Bar code-based mobile coupons will take flight this holiday season
Pointing to the growth of mobile coupon programs that combine location and loyalty in the past year, experts agree that bar code-based offers will lead the pack for mobile offers this holiday season.
Although type of coupon can differ from brands depending on the marketing objective, in-store, location-based mobile offers are expected to be a particularly strong mobile medium used by retailers this year. However, the uptick in mobile coupon adoption also comes with plenty of challenges for retailers.
“From the data we have from this year and with consumers increasingly turning to mobile for coupons, what is most prevalent is scanning a bar code compared to tapping a phone,” said Sheryl Kingstone, Toronto-based research director at Yankee Group.
“It’s a trend towards more in-app activity and consumers using their devices for things around shopping,” she said.
Yankee Group’s data from Sept. 2011 found that 14 percent of consumers used in-app bar code mobile coupons. The same study conducted this year found that 26 percent of consumers used mobile coupons tied to a bar code, showing the year-over-year growth in the technology.
Additionally, approximately 40 percent of smartphone owners use their devices to comparison shop.
To compare, 18 percent of consumers surveyed in Sept. 2011 received SMS-based coupons. One year later, the percentage jumped to 24 percent, per Yankee Group’s findings.
Although SMS-based mobile coupons have also seen growth, it is clear that with the increasing proliferation of smartphones, more marketers are using apps to their advantage as part of their holiday mobile strategy.
Apple’s recent launch of Passbook will likely contribute to an increase of in-app mobile coupons as well.
Passbook’s strong tie-in with location could help retailers ramp up their mobile initiatives this season. In fact, Yankee Group’s data finds that 43 percent of retailers plan to use location-based data to send out relevant, local offers over the next two years.
Additionally, many retailers are eyeing Passbook for its loyalty program integration.
However, the value for consumers to tie a loyalty card to their mobile device might not be clear.
“The consumers are not looking for integration with a loyalty program because they are unaware of the potential,” Ms. Kingstone said.
“When retailers educate [shoppers about] it, the consumer will be able to have information at their fingertips,” she said.
“Retailers are playing around with so many strategies that they are confusing the consumers. It’s great to play around, but make sure there is a holistic strategy around it so consumers know what it is and how to use it.”
Education is key
In-store coupons — including bar code-based coupons — will be retailers’ best defense this year against showrooming, according to John Faith, senior vice president of mobile at WhaleShark Media, Austin, TX.
However, educating consumers on how to use mobile coupons is still an issue. Therefore, retailers should be looking for cross-platform strategies to promote mobile initiatives.
“There is often a disconnect between in-store marketing and their online business — it is siloed,” Mr. Faith said.
“Retailers should think about all channels — mobile, in-store, online, email and social — when they consider couponing strategies to help them drive increased sales,” he said.
According to Pricegrabber’s winter holiday study, 32 percent of smartphone owners plan to download a shopping app this season.
Of these users, 63 percent of users planned to download a bar code-scanning app. Seventy percent of users wanted to download a coupon app, and 66 percent planned to download a comparison-shopping app, showing that there is a need from consumers to download and use mobile shopping apps (see story).
Some experts believe that although there is an increase in opportunity, mobile coupons still have aways to go with getting retailers initially on board.
Again, education is a problem from both the retailer and consumer side.
“The reality is that both consumers and advertisers are curious about mobile coupons but few have trialed them yet,” said Doug Stovall, executive vice president of sales and services at Hipcricket, New York.
“I would consider us still being in the early adopter-phase and not yet in mass-market adoption,” he said. “There is still a lot of education that has to be done among marketers and retailers, especially around mobile coupons since redemption tracking and point-of-sale integration is such an important topic.”
With mobile consistently becoming more complex, it can be a challenge for retailers to keep up with technology.
“Since more than 50 percent of consumers are using mobile coupons in some capacity, there’s clearly some understanding and quickening adoption [from retailers],” said Mihir Shah, CEO of Tapjoy, San Francisco.
“However, they’re constantly getting more complex with ever-improving tools for hardware integration, discovery, sharing and engagement,” he said. “This figure will only grow higher as these tools improve.”
Additionally, Mr. Shah believes that discovery is a major challenge in how consumers discover in-app coupons. Although major deal apps such as Groupon have traditionally had a leg up with helping consumers discover offers and deals, there are now a plethora of shopping apps to pick from.
Although there will undoubtedly be more consumers using their devices to comparison shop and clip coupons, making sense of the data attached to these mobile coupons is a challenge for retailers.
For example, being able to track location-based offers coming from multiple coupon sources is tough.
“There’s a ton of opportunity with mobile to personalize deals and more effectively segment and target consumers, and my impression is that marketers and retailers haven’t figured out how to do that yet,” said Alex Keisner, head of business development at GoPago, San Francisco.
“It will take a lot of time to understand what data is available, how to get it, and from there how to digest it and make actionable decisions based on it,” he said.
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York