From paper coupons to real-time offers: How customer promotions changed

Asa Candler had no way of knowing who drank most of the Coca-Cola he gave away. The coupons he handed out by the thousand each covered one glass, and once a soda fountain had poured it, the paper told his company almost nothing about the person who'd held it.

More than a century later, a clip-on screen built by a Tel Aviv start-up could pick an offer for a shopper who was still standing in the aisle, using what sat in the cart and what that person had bought on earlier visits. Both were promotions. They mark the two ends of one long shift in how much a company knows at the moment it decides to spend money on a customer.

Soft-drink makers, airlines, digital entertainment companies and grocers each pushed that shift forward at different times. The order is roughly this: Paper that reported back late, electronic points that reported all the time, offers aimed at people a company had never met, and offers chosen on the spot. The open question is whether that last step keeps paying once every competitor can take it too.

The Coca-Cola Company's own history of the Candler years says he built on John Pemberton's marketing by spreading thousands of coupons, each good for a complimentary glass. The same account credits his flair for merchandising with lifting syrup sales nearly tenfold by 1892. That's the coupon at its simplest. The company pays for the first taste and hopes the customer buys the second.

The weakness was timing. A paper coupon reports back only when somebody redeems it, and even then it says little beyond where and when. A seller can count the returns. It can't tell which redeemers would've bought anyway, or which ones came back the following week.

Entertainment venues encountered the same problem nearly a century later. In the early 1980s, engineer John Acres developed dispensers that issued paper tickets on coin-operated machines, one for every fixed amount a customer put through the machine. Customers could exchange the tickets for discounts. His company sold thousands of them, he told CDC Gaming Reports for an October 2024 profile. The complaint he heard most often was that a venue couldn't put a value on a customer until the tickets came back.

Airlines found a way out first. American Airlines launched AAdvantage on May 1, 1981, and its 40th-anniversary release in April 2021 called it one of the industry's first frequent flyer programs. Membership began by invitation only, and the rewards included a first-class ticket to any destination American flew. The bigger change was quieter: Every trip a member took now landed in a record the airline kept, long before anyone spent a reward.

Acres borrowed the idea within three years. Just before Christmas 1983, the hotel at Sun City in Bophuthatswana gave him a card, not a key, to open his room door, and at his kitchen table back home he worked out how electronic points could replace the paper tickets, adapting what he called the airlines' newly introduced frequent flyer programs. A major hospitality operator saw a prototype a month later and bought 150 units, the profile says.

The profile credits Electronic Data Technologies, the business Acres had started in 1981, with developing an early customer-tracking system, and puts the price he got for it in 1984 at $1 million. Tracking caught on. When he and a partner sold his next company, Mikohn, in 1989, venue operators could already see what each regular customer spent, but the payoff for a valued customer still came by mail, as monthly coupons that could be exchanged for machine credits. At Acres Gaming, his next venture, he cut out the post and loaded credits straight onto the machine once a member inserted a card. IGT bought that system in 2003.

Points changed what a promotion was for. A coupon bought one visit. A points balance told the company, visit by visit, which customers mattered most, so the next offer could go to them instead of to everyone. American's 2021 release put AAdvantage at 115 million members, every one of them a running record. Most loyalty schemes still work this way.

Every loyalty system needs a history to work from, and a newcomer brings none. So an offer aimed at a first visit runs on different arithmetic from one aimed at a regular. The company pays up front, learns afterward, and accepts that some of the people it pays for will never return. Candler's complimentary glass worked on exactly those terms.

Online entertainment providers face that problem in its sharpest form, because a new account arrives with no visit history at all. Their version of the first taste is an introductory offer, which a provider credits to a fresh account before the customer has paid anything in.

Promotional credits and limited-use rewards are common forms of these offers, and Bonus.com's no deposit casino bonus guidance also lists event entries and loyalty rewards. The guide describes these offers as less common than promotions tied to an initial purchase, and says recently launched providers use them to get noticed in crowded markets, where bigger brands can lean on name recognition.

Both points come back to cost. A purchase-matching promotion costs nothing until a customer has committed money, so it only pays for people who've already shown intent. An introductory credit goes to everyone who signs up, including those who leave the same evening, which makes it closer to a marketing budget than a reward. A brand with a long customer list can reach that list cheaply, and a newcomer has no list to reach. What nobody outside can read from the offer itself is how many of those sign-ups stay.

Shops lived with the coupon's delay for decades. A grocer's loyalty card records the basket at checkout, after every choice in it has been made. The newer goal was an offer made while the shopper was still deciding, and several Israeli start-ups set out to build it.

Shopic, based in Tel Aviv, was one of them. The Jerusalem Post's report on AI-powered shopping start-ups, published in December 2021, explained how its unit attaches to a standard supermarket cart, uses computer vision to register each product a shopper puts in or takes out, and shows a running receipt on its screen. The same unit could put a digital promotion in front of the shopper on the spot, drawing on past purchases, store location and the cart's contents.

For the retailer, the payoff was data. Shopic's analytics followed carts and shelves in real time, giving stores a fuller picture of each shopper's route, which the report saw as useful for contextual promotions and personalized shopping experiences. Rivals were moving too. WalkOut, another Israeli smart-cart maker, had just struck an extensive cooperation deal with Machsanei Hashuk, among Israel's largest supermarket chains, the paper reported.

Investors followed. Retail Dive reported in August 2022 that Shopic had raised $35 million in a round led by Qualcomm Ventures, taking its total to $56 million, with the Israeli chain Shufersal among its existing backers. The company said grocers in the Americas, Europe and Israel were using its system, which also gave them inventory data and analytics on how people shopped.

Here the promotion stopped being a mailing and became a decision made in seconds. The shopper's response comes back inside the same visit, so a store learns quickly which offers move goods. The Jerusalem Post's reporter didn't oversell it, noting that the AI shopping sector's real viability still hadn't been put to a proper test.

Data is worth less as an edge once competitors hold the same kind. Researchers including Jean-Pierre Dubé of Chicago Booth tested that with two movie theaters a few miles apart in an Asian city, sending mobile coupons to phone users according to where they were. As Chicago Booth Review summarized the field experiment in August 2016, either theater could profit from deep discounts sent to people near its rival, but the gain shrank when the rival answered with targeted offers of its own.

The figures were stark. A theater courting people who were nearer its rival lifted ticket sales by less than half a percent with a 40 percent discount, and by almost 3 percentage points at 60 percent. If the nearby theater countered with as little as 20 percent off, the bigger discount added less than 1 point. Convenience beat generosity, and the defender spent far less to hold its ground.

The engineer who helped introduce electronic loyalty points to the entertainment industry sees a related cost. Acres came out of retirement, the CDC profile says, to work on rewards timed in real time using artificial intelligence to interpret customer activity. He's also blunt that operators lean too hard on machine credits, a habit he says "trains customers to be loyal to the best deal and not to a particular brand." Nothing in that warning is specific to one industry.

That leaves the next stage open. Offers look set to keep narrowing, timed to a place, a basket or a moment, and the companies paying for them now learn in minutes what Candler never learned at all. What none of them has shown yet is whether customers return for the brand or only for the next offer, the same doubt Acres raised about the industry he knew.

This article was written in cooperation with Bonus.com