Someday, Store Coupons May Tap You on the Shoulder

 A prototype of a store-map app from Point Inside that may someday serve up coupons based on where you are in a store.

Digital technology could eventually make coupon-clipping with scissors a quaint oddity. And manufacturers are willing to make clipping easier, but not too easy: they don’t want to reduce prices for customers who’d buy a product anyway. Ideally, coupons will continue to be redeemed only by those who hold out for a deal — those whom marketing experts call “deal prone.”
More than three billions coupons a year are redeemed in the United States, says Steven R. Boal, C.E.O. of Coupons.com, founded in 1998 and based in Mountain View, Calif. Last year, about half of all redeemed coupons originated in the weekly coupon supplements inserted in local Sunday newspapers, according to Coupons.com’s estimate. But coupons distributed online accounted for 9.8 percent of all coupons redeemed in 2009, up sharply from 1.1 percent in 2006. (Efforts to find data from another source were unsuccessful.)
By visiting Coupons.com or its affiliates, shoppers don’t have to wait for Sunday. They can browse coupon offers at any time online, by product category or expiration date, then print the selected coupons on their home printers.
The digital-to-paper process still ends up requiring scissors — and you have to remember to take the coupons to the store in time. At Coupons.com, printing on a home printer requires installation of its software, which places a unique verification code on each coupon; as a result, the company says, the redemption fraud rate is less than 0.05 percent.
The next step in the coupon’s evolution is the all-digital version. At Coupons.com and other sites, clicking on an onscreen display can place a coupon on a particular retailer’s loyalty card, like Safeway’s Club Card, ready to be applied at checkout. But, of course, shoppers have to remember what they placed on the card, or, at least, remember to print out a list of coupons stored on the card before heading to the store.
Not everyone is willing to go to such trouble. “Loyalty-card-based coupons have had a lower redemption rate without a reminder,” Mr. Boal says.
Being able to see the coupons saved on your smartphone, or, even better, to have saved coupons show up automatically on the phone’s grocery-list app, would make digital coupons much easier to use. This has come to pass, with apps like GroceryiQ (a Coupons.com product), Grocery Gadget and Grocery Pal, to name just a few.
The blend of Web and smartphone technology preserves the essential restriction — the discount is offered only to those who have gone to some trouble to get the coupon. But it makes coupon clipping, or “coupon clicking,” appealing to more consumers.
“The retailers tell us that about one-third of the people doing direct-to-card are new to couponing,” says Robert Drescher, the chief executive of Cellfire, a digital coupon company in San Jose, Calif. “The users do skew younger and also more male.”
Still, the fundamental proposition of coupons remains unchanged.
“Coupons are ‘costly’ to collect. Even looking online — that’s an effort,” said Peter Darke, an associate professor of marketing at York University in Toronto. “There’s a lot of junk you have to go through to find ones you want. The amounts are small. So it takes a concerted effort to gather enough to make it worth one’s while.”
But what if manufacturers could make coupon offers on the spot, as you stood in the aisle, within sight of the promoted product? Your cellphone would identify your shopping predilections, allowing the manufacturer to withhold the offer if you were likely to buy the product anyway. The offer could go exclusively to those who just needed a little nudge.
The possibility is not a distant one. Point Inside, a mobile technology company in Bellevue, Wash., has been testing still-incomplete technology for determining where shoppers are standing in grocery stores and big-box retailers. The goal is to determine accurate locations to within one meter.
“You’ll probably have to create a new term for serving an ad unit based on where you are standing in a store,” says Joshua L. Marti, the company’s chief executive. “ ‘Hyperlocal’ does not convey how local we’re talking about.”
Current smartphone technology uses GPS and WiFi to find locations, but they are generally accurate only to within 30 meters or so, Mr. Marti says. And GPS loses accuracy as it penetrates walls. To build a system that will eventually solve this problem, Point Inside is relying on other means, like a geotagged reference point outside the store. It then uses AutoCAD software to create a detailed interior map of the store, assigning latitude and longitude to every aisle position.
The next technological challenge is geotagging the shoppers themselves. Next year, Mr. Marti expects the arrival of smartphones capable of serving as highly accurate, multidirectional pedometers. By knowing the exact latitude and longitude of the store’s door, then using the phone to track how many steps a shopper takes in which directions, the shopper’s current location can always be known. The vision fulfilled: Coupons sent to the phone for products within an arm’s reach.
SUCH offers may well prove appealing. “Getting attention at the time of purchase is a huge advantage in getting the consumer to pick a particular brand,” Professor Darke says. But the offers must be well aimed, he adds, or they will annoy people.
Annoyance may come even from good offers, if they are ubiquitous. One can picture a dystopian future of cellphone screens blinking one coupon offer after another, changing with each step down a store aisle: Pick me! Pick me! No, pick me!
How many discount offers can the mind absorb without blowing up?

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.