As consumers increasingly turn to their mobile devices to help scout out offers and deals, mobile coupons have gotten to a point where they need to be contextually relevant so that they can scale. Smart brands have a trove of data that they can use to make mobile coupon efforts more effective.

“There is a lot of talk and excitement in the industry around geo-location and coupons,” said Patrick Moorhead, vice president for mobile at Catalina Marketing, St. Petersburg, FL.

“We believe that geo-location is a great opportunity, but it’s really just a component of personalization,” he said. “Location is a type of personalization, but it really becomes impactful when combined with other personalization criteria, namely past purchase behavior.”

“A coupon for frozen pizza in the parking lot of the store is cool. A coupon for my favorite brand and favorite toppings while I am on my way into the store is something I can use.”

More than location
According to Mr. Moorhead, analytics are not playing a big enough role with how marketers target mobile offers because the majority of couponing apps and efforts appeal to a wide group of users.

Offers within these apps only reflect a small spectrum of what a brand or retailer is interested in promoting.

One of the ways that brands can more effectively target consumers is by using a shopper’s purchase history.

The ultimate goal behind using these types of mobile offers is two-fold – consumers save money and time with relevant offers and retailers are able to target more effectively by taking the guesswork out of which offers are most useful.

When it comes to types of analytics that marketers should be looking for, scale of distribution, sales impact, incrementality and redemption rate all still need be considered. However, these metrics may only be important when looked at in conjunction with other factors.

“For example, it may not be enough to simply consider scale of distribution without looking at the consumer make-up of that scale,” Mr. Moorhead said.

“Reaching a somewhat smaller audience of your best consumers is certainly more preferable – and profitable – than reaching tons of consumers who will never buy your product,” he said.

“We also are looking at the value of multiple impressions an offer has across all our networks – in-store, online and mobile. We’ve noticed that unlike many traditional print coupons, multiple impressions of a mobile coupon may actually have a favorable impact on overall redemption, especially when it comes to personalized offers. We are testing this hypothesis on our mobile commerce solution currently and look forward to sharing our insights and findings when we know more.”

Payment and loyalty
Recently, a Merkle executive at the 2013 Mobile Marketing Association Forum San Francisco said that redemption rates can be as high as 89 percent the first time that a consumer receives a mobile coupon from a brand. From there, ongoing redemption rates can be around 25-40 percent (see story).

This shows how mobile coupons can be alluring to consumers at first. The trick though is to keep the conversation going with tailored, personalized offers that continue to generate high redemption rates.

According to Alex Campbell, co-founder/chief innovation officer at Vibes, Chicago, mobile coupons lessen the impact that an offer has on a retailer’s margin because they are customizable.

For example, if a retailer knows that it will only take a five percent coupon to drive a loyal consumer in-store versus a mass coupon that is sent out for 10 percent off, the retailer saves money while also making the offer more customized.

Although there are numerous challenges around mobile payments, there is a significant opportunity for marketers to ultimately combine coupons and payment.

Take Apple’s Passbook, for example. The technology serves as a mobile wallet to let consumers save passes and offers but is also triggered by location to alert consumers when they are near a store and can redeem an offer.

Location is a big indication of intent and combined with real-time information, retailers can mix up a mobile offer with dynamic content, such as current inventory.

“We’re in the process of developing technology that will allow you to dynamically update a pass based on factors like how close someone is to a store – sometimes if you’re farther away from a store you need more incentive to drive the distance,” Mr. Campbell said.

“We’re also working on technology that can change offers based on available inventory,” he said.

“Knowing a consumer’s price elasticity for certain items allows a marketer to create the perfect offer – one that saves the consumer money on something they care about and reduces the margin hit for the retailer,” he said.

Wading through the mess
Another challenge around using data in conjunction with mobile coupons is knowing what information a retailer actually has to more effectively target a user in the future.

“To get the right coupon to the right consumer at the right time, marketers need access to an immense amount of user-level data to target correctly,” said Craig Davis, CEO/founder of Relevvant, San Francisco.

“Beyond that, organizing and understanding the data is paramount,” he said.

Compared to the massive amount of prep time that goes into the marketing for paper coupons, one of the advantages of mobile is less lead time to develop programs and campaigns, meaning that if marketers have real-time access to data, a campaign can be changed on the fly.

“With 92.5 million people in the U.S. redeeming digital coupons in the past year, there is an undeniable trend towards touching the consumer closer to the register,” said Brandon Young, managing director of marketing analytics at Accenture Interactive, New York.

“Companies need to take advantage of this plethora of data to offer consumers value-add content in real-time that is highly targeted, to ultimately drive greater purchasing power.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York