• by Steve Smith , Staff Writer @popeyesm, March 27, 2006

Using mobile phones as couponing devices was one of the first good ideas for this platform, and an early success for a now-famous Dunkin Donuts latte promotion. SMS makes this a fairly easy thing to do, and I am a bit surprised that more of it isn't going on. Technically, marketers can just put a short code on a packaged good or signage so shoppers can pull down in-store coupons they can show at the counter. Of course, you need the cashiers to be in the loop. Some of these teen clerks have enough trouble with the oversized keys on their Fischer-Price cash registers, let alone trying to figure out why you are holding your phone up to their face when buying Reese's Pieces. "Whoa, dude, I must have been catching a buzz out back when they covered this in training."

The perennial question in mobile is whether to settle for the kludgy but widely available technology of SMS messaging, or even a WAP page or develop your own downloadable application. An application gives you much more control over the presentation and it lets you push offers in a more targeted way to users. On the other hand, a mobile application dedicated to couponing has an inherent distribution problem: how do you get such an app in front of users and compel them to clutter their phone with yet another program? Santa Clara developer Moonstorm is working on both of these issues with its Cellfire mobile couponing app, which is being tested in California markets and will go national soon.

For now, Cellfire is downloadable only to Cingular phones, but it adds an icon to your deck and carries about half a dozen offers from the likes of SuperCuts, Hollywood Video, 1-800 Flowers and T.G.I. Fridays. "Making it free helps, and having compelling offers is important," says Brent Dusing, CEO, Cellfire. Substantial discounts at the retailers a consumer frequents, like two-for-one video rentals at Hollywood, are driving uptake. The partners provide the promotion and distribution for Cellfire. Materials explaining the download process are available in-store, so users can install the app and use the discounts on the spot. Because the application is dynamic and always wired, Dusign can revise offers and art work to phones on the fly. In California, where some local pizza shops have signed on, Cellfire can change offers according to the user's zip code.

Dusing claims early response rates that are off the charts in the first few months of the tests. "We are starting to get back redemption rates in the high teens and 20s for some retailers," he says. Well, considering the mode of distribution, that is to be expected. Users are opting into the system in-store and probably responding to specific offers, so we would expect hearty redemption statistics this early in the game. Cellfire is scheduled to go national next quarter.

Like every other mobile application, couponing has some hurdles. Because this is an in-store retail experience, mobile couponing is a local play. Yet as so many Web startups, even the large search engines, have discovered, selling local merchants on any digital marketing scheme is a long, costly haul. As in local search, the national franchises like video and food chains are the likely first users, but do people want to reserve a spot on their phone decks for coupons to a handful of big brands? A national direct mail powerhouse like ValuePak would seem like a natural partner here. On the other hand, piling on a vast selection of local coupons raises a real navigation issue--how to manage too many offers on a phone deck?

Despite challenges, mobile couponing applications are as natural as they are inevitable to the handset. SMS (even eventually the more attractive MMS) opt-ins are nice for now, but they require repeated, cumbersome user initiation. Over time, mobile couponing will be able to leverage the real-time, location-based strengths of the technology in fascinating ways. Once the carriers turn on the geo-locating capabilities that remain dormant in most recent phones, an app like Cellfire could push location-specific coupons. Here's a marketer's fantasy for you. Imagine walking into the local mall or grocery store, flipping open your phone and having coupons for all nearby stores or even aisles pop up on the screen. "Steve here are the offers within 100 feet of your present location."

Whoa, dude! I just had a "Minority Report"-type future-marketing hallucination. I must be getting a contact high from that cashier at the convenience store.