The earliest form of coupons were first circulated by Coke-Cola in 1887, offering a free glass of their then-new soft drink. This simple concept—a tangible promise of value—laid the foundation for one of the most enduring promotional tools in marketing history. By the mid-1900s, coupon circulation had reached 500 million annually, soaring to over 5 billion by the close of the 20th century. In 2023, U.S. consumers redeemed over 725 million digital coupons, which now account for 57% of all redemptions.

Consumer research from early consumer studies underlined their influence, with up to 50% of shoppers trying a new product thanks to coupon incentives. For leading brands and manufacturers, they weren’t just a discount—they were a handshake, a commitment to quality, and a strategic tool to outmanoeuvre competitors. Their effectiveness was so pronounced that they became the blueprint for modern loyalty schemes, with examples like Tesco leveraging mass coupons through Clubcard to reinforce their position in competitive markets.

With widespread adoption came misuse. Retailers began exchanging coupons for cash, irrespective of terms, leading to consumer misuse and redemption fraud—at times as high as 70%. This eroded trust, prompting brands to scale back distribution through channels like newspapers and door-to-door drops, focusing instead on “safer” methods like on-pack or direct mail coupons. This decline led to the rapid development of Retailer led schemes such as Nectar and Clubcard where the Retailer could offer the brand access to their customers. Until that point the brand owned the customer relationship and now, they were constrained to the Retailer’s version of their customer. Brand advertising speaks to all consumers as did promotions at that time, now that battle ground has been ceased by the main store groups.

Digital promotions have been around since 1999 when MRM introduced Coke Auction on behalf of Coke Cola and it was clear then that coupons would have a much healthier future in a digital world, rather than the more insecure, paper driven, processes that were the norm. The advantages of digital I will explain in more detail, but they offer more highly targeted delivery and validated redemptions, allowing for secure redemption and better ROI in campaign management. Disappointingly these developments have taken over 20 years to get to market. There has been many tech-led companies come and go as they spent time and money trying to compete with Retailer developments which were more powerful and shall we say – more persuasive.

Thankfully development of more sustainable services has accelerated over the last 5 years and the coupon market looks set for a huge renaissance. These developments fall into two areas, Digital distribution and Validated redemptions.

The concept of delivering a coupon to a consumers smart-phone is well established and with the introduction of customer-scanning devices at tills we are seeing more coupon campaigns managed this way. This development initially laboured due to Retailers wanting to control access to their customers and insisting in participation in their own tailormade programmes. This fragments the brand development and becomes more of a trade marketing approach. A more generic “open market” service has taken time to come to market but there are a few service providers able to deliver a direct brand-to-consumer process and enhance this delivery mechanism by also gathering quality first party data. These services offer real-time targeting and activation and much tighter budget control as the brand can dial up or down the value or volume to suit their needs.

These independent services have had security issues over coupon reproduction or repeat usage at self-checkout tills, but these are being addressed and will be closed down. More concerning is that these services reply on Retailer co-operation, as unlike a paper coupon which is a physical receipt which will be reimbursed, these digital scan’s need to be set-up with the entire estate of Retailers so they can be recognised by their EPOS systems on presentation by the consumer. An agreement with each Retailer needs to be reached in order to manage the reimbursement process. At the time of writing this post, the later is a major challenge as major Retailers seem to want to resist these standalone independent services which we consider to be an unfair practice.

The most significant digital development and the one of greatest value to Brands is the move towards digital-scanning at point of purchase. This means that any coupons, paper or digital are scanned within the transaction and the retailer directly deducts the value of the coupon from the Brands trading account or through a third party clearer. No physical redemption process is required and subsequently this reduces the cost of coupon management for both Brands and Retailers. The real benefit for Brands is that these systems can also check that the coupon being presented for the specific product it was intended for, has actually been purchased. This offers Brands the reassurance to be able to coupon at will using any distribution method, safe in the knowledge that only genuine purchases will be discounted. This is perhaps the biggest advance in couponing since its humble beginnings and glorious past.