How Axel Springer made mobile coupons work

Print circulars have fallen out of favor, just like the newspapers that carry them. But European media giant Axel Springer is trying to resurrect the format by tailoring them to mobile users.

Axel Springer launched a mobile app for circulars in 2013. Today, the app, Retale, features more than 180 retailers, has logged 1.3 billion engagements and surpassed 5 million downloads. For Retale, an engagement means that a mobile user opened and read a circular, which might include a deal on a cell phone contract, promotions for box springs, and the latest price cuts on electronics from retailers like Verizon, Sleepy’s and Best Buy.

“A lot of people think circulars are dinosaurs,” said Pat Dermody, president of Retale and the former vp of marketing services at Sears Holdings Corp. “But we fit squarely in the mobile shopping space — something that Axel Springer has been bullish about. They’re set on building that mobile marketplace.”

Axel Springer, which just closed its $450 million deal to acquire Business Insider, is an unusual publisher. While it has newspaper properties, it has succeeded in digital in large part through diversification. It has a strong digital classifieds business, for instance.

Circulars haven’t totally lost touch with the physical world. Retale’s mobile marketplace is meant to drive coupon-clippers into brick-and-mortar stores. The app uses location-based technology to show deals nearby, and allows users to apply filters by category, all to make the experience more manageable than print circulars. Users can save their favorite stores, electronically “clip” the week’s coupons and scan them in-app at checkout.

The app’s goal is to appeal to existing coupon-clippers who now use smartphones as well as introduce the habit to young, digital natives. Paper coupon-clipping may be on the way out, but saving money isn’t. A Retale study found that 75 percent of smartphone users surveyed said they viewed a retail circular in the past month.

“You get the sense that coupon clipping is on the wane demographically, but this could bring it back,” said John Vance, vp of customer experience at business and technology consulting firm West Monroe Partners. “Digitally, you can speed up the process and make it more focused. Saving money isn’t generational.”

Dermody said that Retale’s users tend to be 35-49, but that the company is aiming at younger people. Other coupon apps, like RetailMeNot and Shopular, also provide Internet for deals from retailers. According to app analytics service Apptopia, Retale has brought in the most revenue in the past 30 days among those three apps, even though it recruited fewer new downloads.

Screen Shot 2015-11-05 at 3.29.30 PM
Retale’s downloads over the past 30 days, compared to RetailMeNot and Shopular. (Source: Apptopia)
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Retale’s revenue compared to RetailMeNot and Shopular. (Source: Apptopia)

Retale aims at companies that want to reach consumers on mobile devices but whose own apps’ engagement has been disappointing, according to Dermody. Since the deals and discounts found in Retale are served through the circulars, the app is immune to ad blocking. While ad blocking is a bigger problem on the mobile Web than mobile apps, Retale positions itself as a safe place for a brand to promote its latest offerings without resorting to banners, pop-ups and push notifications.

“This is a different way to do mobile advertising — it’s not mobile banners, and we don’t have to worry about the viewability,” she said. “People hear that, and they get excited.”

Dermody said that Retale’s strength is also in pull, not push, marketing. “Every engagement our retailers have seen is like a hand being raised, they’re specifically asking for that content.”

According to Vance, the app’s opt-in nature gives it an advantage with advertisers. “When people don’t feel pestered, it’s okay if the content isn’t relevant right now. If it’s generally relevant, people will sign up for that,” he said.

Earlier this year, Retale launched an Apple Watch app to add a hands-free convenience to shoppers as they scan coupons at checkout. While Dermody couldn’t specify projected revenue for the year, the company is set to grow its revenue by 300 percent.

“Everyone gets how much mobile has become the remote control of our lives,” said Dermody.

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