DULLES, Virginia: Media mammoth Time Warner will begin distributing online coupons for packaged goods via its online arm AOL later this year, and is said to be close to inking deals with “two major retailers” in support of the scheme.

Speaking at the National Association of Chain Drug Stores convention, AOL’s director of brand marketing Michael Lawless announced that AOL Shortcuts will be launched in the fall, and is aiming to cut into the market for what he called "$300 billion (£148.7bn; €220.3bn) in unregulated currency".

The system will be based on electronic redemption rather than paper vouchers, linking coupons to existing store loyalty cards or using new online programmes for retailers that do not currently employ loyalty schemes.

It will use banner and display ads, marketers’ websites and email to alert consumers to promotions, and coupons will be entered into an online account for each customer and automatically redeemed when the relevant product is purchased at retailers’ check-outs.

Online firms have failed to take even a 1% share in the coupon market so far, but AOL’s offering is the first attempt by a major player to lure the hesitant packaged goods industry into online couponing.

It aims to do so by broadening the appeal of coupons to a younger audience and demonstrating that the threat of fraud can be minimised.

Data sourced from AdAge.com; additional content by WARC staff