Coupons users trading the scissors for a mouse

There may soon come a time when clipping coupons out of the Sunday circular is a distant memory.

Although few would argue with shaving a bit off the price of groceries, the problem with coupons has always been the hassle. You have to happen to find a coupon for something you want and then clip and save it for the appropriate time.

Indeed the use of coupons was declining until 2008, when the recession hit hardest. In the following years manufacturers pushed out a record number of coupons as a way to retain market share and stores worked to entice shoppers. Last year about 332 billion coupons were offered.

Use of digital coupons — those taken from websites and mobile phone devices — is increasing. They represent about 10 percent of all coupons redeemed. A key advantage is that consumers can proactively search for the bargains they're most interested in.

The trend toward digital coupon use is only expected to accelerate.

One of the major players in digital coupons is Coupons.com, a privately held company formed in 1998. The company offers coupons on its own website, those of newspapers, and hundreds of retailers.

In a recent conversation, Coupons.com CEO Steven Boal discussed the business, its rapid growth and why the flagging economy has prompted consumers to return to clipping coupons in droves.

Q: What kinds of trends are you seeing in the use of coupons?

A: Uncertain economic times, whether it's a soft economy or volatile stock market, raise people's awareness of their pocketbook and they think about their spending. We're now seeing a massive resurgence in the use of coupons.

The ironic thing was that we were growing steadily as a business going into the recession, but what we've found now is we have a new set of users and a learned behavior. The economic uncertainty hit and we had a rush of additional consumers use the website. What we're being told and the behavior that we're observing is that this is very much a sustained behavior. It is now hip to be frugal. You don't just see it at Coupons.com, but you're seeing it in grocery stores, you're seeing it in magazines and on TV. You're seeing series' about saving money, about financial management and household expense management. In all forms of promotion and advertising you're seeing people talk about getting back to basics.

Q: How has this rediscovery of coupons by millions of consumers and gravitation toward the Internet changed the business?

A: For decades, the coupon industry persisted on delivery through the Sunday newspaper. Today Sunday subscription levels are back to where they were in the 1940s, but the population has exploded since then. The industry like any other has had to adapt. The evolution of the industry has been from a newspaper delivery system to a digital and online system.

It's an interesting phenomenon that we now power the coupon sections of over 500 newspapers online. It's not that Sunday news is going away, it's the physical paper that's at risk. People are actually ingesting more news now than they ever did before.

Q: In June you announced that institutional investors pumped $200 million into your business. What was the main goal?

A: We've been in business for 13 ½ years and have lived very quietly until recently. We raised a lot of money because consumer demand is so strong money is needed for the company to grow and expand to keep up. We are being rushed by consumers and product manufacturers with demand to issue more coupons, reach more consumers and deliver more goods and services than ever before. We're using half of the proceeds of our fundraising, about $100 million, just to grow to satisfy the demand.

Q: You recently started a savings club which requires a membership fee in exchange for exclusive Coupons.com deals. What's the strategy behind that move?

A: The idea is to create a value center for consumers who use coupons. Today if you were to visit Coupons.com or any of our affiliated network sites you'd see about 170 coupons or so depending on your zip code. If you were a savings club member, you'd see 190. The cost is $3 a month or $30 for a year, which gives consumers access to a lot of savings.

Many people buy the Sunday paper for the savings from coupons. But for a lot less we offer significant savings from offers that may not be available elsewhere.