Coupons Are Hot. Clipping Is Not.

February 25, 2009: The Wall Street Journal -- Increasingly, shoppers are skipping the scissors and getting coupons online or having discounts sent to their smart phones and rewards cards. Currently, online coupons account for 1% of all coupons offered nationwide -- but their use is growing quickly, with redemptions jumping 140% last year, according to Inmar. Manufacturers are attracted to digital-coupon delivery in part because of its 13% redemption rate -- far above the 1% redemption rate for coupons found mostly in newspaper inserts, on the back of sales receipts and on product packaging.

Stores are jumping further into the high-tech end of couponing. Last month, Kroger Co. said it would go national with its free text-messaging coupon program, a service provided by Cellfire Inc. Dan Keefe, who works for a technology firm in Cincinnati, signed up for Cellfire last fall. Now every Sunday, Mr. Keefe, 46 years old, checks his BlackBerry for deals, such as the 50-cent discount on a package of Kroger-brand cheddar cheese he recently received. Clicking on a link in the text message tells Kroger's computer system to add the discount when Mr. Keefe's loyalty card is scanned at check-out.

Grocers and packaged-food companies view this pinpoint digital advertising as a way to improve customer loyalty, draw more foot traffic and fuel overall sales. Customers see the marketing as a way to find bargains they might otherwise miss.Online coupons are also being scoured for untapped discounts. Coupons.com, a site that offers coupons from large food manufacturers and national grocers, says its users printed out online coupons valued at $300 million last year, an increase of 140% from 2007. Based in Mountain View, Calif., the company predicts the total will triple this year, partly because of the recession.

General Mills Inc. last year accelerated its spending on digital couponing, according to Karl Schmidt, director of promotion marketing. He says the company, which runs its deals on Coupons.com, pays only after a customer prints out a deal. Also, General Mills can have a coupon online in a week, compared to the two months it takes with print media.

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