Internet coupon firm CoolSavings.com Inc., Chicago, next week will begin its first concerted effort to attract consumer packaged good manufacturers to its client base, trying to tempt the world's Procter & Gambles and Unilevers with its database of 1.4 million households.
Executives at CoolSavings believe their company — and its database — fit hand in glove with the marketing goals of the big packaged goods concerns. CoolSavings lets advertisers use detailed, member-supplied demographic information to deliver targeted offers to its Web site and to onsite member mailboxes. CoolSavings members then download coupons, rebates or other offers redeemable either online or in stores. Bar codes provide security, and the company charges advertisers a flat fee for the service — currently about $15,000 to $20,000 a month.
In general, manufacturers dislike coupons because they encourage consumers to switch from one brand to another. They also don't allow tracking. Internet coupons are designed to remedy the problem by delivering personalized offers that let manufacturers build brand and attack the switching behavior.
CoolSavings executive vice president of sales and marketing Matt Moog borrowed from James Carville to sum up the company's greatest strength: “It's the database, stupid.”
Visitors to the company's site at www.coolsavings.com supply names, addresses, area codes and e-mail information. They have the option of telling CoolSavings the number of homes and cars they own, household income, profession, age, number of children and pets, household birthdays and anniversaries and more — with the promise of getting offers tailored to their interests. The company currently pulls in about 8,000 new registrations daily, and 91 percent of members fill out all 25 fields, the company said. Such a detailed set of data is the company's major selling point.
Executives are quick to add that the company — which also lets advertisers issue rebates and targeted samples and carry on interactive focus groups — is more than a coupon distribution vehicle. The firm can track response to offers in real time and retarget based on consumer responses and at less cost than direct mail.
“It might actually encourage couponing behavior among people who don't currently use coupons and allow someone like a CoolSavings to try and capture some consumer behavior shift they would then be able to turn to their advantage,” said James McQuivey, analyst for online retail strategies at Forrest Research, Cambridge, MA.
Indeed, CoolSavings chairman/CEO Steven Golden expects that very thing to happen. Four out of five Americans used coupons last year, and CoolSavings hopes to prod that fifth consumer into looking for savings. Such new savers are also likely to come from higher income brackets.
Melissa Bane, program manager of Internet market strategies at the Yankee Group, Boston, expects electronic couponing of packaged goods to build momentum as both consumer demand and the packaged goods companies themselves become more comfortable with online coupons. She anticipates more testing by the industry as the market matures, as long as fraud doesn't become a problem.
CoolSavings also will make a stronger push into the grocery market this month, adding new features to its site that let food retailers list recipes, post store events and use frequent shopper card numbers. The company has landed recent deals in the mass drug trade market, and expects groceries to come online by midyear. Heading the company's new food, drug and mass division is vice president Jeff Marvel, who previously was brand manager of Suave shampoo for Unilever.
Golden said he has sought to diversify CoolSavings' revenue streams beyond big box retailers and online vendors. He expects to attract local vendors around college campuses in the first quarter and has entered beta testing with two malls. By the end of 1999, Golden hopes to develop geographically targeted “local CoolSavings.” The company projects its database growing to 4 million households by year-end.
Beginning last fall, the company brought a series of patent infringement lawsuits against six online marketing firms, including Catalina Marketing Corp. and PlanetU Inc., both of which work with clients in the packaged goods and groceries areas. Some of the companies have approached CoolSavings to settle, Golden said, though he declined to identify them.
Golden also noted that CoolSavings, which is privately held, will explore the possibility of going public.