The beauty of the coupon is perhaps hard to appreciate when you’re impatiently waiting in a checkout line, only to see the dreaded paper-stuffed wallet or envelope emerge and realize you might be standing in line for a while.

However, it is a tried and true way to get customers in-store and online. We look at the advent of digital coupons compared to paper and which is a better option for brands.

Tried and True Advertising Method

The first coupon was introduced by Coca Cola in 1887, so suffice to say whether carefully clipped, ripped or completely mangled, coupons have enjoyed significant staying power. The introduction of digital coupons has made finding and redeeming coupons easier than ever and paper coupons were predicted to phase out as a result. But that’s not what happened. Coupons stuck around, and today represent $3B in savings on consumer package goods each year.

Digital: The Brand Builder

Looking at head-to-head performance, digital does appear to take the lead in some performance metrics. Overall, it attracts a higher volume of customers than print. On average, digital coupons are considered to be 35% better at bringing in new customers. Plus, digital information is potentially more dynamic than print, so it can work to keep existing customers engaged.

Digital is also the superior choice for elevating brand awareness. Much of its edge on print comes from the ease, timeliness, and simplicity of distribution. Reaching tons of people with very little effort is something big data does well. Digital coupons also allow brands to collect contact information, which expands email marketing, newsletter campaigns, and social media response. Mobile-connected consumers are a fruitful target for digital returns and can be reached through SMS, email, social, web, wallets, and apps.

In their recent Mobile Coupon Consumer Research Report, CodeBroker polled over 1,200 U.S. shoppers for insights into consumer behavior in response to digitally delivered coupons. When asked how likely they were to use a text message coupon, 25% affirmed that they would redeem within 3 days, and 60% said it would only take a week.

Paper: The ROI Maximizer

Despite the introduction of digital coupons in the past couple of decades, paper coupons have not been left by the wayside. In a trend report published by the Knowledge Network, print coupons make up 44% of the total coupon market. A different study by ATM research found that 80% of internet users polled still seek out and redeem paper coupons they find in various print subscriptions and the mail.

Traditional print coupons make up the lion’s share of all coupons redeemed at major retailers – 8 out of 10 in fact. Putting this into another perspective, NCH Marketing found that 60 million digital coupons vs  270 million print coupons were redeemed in the same year.

Retailers and manufacturers favor print coupons because of their higher return on investment over digital coupons. Print coupons are redeemed less frequently than digital coupons, which results in a higher ROI. Data suggests the difference in ROI could be as much as 18% higher for print coupons than digital. This is because digital coupons’ ease of use actually ends up decreasing the revenue per sale gained from the coupon.

Coupon Choice Comes Down to Objectives

The bottom line is that you just have to decide what matters most to your business. Do your current objectives need a channel for brand building and customer acquisition or are you more interested in increasing revenue per customer?

Beyond whether print or digital is better at achieving specific goals, there is also the question of efficiency. Digital coupons eliminate some hassles in distribution.

Another thing to consider is cost. For digital coupons, using sophisticated digital data collection can be easier to use but it can also be expensive. Big data services, social media strategists and customer information collection all come with a higher price tag than printing and distributing coupons from a current mailing list.

A Peak into Consumers’ Coupon Preferences

Valassis ran an in-depth study on coupons that yielded some surprises about the modern era of digital. The use of paper coupons is up – from 88% last year to 93% this year – demonstrating that coupon use is both prevalent and growing.

• 91% of users prefer coupons in the mail. (up from 86%)
• 89% look for coupons in store to use at checkout (up from 85%)
• 85% of users reveal coupons books are their go-to (up from 82%)

The respondents stating a preference for coupon books in the newspaper also prefer paper coupons. With that said, paperless coupon use is particularly high among parents (92%) and Millennials (88%), per the Valassis report. This lines up with the study insight that power coupon users are more likely than coupon users in total to fall between 25-49 years old, own their home and have children in the household.

Coupon savings are accessed and redeemed in a myriad of ways. For example, having the ability to download coupons from online to a shopper loyalty card got the thumbs up from about 39% of respondents, and a slightly smaller group of around 36% said coupons that they could redeem straight from their smartphone or mobile device was their favorite way to save.

There has also been an uptick in mobile savings apps for grocery and drug stores. These apps are reportedly used by 56% of people, an increase of 5% from last year. Cashback points and other coupon apps are also popular consumer cost-cutting choices. Warming up a new prospect with a welcome coupon is a tactic with a 68% approval rate according to CodeBroker who found that respondents were likely to join a brand’s email list if they received an instantly redeemable discount.

Final Results: Ease Over Channel

Consumer research reveals that shoppers who want coupons are not going to be that fussy about where they get them. Consumers don’t really care if a coupon is digital or paper as long as it works.

When there is a preference for paper, the Valassis report revealed one possible reason: 58% of those surveyed felt that coupons that were not easy to redeem weren’t worth the trouble, pointing to the sometimes unintuitive redemption processes found in many digital coupon campaigns. If it’s too much of a hassle, these consumers said they’d rather pass.

It’s not enough to simply distribute coupons; they have to be easy to use or they won’t be used at all. But when coupons work, they work. Of the 1,000 respondents in the Valassis study, 94% said they use coupons, and for almost half of this group, coupons are an “always” thing. This signals good things for marketers who court buyers using coupons. So, in the end, the marketing is not really about whether the coupon is clip or click-based.  Both formats are proven to improve customer attraction, engagement, and revenue.

If you are looking to drive consumers to retail or your e-commerce store, connect with us on what advertising strategies can help your business grow.