Commentary
Electronic Couponing Takes A Big Step Forward
- by Thom Forbes , Featured Columnist @tforbes, December 20, 2011
It’s not difficult to predict that a press release about a future trend or product is going to have a big impact if it’s issued under the logo of, say, Wal-Mart or Procter & Gamble because of their sheer muscle mass. Yesterday’s announcement that P&G is going to partner in a new e-couponing technology is the answer to a problem that most of us probably didn’t know existed (although we wondered why scanning smartphones at the checkout counter really hasn’t caught on at the local Piggly Wiggly).
“In this world of mobile boarding passes and QR codes, I had no idea that this was such a hard thing to do,”writesSmart Planet blogger Heather Clancy.
Here’s the problem, according to the release by P&G and mobeam, a Cupertino, Calif.-based startup that recently concluded a $4.9 million round of financing: “While smartphones are supporting users and simplifying life in a host of new ways, until now, phone couponing has not been an option because barcodes displayed on mobile phone screens are invisible to commonly used in-store laser scanners.”
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Mobeam has figured out a way to convert the barcode data on packages into a beam of light –- called mobeams -- that can be read by the scanners already installed at most checkout counters.
“Hey, what’s the big deal?” you may be saying, too, “I already feed my caramel macchiato habit at Starbucks this way.”
It’s true that Starbucks has “enabled 26 million mobile payment transactions this year alone,” writes Tricia Duryee in All Things Digital, “but few people realize that Starbucks had to replace all of its scanners in its stores for the app to work.”
There is a hitch here that the imprimatur of P&G will help to overcome. Mobeam has to convince smartphone makers to embed its technology into its devices.
“Mobeam says it is working with handset makers so that tens of millions of phones hitting the market in 2012 will include its technology, though it declined to say what device makers it is in discussions with,” writes Hannah Karp in the Wall Street Journal. “Samsung Venture Investment Corp., the venture-capital arm of Samsung Group, a large maker of mobile devices, recently invested money in mobeam.”
The partnership with P&G will explore and test the technology, which will enable forthcoming devices to work with legacy red laser barcode scanners at the point of sale.
"Our vision with P&G is for the mobeam technology to be used and leveraged broadly by many leading CPG companies, with P&G and other key consumer goods partners as first adopters," says mobeam CEO Christopher Sellers.
"We are excited about the potential for this new technology and our partnership with mobeam to make shopping simpler and faster for consumers. Couponing is a great way for shoppers to try new products or save on the trusted brands their families have come to love,” says Jeff Weedman, P&G’s VP Global Business Development.
More than 300 billion coupons are currently distributed in North America every year, representing a $3.7 billion slice of the consumer packaged goods market. Redemption had been steadily dropping since 1999 from a high-water mark of 4.6 billion redemptions to 2.6 billion when recession hit in 2008.
If you’ve ever tried to navigate something like A&P’s Freshnews couponing system and electronic flyer program –- which requires multiple clicks and the need to print out a physical coupon for what seems to be a measly ROI –- you may feel that sitting in front of a Sunday FSI with pair of shears is probably still a better way to do things.
I envision a system in the future where, on a simple level, you can enter certain keywords like Luvs or Snickers or kumquats and get coupons for such products sent automatically to folders on your device. Better yet, hold the phone up to the barcode of a product and let it retrieve whatever’s relevant –- including competitor’s deals. And if this is what I’m coming up with, there’s no telling what the people who really know what they’re doing are working on out there.
Coupons are poised to continue to come back, writes Todd Hale, SVP, Consumer & Shopper Insights at Nielsen. Hale sees real opportunity to reach beyond Caucasian households, which currently represent 75% of redemption, and into Hispanic and African American households with targeted promotions.
“The potential pay-off -- in terms of volume growth and winning new customer loyalty -- can be significant,” he wrote in an analysis in April 2010. “In addition to expanding the appeal of coupons in general, manufacturers and retailers would do well to target enthusiasts…,” he writes. “With advancements in coupon delivery vehicles that enable both better targeted coupon distribution and redemption, manufacturers and retailers will continue to have real opportunities to use coupons to drive sales for the next few years and beyond.”
More than likely, the announcement yesterday by P&G and mobeam represents a major advancement in a vehicle that will deliver big time down the road.
Thom Forbes was editorial director of Adweek and its sister publications in the 1980s and has written about marketing and media as a freelancer since 1990.
When I worked in marketing at P&G it was verboten to use electronic coupons of any sort so this move is a surprise. Good for them on getting ahead of the curve on this. What I do know is that there are enormous hurdles to overcome before we have mobile coupons that mimic the Sunday coupon book (commonly referred to as FSI's). I have been involved with a couple of attempts (some still ongoing) to make this happen. From my experience at P&G implementing every known version of a coupon, I know firsthand the uphill battle to make this work. The first two obstacles below are mentioned already in the article. The others are just as big.
1. The investment required for new scanners at all retailers except Target, Walgreens, Walmart and a few others. There's both hardware AND software AND training needed at retailers.
2. The effort required to get the coupon technology or app onto enough people's phones to make a difference. Mobeam will never get on enough phones to make a meaning difference to a company like P&G - they will be mostly what P&G calls a "Test and Learn" example.
3. The investment (time & money) to connect the retailer's enterprise system to the coupon database to the coupon clearinghouse database. This requires new software, additional hardware and the cooperation of at least three additional parties (in addition to the P&G's and Walmart's of the world)
4. The agreements needed from all these parties as to who makes the money and who owns the data. The data is what retailers and CPG's like P&G really want but there will be a war over this that slows implementation.
5. The guidelines that keep this all GAAP compliant. Coupons are a line-item on the balance sheet so much be tracked and audited per federal mandate. Mobile coupons will raise a few eyebrows at the IRS.
These are the major hurdles and there are certainly many smaller ones. So will P&G's venture succeed? I wouldn't take the Vegas odds on that bet. But it could provide the learnings to get it right the next time...when NFC overcomes its own obstacles.
How do you know what's on sale and what coupons you should have for what ? Stopping at each product you may or may not want and waving a phone at it and then comparing prices ? Sometimes you don't know what you will buy until you see a coupon. How does that work on 2" x 4" ? And when there are teeny tiny expiration dates ? Or presently, showing the cashier an app to scan for one coupon, then taking the phone back for the next, etc. (yes a folder will help, but not an end all or be all) and you are standing in line of a person with 20 phone coupons ? To date, the most effective way to coupon is to have them get into your house to save printing costs and checking out bumbles of coupon sites to find out which ones work and which ones don't. And now they have your email address......Planning what to buy where before going to the market/drugstore is the best way to keep to a budget.
It's not JUST about the consumer being able to get the discount. The retailer needs to be reimbursed. Paper coupons are sent to a clearinghouse for a physical count, fraud check, and payment.
With a pure digital solution data must be captured and validated. Existing direct to card solutions - where the discount is loaded onto a retailer's loyalty card - require integration at each retailer; a daunting task for any national effort. Does the Mobeam proposal involve similar POS system updates on a retailer-by-retailer basis?
More questions to consider:
Does Mobeam send unique data to the POS, such as the cell phone number?
How is that data captured and passed to P&G for validation?
How much work must a retailer undertake to make that happen? And the answer had better be "not much".
Who is paying for any work the retailer must perform?
Will retailers continue to get their 8-cents (or more) for handling?
Will P&G receive the phone numbers of everyone that loaded the coupon to verify that a claimed redemption is not fraud?
How is that data kept secure and how does it conform to privacy standards as the data passes through many many hands?
More generally how exactly IS fraud controlled?
How are consumers prevented from scanning the same coupon multiple times?
How do consumers deal with a mis-scan? How do they PROVE that they have the right coupon and they brought the right product? Is scanning based at the family code level or at the product level?
And more...
One other point: Yes redemption HAD dropped for many yeas, but it made a big comeback with the recession.