liability that goes along with
eliminate the option of “stacking” with direct to card. We’re it, though Kraft Foods has not found this to be an issue.
also exploring how to link the use of digital coupons to
increased in-store support. What does the future of digital couponing look like? What
are some predictions you have for the coming years?
How do digital coupons work with or alongside
traditional coupons? Expect to see more direct-to-card opportunities via
mobile, as well as redemption via scanning directly
Depending on the brand, digital coupons can be used as from a mobile device. We believe that mobile couponing
a quick hit way to distribute coupons, as an add-on to an will eventually reach critical mass as redemption
FSI, as a replacement for an FSI, or as a targeted program. integration becomes more prevalent across grocery and
We try not to duplicate offers online and in print, as many mass-merchandise stores. Personalization and uber-
coupon users are checking multiple areas for coupons. customization based on purchase data will exponentially
increase relevance and enable manufacturers to more
What are the greatest opportunities that digital coupons efficiently leverage mobile to maximize sales and loyalty.
hold for Kraft? And what is holding back digital coupons

Spotlight On: Kraft Foods

evaluating digital coupons for your brand
When considering if, when, and how to use digital coupons for your brand, you can apply
the same strategic analysis you would for larger digital programs. In fact, the Strategic Lens
that was described in 360i’s Social Marketing and Mobile Marketing Playbooks can still be
applied to digital coupons. You can use this lens as a way to target your evaluation when it
comes to what’s best for your brand’s needs.

Does it leverage your arsenal? to serve them with digital coupons. Because some types
Digital coupons offer a great way to connect digital of digital coupons are not yet mainstream, knowing your
campaigns to in-store trial and purchase. Consider the target’s comfort level regarding various digital platforms
campaign elements or brand arsenal that and devices will help you achieve success.
you have to work with and incorporate Mobile coupons, for example, skew more
digital coupons to help consumers towards early adopters of technology
along the decision making process. and may not be appropriate for a less
For example, to launch Cooking digitally savvy group.
Crème, Philadelphia Cream
Cheese offered coupons to the Does it provide a value exchange?
existing Paula Deen Real Women When asking your consumers
of Philadelphia community. to take action, they should be
Providing more context to a rewarded in like value. Executions
digital coupon campaign will like progressive coupons and
attract more of your consumers in tell-a-friend coupons mean that
addition to those just seeking coupons. as consumers work to spread your
coupons and brand message they should
Does it follow the rules of the road? be rewarded in turn. Ideally, the value you
Understanding which digital platforms are most used by assign to your coupons will be of equal or greater value
your target audience will help determine where and how to the actions necessary to redeem them.

Evaluating digital coupons for your brand

There is no single “right” value that all brands can Does it meet your objectives?
offer. The discount value should vary by brand, and be Knowing what you hope to accomplish with your digital
influenced by a variety of factors. Brands should consider coupon campaign is a very important step. Setting clear
their coupon budget and what they hope to achieve with objectives will inform your decision-making when it
digital coupons before assigning a value. If the budget is comes to determining which coupon delivery system
small and they hope to reach more people, then assigning to use. For example, a progressive coupon may be a
a lesser value might be a better strategy. If the product great way to build fans on a social community, but if
is unknown, a larger value may be necessary to motivate you want to launch a new product and need more reach,
purchase. We recommend testing a variety of different a digital FSI may be more appropriate. Also, setting
values of coupons to see which offer works best. Such clear objectives will allow you to determine the success
comprehensive testing is something that is only possible metrics you will ultimately use to analyze your program.
with digital coupons.

Evaluating digital coupons for your brand

Digital incentives:
A clarification between coupons & offers
There is a wide variety of ways to incentivize purchases online. Much of the recent
growth in online shopping is fueled by “offers,” which are discounts for service, local retail,
restaurants, and the like. Offers differ from coupons used by manufacturers to provide
discounts for their products. This report focuses exclusively on CPG coupons.

Digital Couponing 101: e-Commerce Coupon Codes

With the growth of e-Commerce DealTaker.com. Typically discounts appear on
has come the growth of searching these sites without the brand's knowledge or
for coupon codes prior to making permission. However, if a brand is looking to
purchases online. For example maximize reach for their offer, they could allow
consumers will search for “Orbitz Coupon Codes” coupons or codes to be distributed on these types
prior to booking travel with the hope of attaining of sites. To prevent over-redemption, or to limit
a promotional code that will save them money your coupons to your target consumers, brands
upon checkout. Some of the better-known sites are not advised to pursue opportunities with
for this type of coupon are RetailMeNot.com and these types of sites.

Digital Incentives: A clarification between coupons & offers

The basics of Digital Couponing

G
iven the flexibility of the digital medium, a to purchase products for which they have coupons in
digital coupon can be placed almost anywhere, hand, as oppose to having to remember what they loaded
added to any campaign and delivered to onto their loyalty cards at an earlier time.
people in a number of ways. However, supermarkets,
grocery stores and other venues where consumer goods An exception to these two main delivery methods is
are sold can only accept coupons in two provided by the retailer Target, which has
primary ways due to their technological the technology to scan barcodes on
restrictions. To be redeemed at a cash consumers’ mobile phones. Also, there
register, digital coupons must either are some apps such as CardStar, which
be printed by the consumer or loaded aggregate your loyalty cards onto your
virtually onto a supermarket loyalty phone so you can just present your
card. phone at checkout. Unfortunately,
these don’t always work well at the
According to a prominent digital register. Retailers make money by
coupon supplier, redemption rates quickly checking out customers and as
for printed coupons are about 15%, such, anything that slows that process
whereas those for loyalty card coupons down is not welcome. At present, the
are around 10%. Higher redemption technology used in Target stores has
rates for printed coupons occur because not been adopted by any other large
consumers are more likely to remember retail chains.

The Basics of Digital Couponing

The differences between
digital & traditional coupons
For consumers, one of the key differentiators between digital and traditional
coupons is convenience. Once a coupon is online, it is easy for Internet users to
search and find it – and they no longer have to pay and wait for Sunday newspapers
find coupons. We list some of the advantages of using digital coupons below.

˺ Higher redemption rates: The fact
% redemption Value % Analyzed
that coupons are either targeted to
Traditional fSi Digital fSi consumers or sought out by them has
< 40%
7% 0% lead to improved redemption rates. The
consumer is taking the time to print out
40% - 49.9%
11% 0% coupons so he or she is more likely to
49.9 - 59.9% use them.
14% 6%
Digital FSIs drive 24% more
59.9 - 69.9%
25% 12% incremental redemptions than
69.9 - 79.9%
traditional FSIs (digital at 78% vs.
25% 35% traditional at 63%).
> 80%
18% 47% 82% of analyzed Digital FSI events
achieve 60% or greater incremental
Source: Knowledge Networks Normative Database. Data Period: CY 2008 and CY 2009. N
= 17 Digital and 28 Traditional recently analyzed FSIs in similar categories: 4 Edible Grocery
redemptions compared to 68% for
and 1 Non-Food Category Traditional FSIs.

The differences between digital & traditional coupons

˺ sharability: Digital coupons can be easily shared and
spread around by consumers. When this happens,
coupon offers may become exhausted earlier. Digital Couponing 101:
The difference between generally
˺ Capture demand: Marketers can use digital accepted manufacturer coupons and
coupons to attract consumers who are customer coupons
searching for a particular product or brand.

When a manufacturer
˺ new buyers: A new report shows that digital coupons
decides to launch a digital
are 35% better at attracting previous non-buyers
coupon campaign via a
and attracting more new buyers than print coupons
digital coupon supplier, they
(Source: Knowledge Works Trend Report, 2011).
can choose to have their coupons served as
generally accepted coupons or as customer
˺ Timing: Digital coupons can run continuously and can
coupons. The former is a print-at-home
be created with relative ease compared to traditional
type coupon which can be redeemed by the
coupons. A digital coupon campaign, when working
consumer at any grocery store selling that
with a digital coupon supplier or aggregator, can
item. When the manufacturer chooses the
be live within 72 hours, while traditional campaigns
latter, the user can only use that coupon at
typically take up to eight weeks to begin.
the specified retailer chain.

˺ lower costs: Digital coupons pass the cost of printing
Customer coupons are generally delivered
to consumers. Also, brands can set a print limit per IP
directly to loyalty cards via the retailers’
address so consumers can only print a single coupon.
websites or some mobile applications. Most
coupons fall into the “generally accepted”
˺ Metrics: Digital coupons can offer better
category, as it is more beneficial to both
tracking opportunities for brands as they can
brand and consumer that consumers be able
receive information on consumers printing
to maximize redemption opportunities.
digital coupons right from the beginning of the
campaign launch. Traditional redemption data
takes approximately eight weeks to gather.

The differences between digital & traditional coupons

Considerations for using digital coupons
The consumer experience for digital coupons is constantly evolving – and, as advanced as
digital coupons may seem, there are still some barriers to mainstream adoption.

˺ Application download: Some coupon programs require may not be the same as the digital coupon audience.
users to download an application in order to access the In April 2011, Experian Simmons’ John Fetto told
offer, and this additional step may cause some users to MediaPost that people who use coupons are more

"
drop off prior to redemption. likely to use all kinds of
99% of digital coupon
coupons. Moreover, digital
users said their house-
˺ Printing: Printing coupons adds a level of complexity couponers tend to be more
hold also used print coupons,
for consumers, who likely only have one or two extreme coupon users.
compared with 35% of print
chances to print out the coupon before losing out on
couponers using digital cou-
the offer. Most suppliers will allow two chances to ˺ Paid media support:
pons. Digital coupon users also
print per user because of the difficulty associated with Sometimes additional
used them for a wider variety
printing the coupon correctly the first time. paid media support will
of purchases and at a greater
be necessary to achieve
variety of stores than those
˺ in-store experience: Not all retailers accept printed campaign print goals.
who used only print coupons.”
coupons.
–John Fetto, Experian Simons

Marketer considerations to note when pursuing digital ˺ “Doubling down”: Keeping track of each of your
coupon programs include: brand’s coupon offers is very important as savvy
consumers will “double down” on deals by using digital
˺ reach: Traditional coupons still reach more people, coupons with traditional coupons and match them with
even among Internet users. Although newspaper FSIs in-store sales to potentially get products for free, if
may drive volume, digital coupons minimize waste. not heavily discounted.

˺ Audience: The traditional coupon clipping target

Considerations for using digital coupons

spotlight on: Coupons.com
an interview with Steven Boal, CEO

What is the single greatest opportunity that digital What are the challenges to working with digital coupons
coupons hold for brands? and how can marketers overcome them?

Coupons are proven to engage consumers and move Marketers are challenged to keep pace with the rapid
product off the shelf. The primary point of differentiation change and growth that is happening in digital. New
for digital coupons is their effectiveness in enabling channels are emerging and the existing ones are growing
brand marketers to be more personalized and targeted in exponentially. We’re working with coupon issuers to
reaching an emerging consumer segment along the entire address the challenge of “keeping up” by our getting
path to purchase. involved in the marketer’s planning process and helping
them plan their annual budgets based on what we see in
With traditional coupon mediums, communication is mass the transition to digital.
and anonymous, whereas digital enables a more personal,
targeted outreach – while still delivering scale and reach beyond naturally increasing digital habits, what are
– at multiple touch points in the decision process. What’s some ways brands can help consumers become more
more, digital coupon users hail from a very attractive comfortable with digital coupons?
demographic; they are younger, have higher household
incomes, have larger households, are better educated, Brands can increase consumer friendliness with digital
shop more frequently and spend more each month on coupons by integrating them across their multichannel
groceries than users of traditional newspaper coupons. marketing program. It’s not just about giving a coupon

Spotlight On: Coupons.com

to a consumer: it’s about integrating the offer across purchase. Retailers specifically will increasingly integrate
the entire digital promotions program. Digital coupons digital coupons into their communications in order to
have proven their effectiveness, and as more brands offer engage with people and promote coupon redemptions in-
them across more touch points in the purchase process, store. Coupons.com already powers coupon galleries for
consumers will increasingly grow more comfortable with retailers spanning tens of thousands of locations to drive
utilizing them. more shopping trips to their stores – and we anticipate
this trend will continue to grow.
What does the future of digital couponing look like?
What are some predictions you have for the coming We also predict digital will change the game with regard
years? to shopper marketing, introducing an entirely new
opportunity for consumers and brands to engage with
Consumer interest in mobile coupon redemption in high- each other along the entire path to purchase. Engagement
volume transaction scenarios (such as grocery, drug and can begin with pre-planning at home and span all the way
mass) will continue to increase. Coupons.com is currently to on-the-go and in-store interactions.
working with point-of-sale providers and retailers on the
architecture for redeeming manufacturer coupons with Coupons.com enables digital coupon programs –
phones. including online printable, save to card and mobile
Regarding mobile couponing, more immediate areas promotions – for the nation's top brands and retailers.
include 1) retailer adoption and 2) consumers’ path to

Couponing in the Digital Age: A Playbook for CPG Brands
Spotlight On: Coupons.com

Digital Coupons: A strategy or a tactic?
While digital coupons alone do not represent a strategy, many manufacturers and
brands are supplementing their traditional shopper marketing strategies and traditional
couponing tactics by leveraging digitally distributed coupons.

Driving trial/purchase/increase volume loyalty
A little incentive can go a long way to get Rewarding consumers for their loyalty is easy
consumers interested in trying or buying your via digital coupons because it is likely that
product. Digital coupons can also connect they have raised their hands to participate
your online campaign with an offline in communications such as email
element, thus closing the loop on your newsletters, branded communities and/or
main objective of increasing sales. a simple visit your website.

steal share the from competitors Awareness
For new product launches, digital A well-targeted use of digital couponing
sampling may facilitate traditional can be used to generate awareness and
sampling efforts by circumventing the interest for a new or existing product.
retail store. For refrigerated or heavy
items, some digital coupon vendors, such Prevent erosion from private label brands
as SmartSource, will hold your inventory As private label brands grow their product
and handle the shipment and fulfillment of offerings at lower prices, brands face increased
sampling orders that are taken from consumers competition. Digital coupons can be used to help
online. The items that still require a traditional retailer keep more price conscious consumers away from private
will combine digital sampling registration with direct labels, and loyal to your brand.
mail coupons for a free sample.

Digital Coupons: A strategy or a tactic?

Digital Coupon Delivery
A digital coupon can be distributed in a variety of ways and through a variety of channels.
Let’s discuss how one can launch a digital coupon campaign.

HoW To geT sTArTeD Most brands will work with a smartsource, owned by News Corporation, part of
digital coupon supplier or aggregator to execute their News America (a traditional FSI company), is the next
digital coupon programs. They are responsible for the largest supplier with 3 million monthly visitors and
backend and fulfillment of these coupon deals, and they 1,000+ partner sites, including some retailers. Two
can get you up and running within a few days. key differences between SmartSource and Coupons.
com is that the latter provides brands with
While there are many players in the space, category exclusivity on their digital coupon
the industry is dominated by a few key campaigns, and an app download is
players: not required.

Coupons.com has the largest redPlum, owned by Valassis (a
online distribution network in traditional FSI company), has
the industry, reaching 17 million about 2 million monthly visitors
unique households per month and 1,000 partner sites and
across 2,000+ different partner limited retailers. Like Coupons.
sites. Partner sites range from com, RedPlum requires that
grocery retail sites to lifestyle, users download a coupon printing
food and newspaper/magazine sites. plugin.
They also have an opt-in email program, with
more than one million subscribers. Consumers must There are also a variety of smaller players in the
download an application to print coupons. Coupons. market that continue to adopt and grow new platforms.
com also offers coupons through the GroceryIQ app; see Some of these players include Shortcuts, Cellfire,
more on p.26. Savewave and Catalina.


Catalina, the company responsible for coupons printed Other places where digital coupons can be distributed
onto grocery receipts, has recently launched an online include:
coupon site called Coupon network.
˺ Coupon aggregators: Coupon Cabin, CouponBug,
Each of these sites allow users to easily browse coupons CouponMom, TheDealery and countless others.
that can be localized to their zip code and then printed out
– the digital equivalent to a Sunday circular. ˺ brand websites: By partnering with vendors like
Coupons.com, marketers can provide printable coupons
Once established on one of these sites, brands can offer to visitors on their own sites (i.e. serving Kraft coupons
their coupons beyond the supplier’s site and into a wide directly from KraftFoods.com).
network of partner sites using what is called a digital
fSi. A digital FSI is a way to spread your product’s ˺ retailer websites: Retailers like Kroger and Safeway
coupon or promotion are making coupons available directly from their sites,
across a large content and allowing consumers to connect them to their
network, similar to loyalty cards or print them out. The benefit of going
placing a media buy directly to the retailer site is that people can be sure
within an ad network. these coupons will be accepted at the register.
The digital coupon
suppliers mentioned ˺ Digital display media: Online banners and display
above have large, media with calls to action such as “click for a coupon,”
established “coupon can alert consumers of digital coupon deals.
content networks” and
offer mass reach. A ˺ social: Brands can share coupons with people on a
coupon network may variety of different social networks in a many different
An example of how Coupons.com’s Concordance include recipe sites, ways.
system works to integrate coupons into recipes.
retailers, media sites
and a variety of other related destinations. Some coupon ˺ email: Many sites will offer email newsletters that
suppliers offer geo-targeting and pay-for-performance deliver coupons directly to consumers who have opted
deals. One way to deliver these coupons is to integrate in. Brands can integrate these coupons into their email
them into highly relevant content, for example within marketing campaigns.
online recipe ingredient links.


Couponing innovations
What has motivated you to "like" a company,
Now that we know the basic delivery and brand, or association on Facebook?
distribution methods for digital coupons,
let’s explore some more innovative ways of 40% 39%
distributing digital coupons. To receive discounts and To show my support for the
promotions company to others

social Coupons
36% 34%
To get a "freebie" (e.g., free To stay informed about the
What makes a coupon a social coupon? Any coupon that samples, coupon) activities of a company
can be shared among people online may be considered a
social coupon, but there are a few subcategories of note.
33% 30%
To get updates on future To get updates on upcoming
FACebooK CouPons Facebook is an excellent products sales
environment for brands to distribute coupons to
consumers, and many brands have used digital coupons
as an incentive to get new fans or followers. In fact, a
29% 25%
For fun or entertainment To get access to exclusive
recent report from ExactTarget and CoTweet revealed content
that the top reason consumers will “Like” a company or
brand on Facebook is to receive discounts and coupons.
22% 21%
Someone recommended it to me To learn more about the
Coupons can be distributed on Facebook through a company
variety of ways. Brands can serve up coupons directly
from fan pages to their consumers with the helps 13% 13%
of applications from vendors like Wildfire, Kickapps, For education about company To interact (e.g., share ideas,
Buddymedia or Coupons.com. One common use is to topics provide feeback)

place a coupon offer on a non-fan Facebook landing
page in order to encourage fans to “Like” your page and
redeem the coupon. Sources: ExactTarget & CoTweet

Couponing Innovations

A retailer example of a Facebook coupon program is deal, and that deal was for $20 for $40 worth of coupons
Walmart’s Crowdsaver app, which was live during the on various General Mills products. The deals, which
2010 holiday season. Crowdsaver worked similar to took place only in San Francisco and Minneapolis, both
Groupon, putting the success of achieving a deal in the sold out within hours. For CPG brands, the margins will
hands of the consumers. Walmart set a threshold of generally prohibit such steep discounting unless costs
“Likes” that an offer needed to reach before the deal are covered by broader promotional budgets.
became available to those who Liked it.
CouPon CoMMuniTies AnD oTHer soCiAl CouPon
Social Grocery is a new ecommerce oPPorTuniTies:
application that lives within
Facebook. It’s a social extension There are a variety of social coupon communities and
of MyWebGrocer, a technology couponing tactics that live beyond Facebook:
company that powers many
grocery store chains’ websites. ˺ Crowdsourced coupon communities: There are
Users of Social Grocery can add a host of sites that house communities of avid
coupons from the Facebook app to couponers such as Mallicious, Dealigg and Discount
their loyalty cards. Patrol. Users will post and share coupons they have
found, and the best deals become crowdsourced to
group Couponing the top, similar to sites like Digg and Reddit.

Another approach is “group couponing,” which was ˺ “Tell-a-Friend” coupons: Vendors like Social Twist
popularized by Groupon. Groupon began in 2008 as an have created socially incentivized “tell-a-friend”
email-based service for local deals activated only when coupons, where the coupon value is worth more if
a certain threshold of users sign up. Today, Groupon they agree to share it with three or more friends.
has more than 50 million subscribers worldwide. A These types of coupons are housed on a microsite
legion of similar providers has emerged, following in (or other destination) and have two values. Users
Groupon’s footsteps. These include sites like TheDealist can select the lesser value immediately, or select the
and LivingSocial, as well as proprietary services higher value which they can redeem after they either
from brands and retailers themselves. Because daily send it to three friends via email, or post it to their
deal sites are mostly focused on getting consumers social communities, where it is assumed at least
introduced to new activities and restaurants, CPG or three friends will see it.
even national campaigns, have been minimal. General
Mills was the first to use Groupon to offer a local CPG


Another derivation of “tell-a-friend” involves rewarding coupons alone cannot sustain an active community. It’s
users with coupons for sharing video content, pioneered incumbent on a brand to maintain engagement and add
by a vendor called Rewardshare. Similar to that are sites value for consumers beyond the occasional discount.
like MyLikes.com, which compensate people in exhange
for sharing content, the majority of which is deal and gAMiFiCATion Gamification is the process of adding
coupon-related. game mechanics to experiences in order to engage
and/or reward audiences. Adding points, badges,
Progressive CouPons Progressive coupons are leaderboards and challenges are a great way to
digital coupons that increase in value as more users motivate action from users. We are seeing this being
fulfill an action. used for marketing programs and it is often paired with
rewards in the form of coupons.
For example, Healthy Choice was
looking to grow its Facebook fan Vendors like Crowdtwist and Bunchball incorporate
base, increase engagement and game mechanics into websites, allowing users to
reinforce the brand’s reputation for win points that can then be redeemed for coupons or
providing great value. Knowing that discounts. Another platform is Swagbucks, a loyalty
the Healthy Choice consumer is a program in which users can earn thousands of freebies
user of social media and interested for doing online activities such as surveys, games and
in coupons, the brand introduced a even simple web searches. Users also get rewarded for
progressive coupon on its Facebook printing and using coupons on the site.
Page (see image at left). The coupon began at a low
value ($0.75 off) and increased as people “Liked” the eMerging TrenDs Group couponing leader Groupon
page, ultimately reaching a “buy-one-get-one-free” deal. is continuing to innovate in the CPG space. In June
2011 it launched a test program that delivers deals
The progressive coupon was supported through a to purchasers via grocery store loyalty cards. Big Y
variety of public relations tactics and in just two weeks, shoppers in Massachusetts and Connecticut could
the community grew from 6,800 to nearly 60,000 fans. purchase a coupon for a $39.99 seafood grill at a
Healthy Choice ultimately distributed more than 50,000 discounted price of $24 and have the deal automatically
buy-one-get-one-free coupons. appended to their Big Y loyalty cards after the
transaction was made online. The use of a grocery
Though digital coupons have proven to grow fan store loyalty card as a payment vehicle creates many
communities, it’s important to note that digital opportunities for CPG brands looking to simplify the


in-store redemption process. Furthermore, this model coupons via mobile barcodes that can be scanned at the
represents yet another iteration of paperless coupons, register.
which will continue to be a trend in the digital coupon
space. Other delivery methods for mobile coupons include
digital coupon calls to action in mobile ads and mobile
Mobile coupons games. SMS programs are popular with feature phones
and are a great way to engage with consumers who don’t
Mobile coupons can be distributed via text message, have smart phones.
mobile ads, branded apps, custom apps, barcodes or
other formats. Coupons delivered via mobile devices The number of smartphone applications that serve
are gaining attention; however, their use is somewhat mobile coupons is growing rapidly. One example is
hampered since retail locations often lack the GroceryIQ, an application from Coupons.com that helps
infrastructure to implement them at the register. users shop by compiling grocery lists and providing
coupons. Users can find coupons and add them to their
At their best, mobile coupons offer the ultimate shopping list from the app. Other examples of coupon
convenience, as they are easier to work with than applications include Coupon Sherpa and Yowza!! Mobile
traditional coupons, as they don’t involve searching, Coupons. Many manufacturers and brands are creating
sorting, clipping or remembering to take them to the their own branded apps like Kraft’s iFood assistant,
store. They also eliminate the need to have another which includes coupons. There are also aggregator apps,
loyalty card. For marketers, having access to mobile like CardStar, which allow shoppers to store, manage
coupons may attract a younger, more affluent target and retrieve loyalty cards from their smartphones.
that is not ingrained in traditional coupon clipping.
Companies like Cellfire specialize in direct to card
As of now, mobile couponing is still an early adopter coupon programs for mobile devices, where users can
activity, with less than 15% of mobile phone users load their loyalty cards with coupons that are served on
having ever used a mobile coupon (Source: mBlox their phones.
2010). Furthermore, only a few retailers have the
infrastructure to scan mobile coupon codes. A new company called SavingStar takes a different
approach to the concept of paperless mobile couponing.
As noted earlier, Target became the first major retailer Their app allows users to link coupons to their loyalty
to process and accept mobile coupons. To date it is the cards similar to the way Cellfire and GroceryIQ can, but
first large scale retailer to allow consumers to redeem instead of receiving the discounts at the time of


purchase, the savings are transferred to one of four geo-TArgeTeD ADverTiseMenTs hold much
different locations. This model is very similar to a points potential but they also come with some risk. There are a
program, and at the time being, consumers can redeem variety of vendors, like PlacePunch and LocalResponse,
the savings in three ways: that serve specials to consumers who check in with
location-based apps. PlaceCast, a similar platform,
1. They can deposit directly into their bank account or sends ads and digital coupons to people who enter
PayPal account. a previously determined “geofenced” area with their
2. They can transfer them to an Amazon gift card. mobile device. These types of focused advertisements
3. They can make a donation to the American Forests work best when users have opted in to communications.
Organization. Blanket texts to unwitting consumers may create
dissonance with your brand.
SavingStar says that soon there will be many more
options for users to transfer their savings including Mobile location-based points applications also provide a
airline miles, hotel points and an option to save at the way to connect with users who are at your retail location
time of purchase. Another key difference between or location of interest. Shopkick and Checkpoints, for
SavingStar and other save-to-card mobile applications example, are apps that allow users to collect points as
is that they have national reach and strong relationships they visit several retail locations, and those points can
with a majority of retailers – plus a large amount of be used to redeem coupons and discounts. Shopkick
data that can be used by marketers to enhance their also incorporates scanning barcodes so that people can
couponing efforts. collect more information, points or deals.

Mobile + location 1D AnD 2D/Qr CoDes provide opportunities for brands
to interact with consumers on the path to purchase.
Location-based marketing is one of the hottest topics in These codes serve as a great way to connect offline and
digital today. People are engaging on mobile phones and online messaging.
sharing their locations, coupons and discounts to nearby
stores is high on their list of priorities. In a recent Scanning has expanded beyond codes to a newly learned
survey by JiWire, more than half of respondents said consumer behavior of tagging music. The Shazam
they wanted to receive location-specific ads. They also application, one of the most downloaded apps to date,
indicated that mobile coupons were a more appealing allows users to tag music operating somewhat like an
incentive than check-ins (Source: JiWire Mobile Audience audio version of a QR code. Shazam has converted this
Insights Report, 2010). behavior for marketing purposes, asking people to tag
commercials, and thus connecting offline and online


campaign. One great example is Old Navy's campaign digital coupons could be more conditional (i.e. based on
in which viewers could "Shazam" TV ads for coupons and geography, past and present behavior, etc.)
other exclusive offers.
Mobile + location + social
There are also a variety of localized deal applications
for mobile devices, the majority of these which are lbsn Location-based social networks like Foursquare,
focused on deals and not CPG coupons. Some examples Gowalla, Loopt and others offer deals based on where or
include apps like Scoutmob, Coupious and Peekaboo that how often users visit (check in to) various locations.
serve local deals and offers based on your current city,
zip code or GPS location. Another example is SCVNGR FoursQuAre In November 2010, Foursquare piloted a
Level Up, which combines daily deals with location to program where Safeway visitors could link their loyalty
get consumers not only to go to a location once, but to card accounts to their Foursquare accounts. When store
return more frequently and unlock greater rewards. visitors checked in to Safeway, they received coupons
SparkFly, is a similar platform in the space. that printed right at the cashier. The second component
of this program was tied to specific user behavior. For
Mobile AugMenTeD reAliTY is an innovative example, consumers who checked in to the gym received
technology that can be used to provide entertainment coupons for related products, such as Sobe Lifewater.
or utility to its users. Valpak and Junaio paired up to
provide a local utility to its application, in which nearby
deals are delivered via a pop up in the video camera view
of the app.

Mobile NFC (near field communication) is an emerging
technology that has been generating buzz in the
marketplace. NFC is a short range protocol built into
The Foursquare-Sobe deal above rewarded people for checking into the gym.
cell phones that enable you to “swipe” your phone
near an NFC tag (which could be in packaging, on a
sticker or at shelf) and pass data to the phone. Android FACebooK DeAls In 2011, Facebook announced its new
supports NFC in its most recent version of the operating Deals product. The Alpha program provided local deals
system and there are rumors that Apple will add this to Facebook users in Atlanta, Austin, Dallas, San Diego
functionality to future iPhones. Adoption of NFC would and San Francisco. There are five ways users are able to
present a big opportunity for the coupon space, as learn about deals in their area:


˺ Updates through email and notifications There are two major factors hindering NFC usage:
˺ A new Deals tab located on the home page
˺ News Feed stories when friends take advantage of a 1. Relatively few payment terminals in stores include
deal NFC scanning, though Verifone announced that all of
˺ Personal messages & wall posts its new payment systems will include NFC. Google is
˺ Sponsored Ad Units also speeding up the roll out with the debut its NFC
payment product "Wallet" in May 2011.
Facebook will also be publishing deals offered by third
parties including Dealio, Gilt City, HomeRun, kgb deals, 2. Few mobile handsets include NFC functionality,
OpenTable, Plum District, PopSugar City, ReachLocal, with Google’s own Nexus S among them. There are
Tippr, viagogo and zoos. The launch of Facebook Deals rumors – but only rumors – that Apple may include
represents Facebook’s most notable investment in NFC in the next iPhone release, and such a jolt by a
social commerce since announcing it would require major handset maker will be needed to further NFC
game developers to utilize Facebook Credits for in-game adoption.
purchases back in January 2011. Users can pay for deals
using credit card, PayPal or Facebook credits. As an interim step, certain vendors are taking advantage
of NFC’s low deployment costs and paper-thin chips
near Field Communications to offer NFC-powered stickers that can be placed on
consumers’ mobile handsets and scanned at specially
An emerging distribution opportunity involves near equipped readers at participating retailers. Dairy Queen
field communication (NFC), a wireless transmission ran such a pilot with Tetherball, 7-Eleven did with First
mechanism based on radio frequency identification Data, and Bling Nation aims to tie in mobile rewards with
(RFID) that allows devices to communicate with each social sharing via a Facebook app that would power NFC
other when they’re in very close proximity. With NFC, a deals.
scanner located at the point of sale, or embedded within
the point of sale such as the Verifone credit card scanner NFC is in its infancy in the United States, but it remains
commonly used by retailers, can instantly connect with a something marketers should keep an eye on as Google,
consumer’s mobile phone when placed near the terminal. Verifone, Nokia, AT&T, Verizon, T-Mobile, Visa, Samsung
At that point, people can instantly pay or redeem special and others have all demonstrated broader support for it,
offers for doing so. Marketers and retailers can offer and certain brands will have the oppurtunity to become
special coupons and rewards for repeat purchases, thus early adopters to see if NFC can impact consumer
encouraging loyalty rather than just one-off deals. acquisition and loyalty.


spotlight on: MyWebgrocer
an interview with Gregg Vincent, VP of Consumer Products

What is the single greatest opportunity that digital – with a lot of groups benefiting and comfortable from
coupons hold for brands? the status quo – manufacturers, clearing houses,
retailers, coupon vendors, even consumers. The digital
Frugal shopping habits created during the recent coupon industry is still in its infancy and therefore
recession present a unique opportunity for remains fragmented. The difficulty with digital coupons is
manufacturers to target a larger and significantly that you are trying to create a solution for groups whose
different audience of consumers who are trying to needs are already being met. Marketers and service
stretch a limited grocery budget. Who doesn’t like to save providers need to come up with a winning strategy for
$10/$20/$30 on their weekly grocery purchases? And digital coupons. There are also additional challenges:
once this becomes a habit to those who have traditionally
looked down on coupons, manufacturers are guaranteed ˺ Retailers are affiliated with different coupon vendors
to benefit from increased coupon usage and therefore and each has different technologies and point-of-
increased sales, brand awareness and loyalty. sale integration. This presents a bureaucratic and
technical hurdle for marketers and manufacturers.

What are the challenges to working with digital coupons ˺ Coupon-to-Card technology is limited to retailers
and how can marketers overcome them? with frequent shopper numbers (FSNs).

There is a multi-billion dollar industry in paper coupons ˺ Retailers want to control the experience and the

Spotlight On: MyWebGrocer

data, yet they are faced with a dilemma. As they What does the future of digital couponing look like?
try to increase distribution by allowing coupon What are some predictions you have for the coming
vendors to increase their distribution to other years?
affiliates, they create a customer service challenge
in that they lose control of where, when and how The future of digital couponing will be marked by
customers access digital coupons. relevant and highly targeted offers based on the things
you like (purchase behavior) and powered by mobile
beyond naturally increasing digital habits, what are technology (geo-fencing). It is inevitable that traditional
some ways brands can help consumers become more paper coupons will migrate to all digital. The speed with
comfortable with digital coupons? which that happens is up to the industry. Consumers
will adopt a new process if it is convenient to them. New
One way is to make digital coupons cool by harnessing technologies must be explored to broaden the market
emerging technologies. Highly involved audiences and drive innovation. It’s certainly an exciting time.
make for better consumer adoption. Websites like
SocialGrocery are trying to help move digital coupons MyWebGrocer provides e-Commerce and emarkting
to the mainstream by providing consumers with an solutions to the grocery and consumer packaged
entertaining and informative experience. goods industries.

Spotlight On: MyWebGrocer

brands can use digital FSIs to test coupon values. Due
to the volume of FSIs, marketers can geo-target offers
based on zip codes, states or DMAs, and gather insights
into your consumers across the country.

Digital coupon suppliers provide tracking for coupons
that have been downloaded and then printed, but most
cannot track redemptions unless they partner with
offline coupon clearing houses that work directly with
Measuring success retailers and brands. Coupons.com, for example, can
gather reads on how many prints have run within 24
hours of a campaign’s launch. Redemption information
The success of your digital coupon program will will follow six to eight weeks later, as the retailer
ultimately depend on several factors: requires time to track and report on the offline
component of the transaction.
˺ Brand favorability

˺ The curent household penetration of your over-reDeMPTion: The best way to prevent "doubling-
product/category down" is to create greater alignment between online
˺ Brand development index and offline coupons and thereby prevent simultaneous
offers. Communication with retailers is also important to
˺ Category development index
prevent store sales running in tandem with your coupon
˺ The product re-purchase cycle offers. Currently Kroger and Safeway have taken steps to
˺ The actual value of the coupon prevent doubling down with a technology that prevents
a printed coupon and a loyalty card coupon to be used in
˺ A purchase requirement
the same checkout.
˺ When the coupon expires

˺ When the campaign launches A small subset of the population who will only buy
products based on coupons and deals. These are people
All of the above could influence how well your coupon who don’t believe in paying retail price for anything. A
is received and how it spreads online. It is important well-timed and planned coupon approach for your brand
to test the various factors above to understand which or product will minimize exposure to these consumers,
combination works best for your product. For example, as they are not your most desired target market.

Measuring Success

Conclusion

D igital coupons have tremendous potential for both marketers
and consumers. For consumers, digital coupons can become a
seamless way to save money on the products they love. For marketers
they can offer improved efficiency and targeting.

Understanding the digital coupon landscape and how to use digital
coupons can be a daunting task, as the landscape is rapidly evolving
with the advent of new technologies and ways of creating, distributing,
promoting and redeeming digital coupons.

Beyond having a deep knowledge of the space, marketers should also
strive to better understand consumer behavior, so that they can reach
their audience in the ways that resonate most.

About 360i
360i is an award-winning digital marketing agency that drives results for
Fortune 500 marketers through insights, ideas and technologies. 360i helps
its clients think differently about their online presence and evolve their
strategies to take advantage of the new world of marketing communications –
one where brands and consumers engage in interactive and multi-directional
conversations. 360i was selected to of Ad Age’s Agency A-List and Fast
Company’s roster of the “World’s Most Innovative Companies.” Current clients
include Oreo, jcpenney, Coca-Cola, Bravo and Diageo among others. For more
information, please visit blog.360i.com or follow us on Twitter @360i.

Conclusion

Couponing in the Digital Age: A 360i Playbook for CPG Brands

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