Cut-Up Culture

Today in Tedium: In a world where browser extensions basically deliver discounts to e-commerce sites as soon as they’re needed, it can be strange to consider the printed coupon in that context. That dotted-line block of discounts and fine print, a mainstay of newspapers and mailboxes alike, is actually relatively new in the historic sense, representing one of the first modern forms of marketing, but in recent years, the value proposition has shifted because of the rise of e-commerce and the mobile phone. But printed coupons still have their fans, and they remain steady drivers of what’s left of the Sunday newspaper. Today’s Tedium talks coupons, where they came from, and how they evolved into a culture of their own. — Ernie @ Tedium

(jridgewayphotography/Flickr)

It took a while for us to start calling coupons “coupons,” in part because coupons are a relatively recent phenomenon

The thing about the coupon I always found fascinating growing up was how it came to look the way it did. Why, so often, was it pre-perforated (and how did they do that!?), why did it have a dotted line around it, and how come the barcodes on them (if they had them) were so unusual?

The nice thing about the coupon is that its name offers some of the answers to this question. Broken down, the term, a French phrase, is really just a way of saying, “cut-out piece of paper.”

But the roots of how it got to that point are interesting, as the coup half of coupon originally meant “to strike,” meaning that coupon and coup d’état have the same root word, despite being used for entirely different things! Eventually, “strike” got toned down to “cut,” and the verb couper eventually gained a secondary noun form to describe the piece that was cut off. Hence, coupon.

But even after coupon came to be known as a document split off from another document, it took a while for it to evolve into specifically the form we know it as today. An earlier term still used today, the “coupon bond,” essentially an interest payment initially distributed in a document not unlike a coupon, actually predates the modern use of coupons.

Coupon bonds for the confederacy. Wonder how the value of these held up after the war. (via Wikimedia Commons)

So how did we get the coupon we know and love today? Can we credit Coke for it? Well, it’s a little more complicated than that. See, while Coca-Cola was incredibly early to coupons, it was a popular legacy travel brand that first formalized the coupon in something resembling the modern form. The firm Thomas Cook, which you might be familiar with from its sudden 2019 collapse, actually originated something resembling the first form of the modern coupon, a detachable piece of paper called the Hotel Accommodation Coupon that could be exchanged for a meal or a hotel stay when travelers were taking a trip. (The coupons were different colors based on use cases.)

In many senses, the first modern coupon, though not really a manufacturers coupon.

“The hotel coupon business, which was commenced as a friendly arrangement of mutual interest to ourselves, to Hotel Proprietors, and Tourists, has far exceeded our most sanguine anticipations; and as its benefits become better known, they will be more highly appreciated by all who are interested in the success of the scheme,” a guide by the Thomas Cook company stated.

One of the earliest editions of the Oxford English Dictionary, originally called ‌A New English Dictionary on Historical Principles upon its 1884 publishing, actually, credited Thomas Cook with inventing the coupon.

The groundbreaking Coca-Cola coupon, often thought of as the first modern coupon. (via Wikimedia Commons)

Coca-Cola’s innovation, in this context, should not be lost, as it played an important role in the evolution of the coupon as we know it today. Unlike Thomas Cook, which in many ways borrowed its approach from the voucher, the Coca-Cola slip existed purely to promote the company’s product—which, it should be noted by the fact that someone reading this is probably drinking a product owned by Coca-Cola, it was breathtakingly impressive at.

As I’ve pointed out many times before, the way we often get to the modern forms of different innovations is not as a result of one single invention, but twelve different things happening incrementally, together creating the circumstances from which a tool comes to dominate the culture.

The coupon gained its popularity one clip at a time.

Multiply this pile by a couple billion and you get within shouting distance of the scope of the coupon industry’s primary vessel. (Carol Pyle/Flickr)

How do manufacturers handle all of those coupons, anyway?

On an individual level, manufacturers’ coupons were an incredibly useful promotional tool, encouraging people to purchase a product they may not regularly purchase, whether for the first time or the first time in a while.

But, at scale, coupons are complicated. They are very wasteful. Unlike newspapers, which one could argue have historical value, many people see coupons as single-use and never really think about them again after they use them at grocery stores.

This created problems throughout the supply chain, problems that regular people never really think about. Grocery stores had to confirm the coupons were legitimate, sort and manage these torn-out pieces of paper, and then return them to the manufacturer. The manufacturer had to do verification of its own, credit the retailers, and then, when they were done, they had to manage these massive piles of spent coupons, which were difficult to handle at scale.

This issue didn’t truly start to rear its head until the Great Depression, when couponing became essential to help allow people to simply get by, helping to turn a somewhat obscure practice into something that regular people did simply to make ends meet. Essentially, necessity turned couponing from an occasional benefit to a common practice.

(Eventually, during World War II, the U.S. government relied on rationing coupons to help manage the supply of certain goods, getting the public even more used to the idea of using coupons to acquire goods and services.)

The Nielsen Clearing House facility helped revolutionize the process of managing manufacturers coupons in the United States. (via Nielsen)

Eventually A.C. Nielsen, a marketing research firm best known for its television and radio ratings systems, came up with a new type of business to get manufacturers off the hook of handling millions of coupons from around the world: A clearing house, dedicated to nothing but coupons. Essentially, as the federal banking system was to managing cleared checks, this new Nielsen subsidiary, called the Nielsen Coupon Clearing House, was to manufacturers’ coupons.

Set up in Clinton, Iowa, in the late 1950s, it represented a business that existed essentially to manage a byproduct of marketing. And managing that byproduct was a lot harder than you might think—and not just for the financial reasons.

A 1958 article, published Axios-style a full 60 years before Axios existed in an industry publication called Sponsor (which looks like an amazing magazine by the way, is largely salvaged on the Internet Archive, and I likely will be dipping into for future Tedium), lays out an entertaining tale about how the first general manager of this clearing house, Kurt Tischler, had his work cut out for him. So what did Tischler have his team do first? According to the piece:

NCCH started burning coupons (5-10 million weekly) in its own furnace but paper burns hot so it didn’t do the furnace any good and spread ash around town. It also brought Clinton’s Mayor down to the plant.

And a prying mayor wasn’t enough to stop the endeavor, either:

Tischler then arranged for employees at the nearby veteran’s hospital to burn the stuff in the hospital incinerator. But federal law prevented Tischler from paying them, so the employees went into hiding every time a Nielsen truckload of coupons hove into sight.

I know what you’re thinking. Burning coupons?!?! But reminder: This was the 1950s, long before recycling and climate change concerns had truly gone mainstream.

Almost as to underline that point, the next thing they did was not much better. Tischler bought in a machine that ground up the paper, then pushed that paper through the sewer line, which clogged up the city’s sewer lines and again angered the mayor of Clinton.

Next up? More burning, this time in an abandoned quarry, which worked until it was too cold and snowy to go to the quarry. Finally, Tischler found a solution for his coupon glut problem, and it’s just as comical and ecologically destructive as everything else mentioned in this section:

Finally, Tischler bought something called a PEGAR. This is used by the government for getting rid of classified material. It adds water to the coupons and turns them into pulp. The pulp is then put into sacks and taken to the city dump. Now, everything’s fine. Of course, coupons made of foil are another problem.

Marty McFly should go back to the future, to Iowa, to tell Kurt Tischler about how paper and metal are two of the easiest things to recycle.

Now, that prior section sounds so comical and absurd that you might think I made it up. I did not. But once Nielsen figured out its coupon clearing process, the company was able to handle important things for the retail industry, like tackling fraud.

A 1980 piece in the Quad City Times, for example, noted that the clearing house was responsible for preventing $18 million in fraud each year, by catching sketchy uses of coupons and attempts to reuse spent ones.

The clearing house, while no longer associated with A.C. Nielsen after being sold off in 2003, remains active to this day, and is a key part of managing coupon redemption and fighting fraud for many businesses to this day, though it’s no longer alone in the market. (It’s not the only part of the industry dedicated to coupons alone; the field even has its own industry group, the Association of Coupon Professionals.)

What I find fascinating about this company, even today is that, despite the fact that Nielsen and other companies in the market research field are classically thought of as “information economy” providers, they nonetheless have this history that sounds closer to an industrial firm managing a Superfund site than it does a marketing company.

The tagline for this image on Flickr is “Why I Still Subscribe—the sections of the paper in order of importance,” which really underlines the point being made here. (F Delventhal/Flickr)

The coupon industry may be the only thing keeping some newspapers alive

A lot has been made about the fact that the journalism industry is really struggling to find its footing in the internet era, particularly because of the declining impact of print-based advertising. Truth be told, Silicon Valley simply found more effective ways to reach lots of different kinds of businesses. Small businesses could maximize their dollar by promoting themselves on Facebook or Google rather than buying up ad space in the local paper.

But coupons, in many ways, remain important reasons for some consumers to pick up newspapers, even if consumers as a whole are doing so a lot less than they once did. (There’s a reason, after all, why people pick up newspapers on Sundays even if they don’t care about newspapers the rest of the week.) While printing a coupon or pulling one up on your phone are certainly possible, there’s something lastingly convenient about getting a coupon in a newspaper that makes it one of the few forms of print advertising that is somewhat resistant to complete disruption.

A 2016 study done by Michigan State University at the behest of the News Media Alliance found that people who subscribed to newspapers tended to be more likely to use the coupons when shopping. (They also, as you might guess, tended to skew older.)

“However, both subscribers and non-subscribers were more likely to save coupons on the days they received the newspaper,” the Alliance wrote in a summary of the research published in 2017. “Even when not receiving the paper, the authors noted, participants were less likely to turn to e-coupons. But having access to a print newspaper made both groups more than twice as likely to save coupons.”

But more importantly, they also tended to be more likely to purchase things offline as a result of the newspaper subscription, creating a case that newspapers are important when it comes to keeping spending within the local economy.

(Additionally, and this is an important one for shoppers: People who didn’t subscribe to the newspaper tended to spend 18 percent more per item they purchased, on average, and when subscribers did not receive the newspaper, they tended to spend a lot more.)

Of course, coupons on their own aren’t necessarily cutting it at a time when even the circulation of Sunday newspapers is down by nearly half of what it was a decade ago, according to Pew Research Center, and many newspapers no longer even offer daily editions. And perhaps for that reason, the newspaper industry is ready to take recourse to protect what’s left of its business model.

Recently, it emerged that the newspaper industry is increasing its legal attack on Google and Facebook, with more than 200 newspapers separately suing the two companies, though the lawsuits have gradually been combined into one super-suit. (The News Media Alliance didn’t put them up to it, but according to Axios, the group supports it.)

In an era when a coupon can be pulled out from your phone or invented from thin air (fortunately leading to fewer expired coupons to incinerate), even this classic newspaper use case feels like it might fall by the wayside. After all, it’s way easier to manage digital coupons anyway.

Couponing is a great way to get a deal, but not too good of a deal. Coupons, obviously, have their limits, no matter how extreme couponing gets on the web and on basic cable. After all, if coupons cut too far into a business’ bottom line, it kind of ruins the point of them, right?

Occasionally, this can lead to situations where coupons can turn into fraud. In 2012, a trio of Arizona women (Robin Ramirez, Amiko Fountain, and Marilyn Johnson) were charged with running a counterfeit couponing ring, which relied on the creation of high-quality forgeries of coupons, while using websites such as eBay and their own Savvyshoppersite.com to distribute the forgeries.

“ would bring in these coupons from overseas in large quantities, quantities we never could imagine and she would sell them on her website for about 50 percent of face value,” Sgt. David Lake of the Phoenix Police Department said of the scheme.

By the time the scheme was cracked by the Coupon Information Corporation, a trade group dedicated to fighting fraud in the coupon industry, the trio was holding onto $40 million in fake coupons and taking part in a level of opulence that was described at the time as “equivalent of drug cartel-type stuff.”

If this sounds like the plot of a Hollywood movie to you, that’s because it literally is. Back in September, the film Queenpins, starring Kristen Bell and Vince Vaughn, appeared, taking a very loosey-goosey approach to the Savvyshoppersite case. The film, airing on Paramount+ after an anemic theatrical run, has not gotten particularly great reviews, but it most assuredly is the most realistic movie about coupon fraud to ever be produced, mainly as a result of it being likely being the only film about manufacturers coupon fraud ever produced.

There’s probably a story about the evolution of the coupon to be had—Coca-Cola turning a five-cent discount into a dominant business is too good an angle not to play up—but for now, we have a story about how couponing became a great vessel for theft.

--

Find this one an interesting read? Share it with a pal!

Thanks again to Refind for sponsoring this one—be sure to give them a look, and see you Friday!