Web Coupons Know a Lot About You, and They Tell

By STEPHANIE CLIFFORD

Published: April 16, 2010

For decades, shoppers have taken advantage of coupons. Now, the coupons are taking advantage of the shoppers.

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A new breed of coupon, printed from the Internet or sent to mobile phones, is packed with information about the customer who uses it. While the coupons look standard, their bar codes can be loaded with a startling amount of data, including identification about the customer, Internet address, Facebook page information and even the search terms the customer used to find the coupon in the first place.

And all that information follows that customer into the mall. For example, if a man walks into a Filene’s Basement to buy a suit for his wedding and shows a coupon he retrieved online, the company’s marketing agency can figure out whether he used the search terms “Hugo Boss suit” or “discount wedding clothes” to research his purchase (just don’t tell his fiancée).

Coupons from the Internet are the fastest-growing part of the coupon world — their redemption increased 263 percent to about 50 million coupons in 2009, according to the coupon-processing company Inmar. Using coupons to link Internet behavior with in-store shopping lets retailers figure out which ad slogans or online product promotions work best, how long someone waits between searching and shopping, even what offers a shopper will respond to or ignore.

The coupons can, in some cases, be tracked not just to an anonymous shopper but to an identifiable person: a retailer could know that Amy Smith printed a 15 percent-off coupon after searching for appliance discounts at Ebates.com on Friday at 1:30 p.m. and redeemed it later that afternoon at the store.

“You can really key into who they are,” said Don Batsford Jr., who works on online advertising for the tax preparation company Jackson Hewitt, whose coupons include search information. “It’s almost like being able to read their mind, because they’re confessing to the search engine what they’re looking for.”

While companies once had a slim dossier on each consumer, they now have databases packed with information. And every time a person goes shopping, visits a Web site or buys something, the database gets another entry.

“There is a feeling that anonymity in this space is kind of dead,” said Chris Jay Hoofnagle, director of the Berkeley Center for Law and Technology’s information privacy programs.

None of the tracking is visible to consumers. The coupons, for companies as diverse as Ruby Tuesday and Lord & Taylor, are handled by a company called RevTrax, which displays them on the retailers’ sites or on coupon Web sites, not its own site.

Even if consumers could figure out that RevTrax was creating the coupons, it does not have a privacy policy on its site — RevTrax says that is because it handles data for the retailers and does not directly interact with consumers. RevTrax can also include retailers’ own client identification numbers (Amy Smith might be client No. 2458230), then the retailer can connect that with the actual person if it wants to, for example, to send a follow-up offer or a thank-you note.

Using coupons also lets the retailers get around Google hurdles. Google allows its search advertisers to see reports on which keywords are working well as a whole but not on how each person is responding to each slogan.

“We’ve built privacy protections into all Google services and report Web site trends only in aggregate, without identifying individual users,” Sandra Heikkinen, a spokeswoman for Google, said in an e-mail message.

The retailers, however, can get to an individual level by sending different keyword searches to different Web addresses. The distinct Web addresses are invisible to the consumer, who usually sees just a Web page with a simple address at the top of it.

So clicking on an ad for Jackson Hewitt after searching for “new 2010 deductions” would send someone to a different behind-the-scenes URL than after searching for “Jackson Hewitt 2010,” though the Web pages and addresses might look identical. This data could be coded onto a coupon.

RevTrax works as closely with image-rich display ads, with coupons also signaling what ad a person saw and on what site.

“Wherever we provide a link, whether it’s on search or banner, that thing you click can include actual keywords,” said Rob O’Neil, director of online marketing at Tag New Media, which works with Filene’s. “There’s some trickery.”

The companies argue that the coupon strategy gives them direct feedback on how well their marketing is working.

Once the shopper prints an online coupon or sends it to his cellphone and then goes to a store, the clerk scans it. The bar code information is sent to RevTrax, which, with the ad agency, analyzes it.

“We break people up into teeny little cross sections of who we think they are, and we test that out against how they respond,” said Mr. Batsford, who is a partner at 31 Media, an online marketing company.

RevTrax can identify online shoppers when they are signed in to a coupon site like Ebates or FatWallet or the retailer’s own site. It says it avoids connecting that number with real people to steer clear of privacy issues, but clients can make that match.

The retailer can also make that connection when it is offering coupons to its Facebook fans, like Filene’s Basement is doing.

“When someone joins a fan club, the user’s Facebook ID becomes visible to the merchandiser,” Jonathan Treiber, RevTrax’s co-founder, said. “We take that and embed it in a bar code or promotion code.”

“When the consumer redeems the offer in store, we can track it back, in this case, not to the Google search term but to the actual Facebook user ID that was signing up,” he said. Although Facebook does not signal that Amy Smith responded to a given ad, Filene’s could look up the user ID connected to the coupon and “do some more manual-type research — you could easily see your sex, your location and what you’re interested in,” Mr. Treiber said. (Mr. O’Neil said Filene’s did not do this at the moment.)

The coupon efforts are nascent, but coupon companies say that when they get more data about how people are responding, they can make different offers to different consumers.

“Over time,” Mr. Treiber said, “we’ll be able to do much better profiling around certain I.P. addresses, to say, hey, this I.P. address is showing a proclivity for printing clothing apparel coupons and is really only responding to coupons greater than 20 percent off.”

That alarms some privacy advocates.

Companies can “offer you, perhaps, less desirable products than they offer me, or offer you the same product as they offer me but at a higher price,” said Ed Mierzwinski, consumer program director for the United States Public Interest Research Group, which has asked the Federal Trade Commission for tighter rules on online advertising. “There really have been no rules set up for this ecosystem.”