Coupons Inc. Counts on Brandcaster to Get Sale-Seekers Online

Newly Launched Pay-Per-Coupon-Printed Program Lets Marketers Target Based on Individual Profiles

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BATAVIA, Ohio (AdAge.com) -- With the launch last week of Brandcaster, a program seven years in the making, Coupons Inc. is out to make distributing coupons online as easy and prevalent as buying ads on Google AdSense. But first it will have to succeed where many others, including AOL, Google and Coupons Inc. itself, have failed: in making online couponing a fully functioning heir apparent to freestanding inserts.
Steve Boal, CEO of Coupons Inc.
Steve Boal, CEO of Coupons Inc.

Although Gen Y has migrated from newspapers to the web, it hasn't migrated nearly as quickly to online coupons. The internet accounted for only 0.4% of coupon distribution last year but -- thanks to better consumer follow-through than with newspaper coupons -- 2.1% of redemption.

Even with existing offerings, "our largest clients are now shifting 10% to 20% of their offline [coupon] spend to our platform," said Steve Boal, CEO of Coupons Inc.

Brandcaster goes beyond the existing Coupons.com system because it doesn't require people to leave the websites they're visiting and takes only a single click to print coupons, he said. It lets marketers target sites or individuals based on context or demographic profiles and pays publishers per coupon printed.

Stemming decline
Despite -- or because of -- the economy, a launch in couponing couldn't come at a better time. For the first time in 14 years, coupon redemption didn't decline last year, holding steady at 2.6 billion coupons, according to NCH. And a February survey by ICOM Information & Communications found that 67% of U.S. consumers said they were more likely to use coupons in a recession.

Of course, Brandcaster still relies on paper. And while Mr. Boal is willing to entertain dreams of paperless couponing, including load-to-loyalty-card tests by big clients such as Kroger Co., he's skeptical about consumer acceptance. For one thing, at least a third of consumer-package-goods volume comes in stores, such as Wal-Mart, that don't have loyalty cards.

Online-media companies such as AOL's Shortcuts have hung their hats on the load-to-loyalty-card model. But so far Shortcuts is limited to three marketers, Kraft Foods, General Mills and Kimberly-Clark Corp., and one major retailer, Kroger Co.

Of course, some industry watchers aren't convinced Coupons Inc. can make its leap so readily either.

Coupon graph
"Right now, the process of finding coupons [consumers] need is better offline than online," said David Diamond, a marketing consultant and former executive of Catalina Marketing, operator of the Checkout Coupon system. "Everyone hates coupons, except for the brand manager who has to make his volume base right now," he added.

Avoiding hard-core coupon users
Scattering coupons, even across relevant online content, may not do the trick either, he said, because people are used to seeking out their coupons in one place.

Brandcaster looks to address that issue by making a wide range of coupon offers available beyond the contextually targeted offers that provide the initial draw. Its targeting capability could make it easier for marketers to offer high-value deals to consumers so they'll be more interested, Mr. Diamond said. It could also let marketers reach the people they want while avoiding the 10% to 15% of consumers who are hard-core coupon users. The latter certainly can goose volume in a pinch, he said, but are undesirable prospects for most brands because their propensity for sniffing out deals makes them unprofitable.

Mr. Boal is positioning this as "the third leg" of online advertising, along with automated ad serving (à la AdSense, etc.) and search. It is, he said, the first really automated way of serving targeted promotional offers across multiple sites. (It works with about 3,000.)
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