Everyone loves a bargain. That's why the coupon industry thrives in good times and bad. There is a core constituency of bargain-hunters no matter what the economic climate, but coupon use tends to skyrocket during downturns as consumers seek new ways to stretch their budgets. The current economic doldrums are no exception. Recent surveys indicate that coupon redemption rates are up 16 percent.
In the midst of the latest surge in coupon usage, the couponing industry is undergoing a fundamental shift that is changing the way consumers access discounts in profound ways. The change began with a shift away from printed coupons and toward mobile coupons. The shift is continuing with the rise of proximity advertising, which enables coupon and marketing-message delivery within sight of the point of sale.
The evolution from paper to mobile coupons is a good thing for consumers, marketers, and the environment. And new developments in mobile coupons delivered with proximity marketing technology promise additional benefits for both consumers and merchants.
Old school: Traditional couponing
Although a change in the industry is well underway, traditional couponing is still a big business. Approximately 300 billion paper coupons are printed each year, and 3.2 billion are redeemed annually at an average value of $1.65. The resources expended in producing, distributing, and disposing of paper coupons are staggering when considered on that scale. Paper coupons are delivered in a variety of ways, including the postal service, and as the production-to-redemption rate illustrates, the vast majority end up in the trash, increasing the burden on landfills.
In addition to the waste of scarce resources involved in the printing and distribution process, old-school couponing tends to be an inefficient way to reach customers. Generally, paper coupons are distributed widely to compensate for the fact that it's a challenge to precisely target consumers who might be interested in the product or service advertised via this method. Paper coupon distributors rely on broad coverage with a relatively low response rate to generate new business.
These factors make traditional couponing less attractive to marketers, as does the demographic typically associated with paper couponing, which tends to skew older and less affluent. This makes traditional couponing less effective to market more upscale products and services.
New school: Mobile couponing
Mobile coupons -- discounts delivered online and accessible via mobile devices for point-of-sale redemption -- are experiencing explosive growth across all demographic sectors. Daily deal mobile coupon services like Groupon and LivingSocial are leading the charge, allowing consumers to sign up to receive offers for discounts on goods and services in their local area. According to Juniper Research, total mobile coupon redemption value -- which topped $5 billion in 2003 -- will grow to $43 billion in 2016.
Unlike paper coupons, mobile coupons are distributed electronically, so the production and distribution process consumes far few resources and has negligible environmental impact. Mobile couponing also more efficiently targets consumers since it is generally permission-based, meaning consumers opt-in to receive offers and services that are relevant to their interests.
The demographic for mobile couponing also tends to skew younger and more affluent, making mobile-coupon users an attractive target audience for brands of all types. In addition to the demographic allure of mobile couponing, the digital nature of the medium increases the coupons' potential to generate new business since users can easily share coupons with family and friends.
Generation next: Proximity advertising
Permission-based mobile couponing is far more efficient than traditional couponing since it virtually eliminates production and distribution costs. It also more effectively targets consumers, reaching audiences who have already expressed their interest by signing up to receive offers. However, mobile coupons delivered via proximity advertising are poised to take mobile couponing to a whole new level.
Proximity advertising that leverages Bluetooth technology and Wi-Fi capabilities to reach consumers within range of merchant- or sign-based antennas can deliver permission-based, rich-media messages to smartphones and tablet devices. The technology's ability to reach consumers in close proximity to the merchant is important: An IBM study found that 72 percent of consumers will respond positively to a call-to-action in a sales offer if they are within sight of the point of sale.
Since proximity advertising messages are permission-based and delivered via Bluetooth technology, messages are transmitted at no charge to recipients, and consumer privacy is fully protected. Proximity advertising has a unique immediacy: It's as personal as a text message and extremely relevant since the messages are sent while the consumer is within sight of the products or services offered. Like online mobile coupons, discounts delivered via proximity advertising are viral since recipients can instantly share them with family and friends via text, email, or social media platforms.
The road ahead
The shift from traditional print coupons toward mobile coupons is well underway, and proximity advertising is a growing sector that holds great promise. The transition toward mobile messaging is a win-win-win situation:
The environment benefits as inefficient and wasteful production and distribution methods give way to dynamic messaging that can be changed on the fly and delivered instantly.
Mobile couponing and proximity advertising deliver a win to consumers by providing savings opportunities and relevant offers at no charge, and in close proximity to the point of sale. Proximity advertising delivers an additional advantage by providing interactive tools that allow consumers to give feedback, get directions to locate merchants, view product details, and gain instant access to loyalty program rewards.
Merchants and marketers benefit from real-time metrics, gaining instantaneous access to rich consumer insights that can help them refine their messaging and extend their brand to drive unprecedented ROI and customer loyalty. As old-school couponing strategies give way to greener, more efficient and effective mobile couponing and proximity advertising techniques, everyone wins.
Alex Romanov is CEO of iSIGN Media.
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"The life of a mobile coupon" image by CellitSMSMarketing via YouTube.