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Coupons you don't clip, sent to your cell phone

Mobile coupons, usually text messages with discount codes sent to a cellphone, are becoming the blue-light specials for the Digital Age.

Hunter Gilmore was never big on clipping coupons. "You stick them on the fridge, meaning to use them, and it never happens," said Gilmore, a 29-year-old actor and advertising-agency recruiter in Manhattan.

Gilmore searches for Web sites that offer to send promotions from more than one retailer.

But thanks to his cell phone, Gilmore has lately been awash in discounts, regularly scoring reduced prices and special offers that he would never cut out of a newspaper circular.

Mobile coupons--usually text messages with discount codes sent to a cell phone--are becoming the blue-light specials for the Digital Age, promoting last-minute clothing sales, two-for-one entrees, and cheap tickets to the theater.

While some mobile coupons are sent directly from a retailer to a customer who has signed up for mobile updates, the other way for bargain seekers to get up-to-the-minute deals is to subscribe to a mobile-coupon aggregator. At Web sites like 8coupons, Cellfire, and Zavers, users can sign up for different retailers' promotions in one place. The opt-in model means that subscribers get only offers they want to receive, making each one worth reading.

Snipping out coupons from the weekend paper is still the most common way households in the United States get their coupons, but the popularity of coupons delivered via e-mail and text messages is growing. In the first half of 2009, nearly 10 million digital coupons were redeemed, a 25 percent increase over the amount redeemed during the same period in 2008, according to Inmar, a coupon-processing company.

The convenience of digital coupons is appealing to a new crop of shoppers, many of whom would not dream of carrying around a crumpled pile of paper coupons just to get 30 cents off a box of spaghetti. About a third of the users who signed up for Cellfire say they have never used paper coupons, according to Cellfire's chief executive, Brent Dusing.

The growing popularity of feature-rich mobile phones does not hurt, either. "It's not like you have to get a new phone to do this," said J. Gerry Purdy, an analyst for Frost & Sullivan, a market research firm. "It's just a slight behavioral change to what people already do."

The widespread adoption of text messaging and sleeker, richer phone interfaces also makes mobile transactions easier. Some shoppers are turning to mobile applications that collect coupons, like Coupon Sherpa, an iPhone application that handles coupons for retailers like Kmart, Toys "R" Us, and Zales. Since its release in April, Coupon Sherpa has been downloaded more than 65,000 times. Taking the concept of mobile coupons a step further, aggregators 8Coupons and Mobiqpons recently introduced location-based features. Using the services, users can receive discount offers from merchants who are only a few blocks away.

"People keep their phones on them all the time," said Thad Langford, chief executive of the mobile-coupon site Zavers. "Even when people are sleeping, it's right next to them, charging."

Analysts say mobile coupons are also more likely to be redeemed. Cellfire says its redemption rate for mobile coupons is 15 percent to 20 percent. Paper coupons, by comparison, have redemption rates lower than 1 percent.

Gilmore, who favors 8coupons because the service caters to discounts in Manhattan (the company says it plans to introduce service in other large cities, such as San Francisco, Chicago, and Washington), says he scooped up $8 tickets to an off-Broadway show as part of a daylong promotion. On another occasion, he scored 15 percent off his purchase at the Container Store, a housewares retailer.

"It's so easy because the coupons are already sitting on your phone," Gilmore said. At checkout, he simply shows the coupon on his cell phone screen to the cashier, who enters a code to apply the discount.

"It doesn't feel like it has the same stigma as walking up to the cashier with a Velcro pouch, fishing around for a coupon, like my mom used to do," he said.

But not every coupon leads to a good find, said Helene Adélé Abiola, a 24-year-old schoolteacher who lives on Staten Island.

"It's hit or miss," said Abiola, who has redeemed mobile coupons for 88 cent margaritas and inexpensive haircuts. "You can get a great deal, but sometimes it's junk. Not all of the deals are fabulous."

And despite their growing popularity, mobile coupons face some hurdles, like software glitches and other technological hiccups, that keep them from being adopted on a larger scale, said Matthew Tilley, director of marketing at Inmar. "It's not a seamless transaction, just yet," he said. "But the work to get there is under way."

In addition to consumers, retailers--particularly ones with perishable items that need to sell quickly--are becoming fans of mobile coupons. Buttercup Bake Shop, a bakery in Manhattan, used 8coupons to offer cupcakes for 8 cents for one day only. Subscribers to 8coupons were alerted via a text message.

"It was very successful," said Kara Martinez, director of operations at Buttercup Bake Shop. "We had a little over 500 people show up."