34% growth in digital coupon distribution in one year.

5% to 20% digital coupon redemption rates vs. 0.9% for traditional coupons.

Those are a few of the recently released numbers that underscore the rapid growth and strong value provided by digital coupons.

New reports from Supermarket News (see Poised for Growth) and Shopper Marketing magazine (see Digital Delivery on page 16) provide in-depth looks at the pivotal role digital coupons are playing as retailers and CPG companies shift budgets from traditional to digital media.  With digital coupons, shoppers can automatically redeem coupons and other offers in lane without having to print or clip.  Unlike print at home and paper coupons, digital coupons seamlessly integrate into online, email, mobile, and in-store marketing campaigns making them easier to use and more convenient for shoppers and providing better reach and results for retailers and brands.

Although experts estimate digital coupons make up roughly 1% of the total coupon market today, they already account for 3-5% of redemptions at retailers with active digital coupon programs.  For a technology that just launched three years ago, that is remarkable growth.  These results are consistent with our own experience.  For example, YOU Technology recently announced that we have delivered more than 150 million digital coupons (providing more than $160 million in value) to shopper cards through our retail network —a significant milestone in the growth of digital coupons in general and our solution in particular.

The reports from Supermarket News and Shopper Marketing point to a number of factors driving digital coupons forward:

• More relevant for shoppers. Digital coupons can reach younger shoppers who don’t use paper coupons and are proving to be an effective tool to drive sales and loyalty.  In addition, strong consumer demand for mobile and social coupons will further fuel digital coupon growth.  By delivering offers in a relevant way, at a relevant time, and in a relevant place, retailers and CPGs can better engage shoppers in and around the moment of truth.  This relevance, along with the ease and convenience of using digital coupons, is an important driver of digital coupons’ strong redemption rates (5% to 20% vs. 0.9% for paper coupons).

• More offers and better values. Over the past year, the number of digital coupons has increased by 34%.  In addition, the number of CPGs participating in digital coupon events has jumped by 17% with over 150 brands actively participating in direct-to-card programs last year.
• More retailers. Kroger has played the leading role in driving the growth of digital coupons.  More recently, Safeway and Target have launched prominent digital coupon programs and industry experts predict that several other large retailers will jump on board this year.  Retailers are also integrating digital coupons into their in-store merchandising and marketing initiatives, which in our experience drives an order of magnitude increase in shopper engagement.

Just as with online shopping vs. the mall, CDs vs. iTunes, and now the books vs. the Kindle, it will be consumers that drive the additional use of digital as an alternative method of accessing content—at a time and the way they prefer.   The digital coupon market is just getting started.