RetailMeNot's Mobile, App Drive Traffic Growth

Digital coupon provider RetailMeNot continues to ramp up its mobile efforts ahead of the upcoming holiday season. Reporting third-quarter results this week, the company said traffic to its mobile site now accounts for 27% of the total 132 million visits it had in the quarter. Add in traffic to its mobile apps, and that percentage grows to 45%.

Its app downloads increased 1.7 million to 8.8 million, while app sessions jumped 12-fold from a year ago, and 74% from the prior quarter to 46 million. That activity helped boost RetailMeNot’s mobile net revenue nearly threefold to $5.8 million in the quarter, or 12% of total net sales of $47.4 million.

The bulk of that mobile revenue came from online buying on mobile devices, with RetailMeNot taking a commission on sales derived from its platform. But the company has been expanding an offline initiative in which it sends offers to app users’ mobile phones when they’re near brick-and-mortar stores. To that end, it now has 3,000 geofenced retail locations, up from 1,100 in the prior quarter.

RetailMeNot is also working with 65 retail partners, including Kohl’s, J. Crew, Toys “R” Us, and Aeropostale, on rolling out a new platform that allows merchants to create and distribute their own in-store offers to drive foot traffic. These efforts to connect mobile to offline shopping help to boost mobile usage.

“We believe the growth in mobile app sessions was fueled by a combination of an increase in our installed base, extension of our geofence locations, increased frequency of our mobile deal alerts and an increase in retailers' use of our in-store offer platform,” said RetailMeNot Douglas Jeffries during the company’s earnings call.

He acknowledged that consumers are still mainly using its mobile site and apps to research purchases that ultimately take place on larger screens, like tablets and desktop computers. With mobile increasing the frequency of visits overall, the company believes expanding mobile adoption will lead to increased sales volume.

In a research note Wednesday, Stifel Nicolaus analyst Jordan Rohan estimated RetailMeNot monetizes traffic on mobile at 40% the rate of the desktop, up from 29% a year ago.

With holiday shopping set to ramp up in the coming weeks, the company indicated it plans to roll out seasonal campaigns with retail partners, but didn’t provide specifics. RetailMeNot CEO Cotter Cunningham only noted that there are at least two marketing promotions in the works specifically designed to drive app downloads and mobile traffic.

RetailMeNot, however, is hardly alone in trying to capitalize on the rise in mobile shopping during the holidays. Rival service this week released an updated version of its iOS app that features coupon codes for both national and local retailers.

“It’s going to be a crazy holiday shopping season as smartphone-wielding consumers turn to these apps for deals and offers while they shop in a store,” stated Yankee Group analyst Sheryl Kingstone, in a post about the move. Data from the research firm shows some 85% of consumers are interested in mobile coupons.

But the reality is print coupons still dominate the landscape. A survey by The Omnibus Company released in September and commissioned by RetailMeNot found that printable coupons are the mostly widely used (60%), followed by online (29%), with mobile accounting for just 10%. Not surprisingly, mobile coupon users tend to skew younger.

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