Weak Economy Spurs Coupon Craze


BOSTON (TheStreet) — With consumers increasingly clipping coupons to save money, businesses are looking to cash in on their frugality.

Shoppers saved $600 million more in the first nine months this year than a year earlier, a 30% increase, according to NCH Marketing Services, a subsidiary of Valassis Communications (Stock Quote: VCI), a media and marketing services company that owns RedPlum.com, a popular coupon resource. Coupon distribution by makers of consumer packaged goods rose 11% to 231 billion coupons.

Among the popular sites vying for prominence in the online coupon market are RetailMeNot.com, BradsDeals.com, Savings.com and CouponCabin.com. Lesser-known sites seeking to draw away market share are 8coupons.com, a mobile coupon platform for small businesses; MoneyMailer.com, a coupon search engine that was named Entrepreneur Magazine's top advertising services franchise for 2009; CouponCabin.com, a site that provides both printable coupons and online coupon codes; and PricesandCoupons.com, a service that integrates price comparison with coupon codes.

"Redemption did not start to increase until the fourth quarter of 2008, following the financial crisis that began in September 2008," says Charlie Brown, vice president of marketing for NCH. "Since then, redemption volumes have consistently been up throughout 2009 due to dramatically changed consumer shopping behavior with coupons."

Demand for coupons has increased tension among the top companies in the space.

This past summer, Valassis won a $300 million verdict against News America Marketing (NAM), a subsidiary of the Rupert Murdoch-owned News Corp.. It accused the coupon powerhouse of trying to monopolize supermarket advertising.

In July, following the verdict in Michigan's Wayne County Circuit Court, NAM president Chris Mixson said the decision "rewards a company that turned to litigation as its business strategy rather than compete." He said evidence barred by the court would have made a case that Valassis tried "to induce collusion when it announced its new pricing policy in a public investor call."

"This information would have shown that this lawsuit was merely part of a larger strategy to get News America Marketing to raise its prices, a move that would have affected both our clients and their consumers by reducing the number of coupons available," he wrote.

Valassis still has lawsuits pending against NAM in federal court in Michigan and in California's Supreme Court.

While those two titans of paper coupons duke it out, another battleground is emerging. Although a study by Experian Marketing Services, a global information services company, assessed that 70% of households still clip coupons from newspapers, beleaguered print media companies are starting to lose their once tight grip on the market to online competitors.

NCH says online coupon distribution rose 41% during the first 9 months of 2009 and RedPlum.com saw coupon prints from the site jump 51% so far this year. At year-end 2008, online coupons represented 4.8% of all coupons redeemed in the U.S., compared to 6.3% by mid-year 2009.

"The typical family can easily save $1,000 annually by spending just 20 minutes a week seeking, clipping and organizing their coupons," says Charles Brown, co-chairman of the Promotion Marketing Association's Coupon Council. "If you do that every year for the next 30 or 40 years, that's $30,000 or $40,000 at today's value of money."

As might be predicted, Google (Stock Quote: GOOG) is among the companies betting that the shift to online coupons can be mined for profit.

Last month, company announced that it had acquired AdMob, a mobile display ad technology provider, for $750 million in stock. The deal, according to Google's announcement, is intended to help the company " in its efforts to develop more effective tools for creating, serving and analyzing emerging mobile ads formats. "

That acquisition was followed by other Google efforts to synergize the demand for coupons with the popularity of mobile devices.

Citing the fact that many are using their mobile devices to find local businesses, Google now allows businesses to add a coupon to its Local Business Center feature. These coupons can be either printed from a traditional workstation or used with a mobile device.

Google has begun issuing 100,000 window stickers to businesses in more than 9,000 cities and towns. Each window decal has a unique bar code that can be scanned with the camera feature of most mobile devices. The code will then immediately load the browser with information about the business and allow access to related coupons and offers.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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