McDonald’s Leading the Roll Out of Mobile Coupons

Implications: McDonald’s free iced coffee could establish mobile coupons in four areas: 1) Launcing new products; 2) Cross-selling products; 3) Targeting buying habits, and 4) Building retailer loyalty.

Analysis: The McDonald’s promotion of free iced coffee through mobile coupons could spur the roll out of mobile coupons.  The McDonald’s mobile coupon is a strategic test for a strong brand and a free offer that extends beyond the millennial generation.  The mobile user has to download the Cellfire service, but simply receives a SMS text message with a redemption code.  Cellfire’s system is targeted marketing, yet does not have the privacy issues of Facebook’s Beacon in sharing shopping habits.  And there is no need for bar-code scanning or near-field communications in the coupon redemption.  Cellfire has been trialing their service since mid-2006 with the former Cingular, now AT&T Mobility, but McDonald’s is a significant new product launch to track consumer behavior.
The McDonald’s mobile coupon will be a comparison with direct-mail pieces.  McDonald’s is sending direct-mail coupons for free iced coffee with the purchase of any breakfast sandwich.  The direct mailers have other offers for getting a free hamburger with the purchase of a like product.  McDonald’s will be able to evaluate the redemption of the iced coffee mobile coupon for cross-selling other products compared to the clipped direct mail offers.  And Cellfire can expand its targeted marketing according to the redemption behavior and the retailer loyalty. 
The redemption of the McDonald’s mobile coupons will also be a comparison test against the click-through rates on downloadable mobile search software like Google, Yahoo and Microsoft.  At the recent CTIA tradeshow, Bango Analytics showed that mobile Web sites have click-throughs of about 2% to 8% and a conversion rate of 2% to 5%.  McDonald’s free iced coffee could test if mobile coupons can improve targeted marketing to handsets.