Clipping Coupons Online Just Got EasierClipping Coupons Online Just Got Easier

Consumers like coupons. Online shoppers like them more than most--they redeem Web vouchers either online or in stores three times as often as those they receive in the mail or newspapers. Now, retailers can access software to broaden their distribution of coupons while targeting and tracking them more closely.

Five-year-old online marketer CoolSavings Inc. last week launched Coupon Technology Solution, hosted software that lets advertisers generate coupons and E-mail them to customers or post them on their Web sites. The coupons contain bar codes that are scanned at the point of sale. Previously, the coupon distribution was limited to CoolSavings' database of 15 million households. Web surfers had to register at CoolSavings' site and download a plug-in to get coupons from companies such as Circuit City, J.C. Penney, and Unilever.

Paper products manufacturer Georgia-Pacific Corp. in Atlanta is using the software with Shaw's Supermarkets, a grocery-store chain in the Southeast. For Thanksgiving, customers could print an online coupon, redeemable in the store, for a free package of napkins when they bought two packages of paper plates, bowls, or cups.

"The real question is, do coupons work for those things that sell well online?" asks Kent Allen, Aberdeen Group's research director. "The answer is yes, but the challenge for CoolSavings is to get out there and introduce that idea."

Businesses spend less than 1% of their ad budgets online, Allen says. But redemption rates for online coupons from CoolSavings are 15%, compared with 3% to 5% for direct-mail offerings, CEO Matthew Moog says. For those reasons, companies may use online campaigns as testing grounds to target a particular demographic, then hone their direct-mail and other initiatives. The improved analytics of the Internet and speedier response times are extra benefits.

CoolSavings, the largest online coupon provider, projects that its revenue will jump 50% this quarter compared with last. The vendor charges a $10,000 setup fee, plus $5,000 a month for Coupon Technology Solution. Companies that also use CoolSavings' database pay $5,000 to $100,000 a month.