Economic downturn bodes well for mobile coupon companies
Mobile coupons show promise, adoption remains modest
January 6 2009 - 12:24 pm ET | Colin Gibbs | RCR Wireless News
THE KROGER CO. is in the process of rolling out a nationwide mobile-couponing campaign after a successful pilot in the Southeast.
Plenty of application developers and content owners are spinning their wheels as they try to convince users to shell out for mobile goodies. But a small — and very optimistic — segment is hoping to get consumers to save money with their phones.
Mobile coupons — discounts delivered and redeemed via handsets — will be used by some 200 million mobile users by 2013, according to a recent forecast from Juniper Research, as Near Field Communications technology joins text-messaging and mobile barcodes as a retail force. While nearly all mobile coupon activity is currently limited to the Far East, uptake will surge in Western Europe and North America over the next few years, the market research firm predicts.
“We believe that consumers will be attracted to mobile coupons compared to traditional paper, and by the ability to tune the types of coupons received to their personal preferences rather than receiving all types through the vanilla distribution mode that is allowed by paper coupons,” Howard Wilcox of Juniper Research wrote. “Today, the overwhelming majority of coupons are paper-based, but the mobile phone is the ultimate individual marketing device, and mobile coupon pilots show great increased redemption rates — often double-digit percentages.”
Value play
Indeed, while mobile coupons are still in the earliest stages in Western markets, Cellfire — one of the first players in the space — is already gaining traction. The San Jose, Calif.-based startup found success last year by teaming with partners such as Arby’s, Gamestop and Valvoline to deliver discounts directly to mobile users, and is in the process of rolling out a nationwide campaign with The Kroger Co. after a 219-store trial in the Southeast that saw redemption rates as high as 20% — compared with print campaigns that typically result in a 2% return.
“The sliver lining of a negative economy for Cellfire … is that consumers’ interest in savings and coupons has gone up considerably,” Cellfire CEO Brent Dusing said via e-mail last week. “So marketers are viewing coupons as a valuable way to reach customers. We see advertiser promotions budgets remaining relatively stable vis-à-vis other media and advertising.”
The 3-year-old firm delivers coupons via a downloadable application as well as through a wireless Web site; users can choose to be alerted to new coupons via SMS or e-mail. Cellfire has grown to roughly 25 employees and in February raised $12 million in a third round of funding, and its offerings can be found on the decks of Verizon Wireless, Alltel Communications L.L.C. and several smaller operators.
Free-for-all
A host of other players are vying for room on the playground, too. MobileVerbs Inc. last month announced a deal with Jack-in-the-Box that allows users to provide feedback and receive coupons via text message, and Subway restaurants has tapped Modiv Media to handle mobile couponing for outlets in New York and Washington state. Yahoo Inc. has partnered with Coupons Inc. to launch a mobile platform, and other players include moQpon, NetInformation, Red Fish Media and 8coupons.com — not to mention the ever-growing number of companies looking to tap the mobile barcode segment.
Mobile coupon companies face a considerable challenge in making consumers aware of their offerings, however. Cellfire may be flush with cash thanks to last year’s funding round, but it doesn’t have the deep pockets to support broad national marketing efforts. Instead, the company works with partners to promote coupon campaigns with in-store signage, e-mails, newsletters and earned media. And, as Dusing points out, the value proposition that lies at the foundation of mobile coupons is an easy one for users to grasp and appreciate – especially during an economic downturn.
January 7, 2009 05:34 pm
As a correction to this article, TxtWire (www.txtwire.com) has teamed up with Modiv Media and is now handling the Subway business including integration with POS systems.
January 7, 2009 05:38 pm
Mobile coupons are a great concept, Cellfire's business model is not. First, the number of coupons available are woefully thin. A search by zip code will likely provide a coupon for 1800-flowers or a travel agency, and not much else. Without a presence of offers approaching critical mass it is just not worth it for a carrier to deploy on a national scale. Cellfire's acquisition of coupon partners over their 3 years has moved glacially and this has been a major barrier for their uptake by consumers. This might be why they have had such difficulty in securing relationships with carriers for an on deck presence and have been relegated to the wireless web site approach. Its a catch-22: No coupons, no subscribers. No subscribers, no carriers. No carriers, no advertisers. No advertisers, no coupons, and so on. Second, without carrier sponsorship and endorsement, discoverability of Cellfire's presence is a huge issue. Cellfire, like many WAP applications, on some carrier sites, is buried beneath several layers of screens. This was the case at one large carrier who was an early adopter where Cellfire flopped. Third, if you can remember your feeling of being in a check out line at a retail store and behind a customer who whips out a checkbook to pay for their purchase, imagine the user experience of attempting to access a carrier web site in-building coverage issues and all, so you can find your coupon and show it to the cashier. Mobile coupons, I hope so...Cellfire I don't think so.
January 7, 2009 05:59 am
In answer to Simon's question, the coupons under discussion in this article are delivered using a varity of mechanisms. Cellfire, for example, has a wireless web mechanism, and alternatively, a downloadable app mechanism. What "works" depends heavily on redemption requirements. The MMS example you cite is most closely associated with barcode redemption, though you can also pull this off in a wireless web environment.
January 7, 2009 01:06 am
Can anyone tell me if these mobile coupons use or require a mobile handset client that needs to be downloaded by the subscriber or are coupons sent over SMS or MMS bearers?
January 6, 2009 03:05 pm
Also, check out Dizgo (http://www.dizgo.com), a mobile advertising solution deployed in several cities and resorts that helps drive immediate traffic to local retailers.
January 6, 2009 03:52 pm
Neglected in this article is the product Qpons made by the team at NearU Search, Inc. The product found at http://qpons.nearu.us is a self-service text advertising application. It allows you to set up a schedule and build your qpons. In under 30 minutes. The 'how-to' marketing collateral is available in the application. And later this month, an online report detailing the day-to-day volume of opt-ins, quits and searches will be live. Prices start at $60 per month for 500 text ads - it is far and away the best deal in this space. This little darling is currently the fave of merchants from bookstores to watch retailers across the country. In addition to the basic alerts, a customer can search the current Qpon at any time. Customers are also directed to the nearest store location for redeeming the Qpon. And the advertiser gets a bit more for his money on the company's web site at http://www.nearusearch.com which features the current Qpon for each advertiser.Total control of your SMS ads for a song. It's a strong play in any economy.