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There are two different types of coupons hinted at in this question.  First, there are coupons for services that come in typical junk mail, such as pizza place coupons, which could be made available for GPS phones by location.  I imagine this could expand into a huge business, whereby I could logon to a particular site on my phone and see discount services for businesses in my immediate area.  That's a service lots of people would benefit from right now.

However, that is not the main purpose of the coupon services mentioned in the question above.  Those services are designed for the coupon clipper who makes trips to the store and wants to save on products they need.   Additionally, these folks need a discount to get certain "maybe" products within their budget.   For these people, the main barrier to coupons on cellphones is this: actually surfing to find the coupons on your cellphone can't cost more than the coupons are saving them, and they already have to clip from the sunday paper to get any decent coupons, so they need a major time savings for it to be valuable. If they must surf for coupons, the coupon site surfing has to be subsidized somehow.  Any serious clipper is not going to waste minutes and money surfing for coupons when they're already laying out the money for the sunday paper. 

I can think of several way better options for consumers who need a mobile coupon clipping service:

1. coupon ID by RFID readers in cellphones.  I should be able to find coupons in the store for the items I am considering buying.  That means zero time for me to clip and maximum return for companies looking to sell a customer on a "maybe" product.

2. coupon lookup, then copying from a computer.  If I can ID what coupons I need faster on a computer, then I should be able to get those same coupons immediately onto my phone without burning off cell minutes (i.e. via bluetooth, usb, or some other transfer technology.)  

Mobile coupons must also be accepted everywhere for them to be valuable -- if I go to all this trouble and the store won't take my mobile coupon, there's no measure of time that would describe how fast I'd stop using the service.

The model adopted by www.vouchermate.co.nz here in New Zealand highlights one of the barriers to adoption, cost.

The site offers two modes of distribution:

• print; and
• TXT to your mobile.

If the customer chooses the text option a cost of NZ$0.50 is charged to their phone account.

In countries where SMS is a non-trivial cost at least one member of the supply chain needs to carry the cost of distribution.  This could be offset to the business, carried by the provider (could be offset by advertising) or the customer.

Given the nature of coupons is to try and build interest and entice customers to the business offering the coupon moving the cost onto the customer seems counter intuitive.

The other barrier would be the initial distrust of such a service.  An embedding time would be needed to prove to the business that fail safes around the number of vouchers that are in circulation work.  Typically this is controlled from the print dialogue (the number of times the voucher has been printed becomes the circulation) and the number of time an SMS has been requested.

The responsibility to prove this works would be with the provider.  In the early days sufficient auditing would be required to prove that the requested level of circulation is not exceeded though such a distribution channel.

Coupons continue to be a marketing technique and using the mobile network and handsets as the distribution channel would be a positive approach angle in the "green business" camp.  The lack of paper and ink used could prove to be a strong message for the right businesses.

The other benefit for such a channel is to use up spare capacity in the network operators.  There are some countries, Thailand as an example, where SMS traffic is not at the level of the UK and US.  This is driven by two factors:

1. The comparitive cost of data versus voice.  The price wars between operators and the Thai desire to speak versus write has created this model.
2. The language.  The complexity of the Thai language does not lend itself to SMS usage.

Creating a service that combines an operator's desire to use the capacity with a nations enjoyment of free stuff could be a winning model. 

All of the current services that offer mobile coupons share a current theme.  They have shifted the relationship from push to pull.  Where traditionally coupons have been pushed out to customers now customers pull the ones that are of interest to them.  This gives some of the smaller more niche businesses a more cost effective distribution channel as the costs for inclusion in large print runs could be prohibitive.  By using the cell phone as the channel you increase the opportunities for likely customers to find your coupon. 

Most of the services start as web based offerings, as such there are easily linked with (and searchable) using adsense or similar tagging.

Such services typically give you an option to print the coupon yourself (your paper, your ink, your cost) or receive a SMS based coupon.

By intertwining this with GPS on phones you get an extension of location based services.  LBS is one of those technologies that is still very much looking for the killer application over and above the usual yellow pages listing approaches.  I'm not convinced that a LBS that allows you to find all of the coupons that can be found in your current location, or for those national chains the nearest store that will accept a coupon already on your phone is that killer applicatio.  At best it's an aid to those few that probably use mobile as a coupon platform, it wouldn't be a compelling reason to suddenly start using coupons on mobiles.

In general the current "show the coupon on the screen" approaches should be treated as a proof of concept only.  Further evolution into the mobile as the container but other transport mechanisms for handing over the coupon would better serve the concept.

Using bluetooth transmit, RFID contact or IR send supported with a Symbian (at minimum) application that "hands over" the coupon would give a more traditional feel to the customer and business and go along way to mitigating some of the potential concerns around over supply of coupons in the market, and the impact on the bottom line of the business offering the coupon.

 

Mobile coupons: the bad and the good

 

The Bad

Companies are continuing to search for other ways to market to younger generations as traditional broadcasting channels decline in relevance. Delivering coupons to mobile devices makes sense for a variety of reasons, but there are some drawbacks too.

Most people who grew up with the Internet have a 6th sense that detects pushy marketing that is irrelevant to them. Generally it inspires a recoiling response and the visitor/viewer will quickly look for other products, content, or services that aren't so beligerant. In this sense, mobile coupons are no different. It's critical to earn the consumer's trust first, then provide marketing messages that are relevant to the segment's interests.

On a related tangent, it's important to realize that effective segments won't target all 15-23 year olds, or all consumers with brown hair. Smaller segments that coincide with current microtrends will provide valuable content to interested people. Conveniently, this fits well with the speed and flexibility mobile coupons inherently possess.

After a good rapport is established, procuring relevant content becomes the next challenge. Mobile coupons will only draw consumer interest if they provide deals for stores that they're interested in. Companies like Cellfire and ZiXXo provide a limited selection which summarily ignores whole swathes of consumers.

Another challenge for mobile coupons is tracking the success of a campaign. That means somehow capturing which coupon codes are being redeemed. To automate that process some sort of screen bar code reader is necessary, which can quickly add costs for companies with lots of brick and mortar locations.  The alternative is to ask employees to enter the codes, which introduces a larger margin for error.

The Good

Mobile coupons can provide a cheap way to push information out to any segment comfortable with text messages, if the marketing company is willing to enter coupon codes manually.

Delivery is almost instantaneous and requires no paper or physical transportation costs. That means it's easier to respond quickly when microtrends erupt, capitalizing on the peak of interest. It also means the campaign is environmentally friendly.

Tracking who's redeeming coupons is more accurate because the unique codes provide running tallies. That's a lot more compelling then gathering paper coupons, weighing them on a scale to estimate how many were turned in (common practice at retail stores), then reconciling that with electronic records.

Most importantly though, mobile coupons provide another channel for connecting with young people who grew up on the Internet, and with mobile devices. They aren't interested in seeing broadcast advertising, but they highly value content that's targeted to them in a non-pushy manner. Especially if they seek it out first.

The Summary

Barriers to mobile coupon adoption:

• Trust Barrier, cell phone numbers are typically permanent
• Time investment to discover coupons that are relevant to consumer
• Selection of companies to choose from is spotty, very easily missing segements otherwise open to marketing
• Specialized equipment is required to read the bar codes automatically from the screens of mobile devices. Some airlines are already implementing this technology. Otherwise manual entry by humans introduces higher margin for error.    

Advantages to mobile coupons:

• Low cost
• Instant delivery
• Trackable
• Environmentally friendly
• Potentially effective way to connect with younger generations

Mobile coupons will be huge. 75% of shoppers already use regular coupons, according to one marketing study — and that's across all income brackets! But cell phone coupons bring some very exciting new possibilities, like new offers that are based on your position, and a handy way to clip digital coupons automatically. (Coupons could even be timed to arrive at the exact time of the day when they'd be most useful!)

So if mobile coupons are such a good idea, what's holding them up?

Compatibility
Before users can even sign up for Cellfire, they have to click through several screens to check their carrier and cell phone for compatibility. And MoVoxx takes the opposite approach, encouraging advertisers to upload a single JPG for all their offers and hoping their units will be able to display them properly. Mobile coupons will benefit from widespread mobile standards, just like developers in every other industry. But until then — a mobile coupon isn't very compelling if you have to squint just to read the logo!

Bad Design
Cell phone users are thrilled that their units can display full-motion color video. But too few advertisers are taking advantage of it. Maybe they're adopting a "soft sell" approach, but it's more likely that they just haven't grokked that mobile coupons can do things a regular coupon can't. In the end, they're only hurting themselves. An interactive coupon can list a series of choices on the cell phone — and even lead the user to a second coupon with offers that are targetted even more carefully. Plus, for years advertisers have been dreaming about customizing their ads based on a consumer's actual position — in real-time. It's the holy grail of advertising — and it's about to arrive — so developers should already be thinking about how to make mobile coupons more sophisticated.

Small selection
Consumers want coupons that are targetted to their interests — and so do advertisers. But until more advertisers use mobile coupons, it's not possible to do the careful targetting that we've enjoyed with regular coupons. It seems like everyone's getting the same batch of generic mobile coupons from the same big video chains and coffee stores. When mobile coupons actually start to key in on the unique interests of each and every mobile consumer — they'll be irresistible.

Interface
I like how Cellfire let's you use a web interface to manage the coupons. (No matter how much I love my cell phone — it's still easier to use the full-sized keyboard on my computer!) Mobile coupons can be useful on a phone — but I dread the possibility of mobile coupons requiring several long journeys through a series of menus. ( Don't Reply / Save / Select Category / Save in this Category / Return to Main Screen...)

Bad marketing
Mobile advertisers should launch a consumer outreach. (Television ads? Advertising supplements with your mobile bill?) But it seems like mobile coupons are being targetted to everyone except the consumer. If you check out the web sites for ZiXXo and MoVoxx, the first thing you'll notice is they're written for advertisers. I should be glad that they're hustling to line up more coupons for cell phone shoppers. But once they've got the coupons lined up — they'll need to have some consumers to show them to!

Consumers interested in mobile coupons may start bypassing the services altogether, and start looking for mobile coupons on each advertiser's individual web site!

Familiarity
With the bad economy, shoppers should be even more interested in saving money. This suggests the biggest reason that consumers aren't using mobile coupon services.

They just don't know about them.

Once that changes, the mobile coupon revolution can begin.