• by Laurie Sullivan  @lauriesullivan, March 13, 2008

AOL is expected to announce today a free consumer service that ties online coupons to loyalty cards, and privacy experts are less than pleased. However, supporters say that while the cards record purchases and shopping habits, the technology helps marketers focus campaigns on products that shoppers really need.

The Kroger Co. becomes the first to sign up for AOL's Shortcuts. The grocery chain will offer the service at 2,481 stores--such as Kroger, Ralphs, King Soopers and Fry's--in 31 states across the country. General Mills signed on to offer coupons for Cheerios, Green Giant and Yoplait beginning today. Kimberly-Clark and Kraft will begin offering discounts on items by the end of the month.

Sharon Baker, executive director of AOL's program, said all consumer information remains confidential, and will only be offered as aggregate in reports to consumer goods product (CPG) companies, which use the information to provide better service and products. "A profile area on the site will let consumers tell us the information they want to receive, such as information on organic products," she said. "We may use the information in aggregate, never identifying the individual by name."

Consumer privacy watchdog and Caspian founder Katherine Albrecht said companies have begun shifting toward opt-in services that offer incentives, making it more difficult for shoppers to resist giving away personal data, such as shopping habits.

"If the stores tell you we're going to track everything you buy, consumers say 'no, no,' but tell them you're going to track all purchases and give them coupons to save money, they say 'oh, wow, that's great'," Albrecht said. "Anyone participating in loyalty card programs should already know their purchases are being recorded."

Despite potential concerns, the service offers a host of benefits to marketers and CPG companies, providing faster access to data. Information on results from paper coupon marketing campaigns that once took between 60 and 90 days to get, Shortcuts can deliver within two weeks. Baker says the service should alleviate online coupon fraud because printing isn't required, and consumers could begin seeing mobile services within the next 60 days that let "you send shopping lists to a mobile phone."

Shoppers can visit shortcuts.com to set up an account using store loyalty cards from Kroger grocery stores by typing in the number on the back of the card, which identifies them at checkout in the store.

Beginning today, consumers can search the online coupon service by brand, product or category and click on grocery coupons they want to add to their card. The cash register clerk simply scans the loyalty card at checkout. An API Shortcuts Web site integrates with the grocer's point-of-sale (POS) software from IBM used at checkout registers, and the coupons are automatically applied to the purchases.

The Web site monitors coupons that consumers redeem, as well as the amount saved for each purchase and value of those remaining on the loyalty card. For shoppers who prefer paper coupons, Shortcuts lets you print a custom list to take to the grocery store. About a dozen AOL employees support the service, along with Platform A, the company's advertising network.