Online Coupons Click With Companies

A deepening recession has companies trying to get more frugal consumers to turn coupon clipping into clicking.

CNBC.com Coupons.com said they issued $300 million worth of coupons in 2008.

“Online coupons have risen as the economy has gotten worse,” says Heather Dougherty, an analyst at Hitwise. “Consumers put more effort into saving money and are seeking out deals more.”

Retailers, fast food restaurants and consumer goods companies are taking notice, increasingly distributing their coupons through the Web and mobile phone, attracting a younger group of consumers who don't identify with traditional printed coupons.

The strategy seems to be clicking. Web sites that offer coupons and savings codes have seen a 14-percent increase in traffic year over year, according to Hitwise, an online measurement firm.

General Mills , for example, has coupons available for many of its brands on the Internet and on mobile phones.

“We are aggressively shifting dollars from print to digital coupons to reach a younger demographic that’s not buying newspapers,” says Karl Schmidt, director of promotion marketing at General Mills.

According to Hitwise, Coupons.com was the most visited coupon site last month. Coupons.com CEO Steven Boal says the company issued $300 million worth of coupons last year and expects that to soar to $1 billion this year.

The process is simple enough: Consumers find a coupon on a site, print it and then present it at the store, as they would a conventional one.

Coupons.com displays printable coupons for a number of companies including General Mills, Hershey’s , Coca-Cola , Kraft , Kimberly-Clark and Pepsi .

Boal says his site will increase its reach next month by dispensing coupons through store kiosks and through cell phones.

Other companies are also getting more high-tech by offering mobile phone coupons. Kroger distributes coupons through Cellfire, a company that makes a coupon application for cell phones. Cellfire allows Kroger customers to add coupons to their Kroger discount cards on the Web or through their mobile phone, instead of printing them.

Besides Kroger, Cellfire has deals with fast food restaurant Hardees , video rental store Hollywood Video and electronics retailer Best Buy . Consumers are alerted to the presence of coupons on their phone. At the time of purchase, a code displayed on the phone is keyed into the register by the sales clerk.

Cellfire Cellfire distributes coupons on mobile for retailer Kroger.

Cellfire CEO Brent Dusing says 26 percent of their coupons that were clicked on were redeemed. By comparison, 0.50 percent of coupons inserted in Sunday newspapers were redeemed in 2008, according to coupon processing agent Inmar.

Part of the appeal for these companies is that online coupons can drive more traffic to stores. Consumers may forget to carry clipped newspaper coupons with them, but online coupons can be printed at anytime virtually anywhere. Schmidt says that the majority of the General Mills coupons are printed at the end of the workday, presumably because people expect to use them when they stop at a shop on the way home.

Companies are also finding online coupons to be an effective and cost efficient way to launch new products.

Integrated Beverages Group offered buy-one-get-one-free coupons for Children’s Throat Cooler on its site. About 65,000 have been downloaded since the coupon went up in December 2008 with about 20,000 redeemed, says Michael Densmore, chief marketing officer, at Integrated Beverage Group.

Since the growth of online coupons is partly a result of the economic downturn, it remains to be seen what will happen when the economy recovers. Companies, however, are hopeful.

"Some of the behavior will continue," says Dougherty.

© 2009 CNBC.com