CoolSavings, Inc. - Company Profile, Information, Business Description, History, Background Information on CoolSavings, Inc.

360 N. Michigan Ave., Ste. 1900

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To provide best in class interactive marketing solutions to our clients, agencies and partners that deliver value to consumers, protect their privacy and earn their trust.

History of CoolSavings, Inc.

CoolSavings, Inc. offers interactive marketing services to publishers and advertisers. The company matches marketers with their target consumers using a unique process of collecting detailed, permission-based information, including demographics and personal interests. CoolSavings' broad distribution network includes four "marketing channels,", an Internet coupon site; CoolSavings Marketing Network, an Internet-based promotions distribution network; Technology Licensing; and Direct Mail.

CoolSavings also provides "lead generation, e-mail, coupon and loyalty programs across its extensive network of company-owned Branded Web Properties and top partner sites."

In the fall of 2005 the company announced plans to become a private subsidiary under parent Landmark Communications, Inc.

Searching for Ways to Save; Evolving Technology: 1894-1997

Since early days, people have used coupons. In 1894, Asa Candler, the druggist who purchased the Coca-Cola recipe for $2,300, issued the first recorded American coupon, a hand-written piece of paper that offered customers a free glass of the fountain drink. In 1895, C. W. Post introduced the first grocery coupon. The coupon offered a discount of one cent towards the new cereal Grape Nuts. The Great Depression made coupons even more popular throughout the 1930s as people searched for new ways to save money. In 1957, the Nielsen Coupon Clearing House was opened, becoming the first clearinghouse devoted to coupon redemption and creating a new industry. By 1965, about one half of Americans used coupons and ten years later, over 60 percent clipped them. But with the birth of the Internet and new technology, coupon clipping would take on a whole new shape.

In 1995, a new company, CoolSavings, Inc., was born with the hopes of rising to the needs of consumers and retailers alike. The mission was simple: provide consumers with a convenient way to find a deal, and match those consumers with retailers who would offer what they wanted. But in the world of business, most things are not simple and the question would prove to be age-old: how would people handle change?

In just three short years, the mission seemed as though it was coming to fruition when the company was able to report having more than 900,000 consumers in its database. The problem, however, was that retailers were nervous. The Internet was still relatively new and there were no real projections for the success of Internet promotions. Although CoolSavings was offering a unique marketing strategy, some retailers decided to try their hands at launching their own web sites.

Consumers were slow to sign up. The company offered the convenience of online, printable coupons, but it also required people to download specific software in order to use the site. In addition, in order to download a coupon, it was mandatory to enter specific demographics, including name, age, and occupation. To many, this felt like an invasion of privacy.

A New Patent and a New Spokesperson: 1998-99

CoolSavings' answer to the issue of privacy was a patent. In 1998, the company received a patent for its revolutionary tool that would calm consumers and thrill retailers.

CoolSavings announced that it had received a U.S. patent for compiling demographics and providing information to retailers, yet retaining the privacy of consumers. "The patented CoolSavings program acts as a target marketing tool for advertisers and a privacy advocate for consumers," said Steven M. Golden, the company's then-chairman and CEO. In addition to being a unique direct marketing tool, the patent also acted as a significant roadblock to any future competition for CoolSavings. To protect its patent and to block future competitors from opening their doors, the company began filing patent-infringement lawsuits against nine of its rivals.

Though the company had built a database of over four million shoppers by 1999, it felt the need to move to a new level in brand-building. In October, it announced the launch of a $15 million offline advertising campaign, featuring its piggy bank logo in the role of CEO of the company. "Today, we are launching the next phase in our brand-building efforts with an aggressive advertising campaign designed to distinguish us as one of the leading destinations for consumer savings offering a strong value proposition and a unique brand icon," said Steven M. Golden. By using the pink piggy bank in a talking, moving role, CoolSavings became one of the first Internet companies to use a talking icon to identify its brand to consumers.

A Quickly Progressing Company: 2000

In 2000, American shoppers celebrated the Third National Coupon Month and CoolSavings celebrated having built a database of over eight million permission-based members. Parents took part in Coupon Month by teaching their children how to save money with coupons. Meanwhile, CoolSavings steadily moved its way up the industry ladder by announcing an initial public offering. Some 3.3 million shares of common stock were offered. According to the IPO Reporter, CoolSavings' net proceeds would be about $45.8 million and would be used for general corporate purposes.

Indeed, as the year progressed, 2000 proved to be a successful one for CoolSavings. In July, the company was ranked the Internet's number one coupon site, nearly doubling its nearest competitor, according to a new reporting system created by Media Metrix, an Internet and digital media measurement company. Based on the same company's findings, CoolSavings was also rated as one of the 50 most visited sites on the Internet.

Along with these successes, the company was able to settle "seven of the nine suits it filed, with most of the defendants agreeing to pay royalty fees to use the patent," according to Crain's Chicago Business. The company said the deals were based on putting aside ongoing legal battles and focusing on just competing in the business world. Though the more than two years of bickering were over between CoolSavings and the majority of its competitors, the defendants in two other suits were filing countersuits foreshadowing possible challenges for the company.

Also in 2000, CoolSavings managed to report record financial results for the second quarter. Net revenue increased 324 percent to $8.9 million from $2.1 million. Steven Golden commented, "We have successfully developed a complete infrastructure of e-marketing solutions to help advertisers incentivize customers from acquisition to loyalty, while reducing costs along the way."

A Roller Coaster Year: 2001

The year 2001, however, brought financial woes for CoolSavings as it faced many of the same challenges that other dotcoms were facing. One of these challenges was lack of investor appetite for such companies. The company also began to face mounting losses, declining cash, and a stock price that had not topped $1 since the beginning of the year, threatening possible delisting by the NASDAQ. Adding to CoolSavings' problems, the company's revenue-generating patent came under scrutiny by the U.S. Patent and Trademark Office, a direct result of challenges from two defendants of patent-infringement suits filed by CoolSavings. The two companies, Catalina Marketing Corp. and BrightStreet, Inc., "brought countersuits against the company and petitioned the Patent Office, claiming that CoolSavings' patent is not valid," according to Crain's Chicago Business. If CoolSavings lost the patent, it would no longer be able to receive royalties and could face patent-infringement litigation itself, possibly not allowing the company to continue to do business in the same way.

The year did bring several new endeavors. In March, CoolSavings announced a new service for shoppers called CoolShopper. "CoolShopper, [is] a powerful comparison shopping search engine that enables members to identify a comprehensive list of products, brands and merchants," said the company in a news release. The product was fashioned following CoolSavings' continuous goals of providing services to consumers while delivering targeted advertising and incentives for retailers. It was another tool to help consumers make informed shopping decisions, while also giving them more control over their shopping experience. According to Steven M. Golden, "at the same time, CoolShopper will contribute significant value for our wide range of advertisers by delivering interested, qualified shoppers to their store or site."

Another new endeavor was a joint venture with Time, Inc. called CoolParenting. The venture would allow advertisers to target the specific needs of new parents and children by offering product discounts, samples, and content particularly for them.

In July 2001, Matthew Moog advanced to the role of president and CEO of CoolSavings from his previous posts as president and COO. He had been working in various roles at the company since 1998, including serving as executive vice-president of sales and marketing.

Bad news came for CoolSavings in the fall of 2001 when it received word from the NASDAQ Listing Qualification Panel that it had been delisted from the market. The company had failed to maintain a market valuation of at least $5 million and a bid price of at least $1 per common share for 30 consecutive trading days. The NASDAQ also raised concerns that the company might have violated NASDAQ's voting rights rule.

Though experiencing several challenges, the company continued to look ahead, as Internet coupons grew in popularity with American consumers. According to Information Week, online shoppers were attracted to such coupons more than others: "they redeem Web vouchers either online or in stores three times as often as those they receive in the mail or newspapers."

In November 2001, CoolSavings launched new software that would allow advertisers to generate coupons and email them to their customers or place them on their web sites. The new hosting software, called "Coupon Technology Solution," was made available to retailers who wished to broaden their distribution of coupons while keeping closer track of their consumers. This was a huge step for companies who wished to "use online campaigns as testing grounds to target a particular demographic, then hone their direct-mail and other initiatives," said Matthew Moog. Previously the software was only used by CoolSavings' database of households who had to register at the site and download the software in order to get coupons.

New Tools and New Ventures: 2002-04

According to, in 2000 and 2001, "63% of people in the United States used the Internet at least once and many are 'extremely enthusiastic' about it as a tool."

Clearly the popularity of the Internet was constantly increasing, but with the fall of many other dotcom businesses, CoolSavings faced several challenges. But in the spring of 2002, CoolSavings appeared to persist despite tough economic times and the decline of others in its sector. In May, the company announced having over 20 million members in its database of consumers.

Also, Media Metrix reported the company as the 32nd most visited web property on the Internet.

Putting a spin on the "old" way of reaching people, CoolSavings debuted a new Co-Op direct mail marketing program in July. The mailer featured the pink piggy bank icon and was targeted toward registered CoolSavings members who were active shoppers and who had given permission to receive special offers from advertisers. The mailer was preceded by an email that alerted consumers to look for the mailer in their mailbox. Additionally, it was followed by an email that reminded shoppers of the offers they had received.

CoolSavings also declared that it had officially launched the CoolSavings Marketing Network, an Internet distribution network for coupons and samples. The CoolSavings Marketing Network combined the Company's Coupon Technology and its partnerships with top web properties in order to offer consumers even more promotional offers. The company stated that the CoolSavings Marketing Network was the largest distributor of online print-at-home grocery coupons, offering a variety of offers from advertisers such as General Mills, 3M, and Dannon.

In 2003, CoolSavings was able to announce a first in its company history: net income profitability. At the end of the second quarter, the company's financials were looking up, with a net increase in cash for the third consecutive quarter and a 69 percent growth in revenue for the quarter as compared to the same quarter the year before. Again, CoolSavings boasted a membership base that continued to grow, registering nearly two million shoppers in the quarter and recording over 18.5 million member visits.

Though the future was looking brighter, some retailers were expressing mixed thoughts about Internet coupons. In light of some incidents that occurred with shoppers using fraudulent Internet coupons, some supermarkets banned the coupons. CoolSavings urged supermarkets to continue to accept legitimate coupons and reject only coupons for free products, which the company did not support.

In early 2004, as CoolSavings moved out of debt and "into the black," it announced the acquisition of Planet U, a company it had previously sued for patent-infringement. "Planet U's vision was to work with the grocery stores to mine their frequent shopper card databases to deliver personalized rewards based on shoppers' past purchases," said research analyst Jim Nail. "Planet U was just too early."

CoolSavings did not disclose the terms of the deal, but did mention that it hoped the acquisition would help evolve the company into more of a loyalty marketing company.

In an era of tired consumers, bombarded with spam and unsolicited calls, and with the increasing popularity of the Do-Not-Call list, it became necessary for advertisers to find new ways to reach shoppers. CoolSavings continued to follow the trends of the times with the announcement of its new Lead Generation Network Services in the fall of 2004. Through these services, advertisers were able to target specific consumers and deliver a variety of offers, such as samples, coupons, travel brochures, and free newsletters. The consumers, with their permission, received information, tailored to their personal needs.

For the quarter ending December 31, 2004, CoolSavings reported record fourth quarter revenues. The company stated that it ended the year strongly due to investments and acquisitions made, as well as new product development. Though the acquisitions made did require a monetary investment, the company noted that those investments helped build a strong foundation for CoolSavings, and would help provide increased revenues and operating margin improvements.

Building on a Strong Foundation: 2005

CoolSavings started 2005 with the launch of a new consumer rewards program called FreeStyle Rewards. FreeStyle Rewards was a loyalty program that awarded points to consumers based on dollars spent. In fact, it rewarded one of the highest average points-to-dollar ratios in the industry. The program also answered the demands of consumers for cash rewards, granting them with a Debit MasterCard instead of a Gift Card. CoolSavings cited the program as being an opportunity to provide services to an ever growing group of retailers and consumers.

In the fall of 2005, CoolSavings announced that it would be going private. Its main investor, Landmark Communications, Inc., a private media company, bought out the shares of two other investors, gaining control of 91.7 percent of CoolSavings' stock. Executives at CoolSavings seemed positive about the change, noting that Landmark "does not expect to make any significant changes in CoolSavings management or immediate business strategy."

Going private would save the company about $1 million per year in legal, audit and insurance fees, and would allow the company to focus on building the business as opposed to "public filings and investor calls."

One could not argue with the fact that times had drastically changed since Asa Candler hand-wrote the first coupon. Technology had improved and the birth of the Internet had changed many things, including the way consumers shopped. According to data released by the U.S. Census Bureau, as of 2003, 127 million Americans were using the Internet. At least 54 percent were using the Internet for the purchase of products or services. Naturally, Internet shoppers were always looking for a deal. As a marketing services company, CoolSavings hoped to build on what it had already constructed. Thus far, CoolSavings had proven its ability to be flexible, to bend and evolve with the times. As the company prepared to go private, it could still be expected to serve the ever changing needs of consumers.

Principal Competitors

Catalina Marketing Corporation; E-centives, Inc.; LifeMinders, Inc.;, Inc.; Netcentives, Inc.; Yesmail, Inc.


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