Coupons.com Raises $200 Million To Rival Groupon

Coupon

Groupon is not the only company benefiting from the boom in digital discounts. On Thursday, Coupons. com announced that it had secured $200 million in equity funding from institutional investors, up to half of which will be used to "facilitate liquidity" for employees and early investors.

The company declined to name any investors, but said they include mutual funds and no venture capital firms.

In addition to rewarding existing employees, Coupons.com also plans to use the new financing to add another 100 employees to its 300-person staff, which has grown by one-third in the last six months. Hiring will extend companywide, but will center on engineering, sales and client marketing departments.

Among other goals, Coupons.com -- which operates in a dozen European countries -- plans to continue its international expansion. It will also use the funding to develop new products and services, attract younger consumers and potentially pursue additional strategic acquisitions. In 2009, the company acquired Free State Labs, maker of the Grocery IQ mobile shopping application.

"This investment will help fuel our growth, as we continue to revolutionize the multibillion-dollar coupons industry that, for decades, has relied predominately on newspapers for distribution," said Steven Boal, CEO of Coupons.com, which distributes coupons to millions through its flagship site, as well as via thousands of third-party retail and other sites.

The company's clients include CPG brands such as Clorox, General Mills and Johnson & Johnson, plus large retailers including A&P, CVS, Duane Reade and Kmart. Last year, Coupons.com said the redemption value of coupons from its online properties doubled to more than $1 billion through the first half of 2010.

Hot social buying start-ups like Groupon and Livingsocial, however, have put increasing pressure on the company's business in the last year. Both sites have blown past Coupons.com in traffic this year, with Groupon attracting 12 million U.S. visitors in May, followed closely by LivingSocial at 11 million. Trailing behind them is Coupons.com, with 7.4 million.

Groupon earlier this month filed for an IPO that could raise almost $3 billion and value the company at an estimated $30 billion. LivingSocial has raised a whopping $630 million to date from backers, including Amazon and Lightspeed Venture Partners. Coupons.com declined to comment on whether an IPO filing is in its future.

To compete with the new wave of daily deal sites, Coupons.com said in its funding announcement that one of its goals was "to attract a new demographic of coupon user, who engage with new couponing methods, like digital, social and mobile coupons, but typically would not engage with traditional paper coupons." Exactly how the company will pursue that objective is not yet clear.

But Coupons.com CTO Steve Horowitz recently said he sees promise in the rise of near field communication technology to bolster the company's traditional focus on distributing coupons from major CPG brands, which are redeemed via local retailers and supermarkets.

From 2006 to 2009, the proportion of digital coupons among all coupons redeemed increased from 1% to 10%, while newspaper coupons fell from 63% to 50%, according to data from NCH Marketing Services.

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