The rise of effective location-based digital coupons
By Alex Romanov, Guest contributor
2010 was widely proclaimed to be “The Year of Mobile,” with marketers and industry analysts everywhere taking note of the growing trend. Mary Meeker, the renowned mobile analyst commented earlier this year that “mobile is driving the most dramatic behavior transformation in history.”
But some new trends are already taking off in 2011: place-based and proximity-based marketing, a rapidly-expanding channel that combines the benefits of digital and mobile interactions. In particular, marketers are increasingly using this channel to deliver digital coupons to reach consumers. From an advertising perspective, this medium is particularly effective, and for number of reasons – most importantly because the mobile channel is ideal for reaching today’s technologically-savvy consumers within the context of a place, location or proximity to a retail space.
Mobile and Digital Converge
It’s estimated that more than 85 percent of Americans adults now own mobile phones, and a recent study found that Americans are spending almost three hours per day on their mobile phones. It’s safe to say then that this time will only increase. Capitalizing on consumers’ growing mobile usage, place-based mobile technology allows retailers to connect with consumers instantly as they are in-store, shopping and primed to buy. Typically, digital coupons are delivered through this proximity technology by detecting consumers who have mobile phones and are within close range of a retail presence (from 3ft to 300 feet) and then sending those consumers content – with their permission, of course. This technique provides an unparalleled level of “hyper-local” targeting. The potential impact and ROI for advertiser and brands is tremendous.
Huge Digital Coupon Growth
For those still questioning the efficacy and value of digital coupons versus print coupons, the latest numbers speak for themselves. According to the Coupons.com Digital Coupons Trends Report for 2010, more than $1.2 billion in digital coupons savings was issued in 2010, representing a 41% growth over the year before. Digital coupons have dramatically outpaced the growth compared to coupons distributed in newspapers, which only grew 7% in the same period.
And because consumers can be targeted as they are shopping – sort of a digital version of the in-store “free food sample” concept, the digital coupons are delivered right into the palm of consumers’ hands. Digital coupons target consumers at the right place and at the right time, and as a result consumers are far more likely to visit the store, interact with a brand, or make a purchase. In fact, a study conducted by IBM found that 72 percent of consumers are more likely to take action after receiving a message while “on location” compared with messages received off-site.
Direct Marketing News Convenience, High Response Rates and ROI
Digital coupons deliver what printed ones cannot: convenience, higher response rates, immediacy and measurement. Comparing the response rates of print coupons to place-based mobile coupons, it’s clear which delivery method is most effective: print coupons traditionally only receive a 1.5-2 percent response rate, whereas place-based mobile coupons typically receive response rates of between 23-33 perecnt. In terms of ROI, marketers stand to make significant gains by using these types of digital mobile coupons.
Unlike print coupons, using digital-based coupons also offers the opportunity to build demographic information about consumers as the technology allows retailers to collect data on which offers are being accepted or rejected by consumers, so they can manage or adjust their campaigns immediately. All collected data is kept for review and future use, providing useful “Business Intelligence” while also helping retailers to improve the effectiveness of their advertising campaigns. This means that retailers can quickly identify potential problems and opportunities and respond to both – simultaneously reducing revenue losses and increasing revenue gains.
I believe that digital coupons will become hugely popular for marketers across all verticals throughout 2011. It is very likely that going forward, we will see 2011 or 2012 become “The Year of Proximity-Based Marketing,” as mobile and digital signage converge, and with digital coupons being utilized by marketers on a large-scale basis.
With this in mind, it would be wise for brands to take note of growing place-based mobile and digital interactions and plan for the future.
Alex Romanov is CEO of iSIGN Media, a Toronto-based digital media company that is the leading developer of interactive proximity marketing solutions. The company’s solutions allow digital signs to ‘talk and interact’ with nearby mobile devices, providing mobile users with information and incentives at exactly the time they need them. Contact him at alex@isignmedia.com.
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This was very interesting, I was not aware of the IBM study that was done about consumers are more likely to take action after receiving a message while on location. It would be great to be able to use a coupon on your mobile device while at the store.