SAN FRANCISCO - While most forms of advertising are getting better at targeting likely customers, coupons rarely hit the mark. To wit: US consumers redeemed less than 1 percent of the estimated 285 billion coupons issued last year for groceries and various packaged goods.
But a small Silicon Valley company is striving to improve coupons' aim with a new online distribution network based on a contextual concept that helped turn Google Inc. into the Internet's most popular - and profitable - advertising vehicle.
After several weeks of tests, Mountain View-based Coupons Inc. plans to unveil its "Brandcaster" system today.
If Brandcaster works, Web surfers should start seeing more offers to print out coupons for products that have a contextual connection to a topic that piqued a reader's interest in the first place.
For instance, someone looking at a Web page about healthy food might be offered a coupon for organic milk.
It's the same idea behind the text-based ad links that Google displays alongside search results and other information at hundreds of thousands of websites.
Coupons Inc. even recruited one of Google's advertising masterminds to become an adviser for the Brandcaster system.
Gokul Rajaram, who left Google late last year, said he wanted to help out because he views Brandcaster as a logical extension of Google's "AdSense" - a system he helped launch in 2003 to distribute relevant advertising links to other websites.
Since then, AdSense has attracted more than $15 billion in advertising revenue.
Coupons are "one of the big bastions" of advertising that still haven't made a significant move to the Internet, Rajaram said. "I think this can drive large amounts [of coupons] online."
Steven Boal, who started Brandcaster a decade ago, doesn't have any delusions about approaching Google's ad volume.
But he believes Brandcaster will play a pivotal role in achieving his goal of generating $400 million to $500 million in annual revenue, paving the way for a possible initial public offering of stock.
He declined to reveal privately held Coupon Inc.'s annual revenue.
Like Google's advertising system, Coupons will share revenue with the websites participating in Brandcaster. Advertisers will only have to pay when a consumer prints out a coupon.