Small Business Saturday = Shrewd Marketing for American Express

This week, Small Business Saturday will be held, once again, the day after Black Friday. I originally wrote about Small Business Saturday in December 2010, the year American Express launched the “movement” as they call it, in support of shopping independent businesses as capitalism companion to the holiday shopping frenzy. Without question, Small Business Saturday has become wildly successful over the last three years, with over 3 million Facebook likes and more than 400 organizations and 50 Chambers of Commerce across the nation actively participating and promoting the event. Most importantly, last year Small Business Saturday raked in over $5 billion. Can you say holiday jackpot? Good for small businesses and good for Amex. Let’s take a look back at its beginnings…

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Daily Deals Sequel: Groupon Hangover And Mobile App Madness

Almost two years ago I wrote a blog about the growing online coupon business. At that time the frenzy was in full swing: Groupon was the media darling, copycats were everywhere, and the future was so bright, they had to wear shades (half-off of course). There were, however, naysayers calling out problems with the daily deal model: they were putting small businesses in the red, they only made money for greedy Groupon-types, daily deals were just a phase. They were right. But not completely.

Fast-forward to September 2012: Consumers still love saving money (DUH) and deals are here to stay, but in different incarnations. Groupon has become to online deals what Kleenex is to tissues, but there are major shifts in the landscape.

1) Groupon went from a rock star to has-been: As the deals market became more crowded with me-toos, combined with the “thrill is gone” from consumers. the daily deal concept itself became stale. Groupon tanked after its initial IPO at $20 a share in November 2011 (at last check, its price was a paltry $4 a share) which coincided with the domino effect of lackluster social media company IPOs. LivingSocial, Groupon’s biggest competitor with a sizable ownership by Amazon, has also been steadily eating into its market share. The most recent blow was Starbucks choosing LivingSocial for its daily deal, which sold out immediately and was the biggest revenue generator yet for the company.  Yelp and OpenTable  still offer deals but scaled back on promotion and rely on their core businesses.

2) Alternative deal sites, niche markets and buy outs, oh my: As the daily deals market became saturated, Groupon and other companies started hawking national and local offers with a longer shelf life. New business models and after-markets also popped up; sites curating a city’s “best of” deals such as Dealery and Yipit, or expiring, unwanted deal sites such as Couprecoup and FatWallet. There were also many companies renamed, bought, funded and vertical niche start ups in clothing, food, and other services, as seen in this 2011 Deals InfographicMarqeta, a different concept altogether, uses a discount card that rewards loyalty to its vendors.

3) Mobile apps rule: No surprise, smartphone apps is the fastest growing area in the deals segment. Location-based apps such as Mobsav, Yowza and others offer national and local deals but most consumers are still uneasy with companies tracking their whereabouts. Companies already on mobile-friendly turf, like Foursquare and Facebook Check-in Deals (formerly Facebook Deals), have a built-in advantage. Some location-based apps combine offline shopping habits with mobile apps to discover discounts when a consumer is approaching that desired item. These apps all operate differently but the premise is the same: Vendors like Swarm and Spotzot knows who you are, what you want to buy, and will “activate” when you are near the location of your holy grail. Not ok with Deal Big Brother watching?  Scoutmob offers free half-off deals (yes, FREE!), a cheeky brand personality, and entertaining, useful e-newsletter. Scoutmob only charges the vendor on redemption, so it’s a win-win for the deal-bearer and the consumer. Credit card companies like American Express are also getting in on the action and benefit from having a solid social media presence. Groupon and LivingSocial have added mobile apps to their menu but operate the same way as the website.

So what’s next?

Deals will continue to transform with new technology and consumers’ behavior and preferences. The market will also continue to shake out: Some deal apps and sites will thrive while others will go to the coupon cemetery. A glaring weakness and missed opportunity for all of these companies offering deals (other than location-based apps) is good target demographics —sounds counterintuitive but true. Knowing subscribers well would arm companies with a goldmine of data to offer relevant deals. In a recent experiment I did, Groupon is the only company that asked for even the most basic information. Either these companies are not marketing-savvy enough, worry that consumers will bail if there is an avalanche of questions, or are too busy focusing on the bottom-line to pay attention to their customer. All. Bad. Ideas. Having subscriber access to email is a privilege and a gift. If the balance of interest tilts, these companies could lose their coveted spot in subscribers’ in boxes.

And like all good marketing campaigns, closing the loop on deal usage is the next frontier. Deals present tricky ROI math: companies may know how many deals were sold but not how many were actually used, or redeemed by a mobile app but not tracked, or sold on a website. Or any other number of scenarios. A recent deal by Coca-Cola and Auntie Anne’s hopes to trailblaze this path but it will take long-term data to show true bottom-line value to both the company offering the deal and the vendor distributing it. The ROI results could provide compelling data that could easily shape future deals for customers.

In the meantime, I’m still waiting for a deal to upgrade my site on WordPress.

Small Business Saturday = Shrewd Marketing for American Express

When I heard about Small Business Saturday, held this past weekend, I thought – great – a sanctioned opportunity to acknowledge small businesses and support the local economy around the busiest shopping season of the year. I was so taken with the idea, being a sole proprietor and all, I wanted to find out more. Was it government-sanctioned day? A media-created event wedged in between Black Friday and Cyber Monday? With a little research, I found out that it’s neither: American Express  OPEN was sponsoring and promoting Small Business Saturday. That’s right. American Express – the mega-company shunned by many small businesses for its high acceptance fees. Conversely, many locally-owned shops wouldn’t be around if it weren’t for their Amex line of credit and loans, so it’s a difficult pill to swallow: small businesses can take advantage of this great awareness tool handed to them on a silver platter, but it’s given to them by someone they don’t really want to touch. For American Express, though, it’s a win-win: getting mega-amounts of local and national publicity, showing concern for a larger cause and community, and possibly getting more business on November 27 and beyond.

There are 28 million small businesses in the U.S. according to the Small Business Administration, and even though many don’t take Amex, that hasn’t stopped a lot of them from embracing the opportunities Small Business Saturday offered (by the way Small Business Saturday is a service mark by Amex so they literally own the day). Amex was smart to include all businesses in this promotion, not just Amex-takers. After all, how could you pull this off  if you only included your customers?

Benefits to small business owners included: the first 10,000 to sign up received $100 of free Facebook advertising (Facebook also donated $500,000 in credits for future use). Amex also made Small Business Saturday promotional material available for download – complete with Amex logo – for posting at brick and mortar stores and web sites, along with advice and consulting services on the Amex OPEN web site. The campaign also included TV and print advertisements.

In addition to creating a lot of awareness for locally-owned businesses, Small Business Saturday has scored big with local and national civic and advocacy organizations like Chamber of Commerces, Better Business Bureaus, womens’ groups, among others. Amex even committed to donating $1 to the nonprofit Girls Inc. for each “like” on its Facebook page, up to $500,000. (Their page hit over 1 million “likes” – pretty impressive by any standards). All this fanfare also moved local and national politicians to support  Small Business Saturday and has generated  a flurry of media attention. When was the last time you heard the government and news outlets promoting a company’s marketing campaign?

Mayor Bloomberg of New York City promotes Amex’s Small Business Saturday with American Express CEO Kenneth Chenault far left.

And Amex didn’t stop at courting businesses, consumers who registered their American Express card received a $25 statement credit for spending more than $25 at a locally-owned, independent small business that accepts American Express on Nov. 27. Good for shoppers and great for Amex.

This “movement”, as it is called on the Small Business Saturday web site, would be called “astroturfing” if it were in politics – lobbyists attempting to make a money-backed cause look like a grassroots campaign – but it will likely go down as a brilliant corporate marketing strategy executed with laser-like focus and precision.

Though the results of the success of Small Business Saturday and long-term reverberations for small businesses, consumers, and Amex are yet to be determined, Amex took extreme care to package its gift to small businesses and consumers, honing in on the needs of a stuttering economy, taking advantage of seasonal interests, employing social media savvy, and lovingly wrapping it in American Express logo paper. It may not be the most authentic gift to the U.S. economy, but the recipients couldn’t wait to open it.