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.

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Free Social Media Sites Have Their Price

2010 was a great year for marketing folks to get back some of its mojo and play with some toys in the social media sandbox, but the people who really fueled all the excitement was the collective “me” who enjoyed the dim limelight telling the world what “we” are doing, where “we” are going, what “we” are thinking via Twitter, Facebook  and other social media. In fact, any marketing would be impossible without their participation. But it seems like our oversharing culture also ended up getting stuck in the marketer’s web.

We know many social media began as communities, not money-making rackets. But the game has changed – when the marketing light bulb turned on, many social media sites started using our information as opportunistically as they can. As it turns out, it is pretty much a slam-dunk to contact customers and prospects directly.  The implications of this windfall have reverberated through every company’s communications plan, large or small, who in the past felt one step away from their coveted targets. Customer not happy with your product and slamming it on your Facebook Fan page?  You can respond – quickly and publicly. Getting feedback that your customers want a certain type of deal?  You can Twitter it. Want to attract hungry people close to your restaurant? Bring on the mobile phone coupon and your next diner could be walking through the door.

And while subscribers can opt in or out of communications preferences (including being contacted by third parties) we still complain about privacy on the free sites we use.  Sites that do dismiss our privacy rights need to be punished more effectively to make a real difference (think Zynga, Facebook). I seriously wonder how many of us even read  those fuzzy, long-winded legalese before we click “I Agree”?  Privacy rights should still be expected – paid or not – but we are also more than willing to give up personal information to get on these sites for free. Heck, even WordPress is gratis. And yes I signed up for the weekly digest and we are very happy together.

This also brings up the concept of “free” in general. We know it is an extremely powerful word in marketing. This begs the question: how many of us would be on these social media sites  if we had to pay?  We would have to do a value analysis on each one, and some would very likely be eliminated from our bookmarks. Conversely, every good marketer knows how difficult it is to charge for a service that was initially free. Some have had mild success while others use a softer approach with add-on/upgrade strategies (examples: Linkedin, Twitter).

The bottom-line? The collective “me”  made an unspoken pact with free sites when we got on them to share our desires, jobs, travels, loves, thoughts, and everything else.  Acknowledging the tradeoffs openly may be the first step.

You’re Not Paranoid, Advertisers Really Are Watching You

Thanks to the internet, the never-ending quest to pinpoint advertising to a viewer’s demographic has gone into territory unthinkable by the Madison Ave of yore. Back in the day, even up until the explosion of the internet, advertising decision-making and placement of ads were fairly simple: develop your messaging, ad concept, and make it as targeted as possible with the data that you had  – from something as simple to a Yellow Pages ad for the local plumber to more targeted like a billboard on the highway for tires, or a print ad for cosmetics in a women’s magazine.  Sure, you could pull from demographic information, but it was nowhere near the level of data-gathering techniques available online today. Advertisers now have access to a startling array of  information about peoples’ internet surfing habits, lifestyle preferences and other personal data to create advertising “just for you”.

In theory, micro-targeted advertising does have a mutual payoff both to the advertiser and the recipient:  the marketer doesn’t waste dollars on non-starter prospects and the viewer only sees products and services that are of interest — seems like a perfect match. But in order to achieve this potential win-win proposition, we must give, willingly, or ignorant of its implications, a lot of personal information to these folks. And let’s not kid ourselves, few of us lovingly embrace advertising, but know it’s part of the trade-off of a “free” internet (OK I love it but I’m in the business). Web sites where we shop, compare, network, read articles, and everything else turns a jumble of data about our grooming habits, drinking preferences, marital status, film choices, political leanings, and churns out a target profile.

From this technology boom comes a bonanza for advertisers, including some of the fastest growing advertising trends that marketers are capitalizing on and privacy advocates are watching closely.

Real-Time/Instant Bid Ads 

Online ads historically have been on the perimeter of web pages and many of us may not even pay attention. But if we look closer, we’ll see they have a strong correlation to what we are looking at on the screen, since advertisers can pull from general demographics and location. When I look up biking routes in the San Francisco bay area, there will likely be ads for local bicycle shops, bicycle trips coming up in California and maybe even an ad for the latest Lance Armstrong book. Now, though, advertisers can make split-second decisions by “following” viewers around on the web. For example, if I purchase a vacation package on eBay (who has actually been testing a system for a year), that data can be captured and eBay can dynamically change ads for other parts of my trip, like travel, or beach wear, or other vacation-oriented ads – instantly. 

Self-Service “Smart Technology” Advertising

Another trend ala Facebook is self-service advertising, which allows companies to cherry pick from Facebook’s 400 million subscribers for both demographic and psychographic slicing and dicing. For instance, an advertiser can pull data for all 30-35 year olds, single and married, in New York City who are Facebook fans of Top Chef and listed fine dining as a key word on their profile to see an ad of a new, trendy restaurant opening in Soho. Sometimes these ads can be a great match with the person, but other times are an awkward, intrusive advertising on our Facebook pages that will get noticed for the wrong reasons. Facebook does have sales consultants to help create a successful ad, but the point is, anybody can pull an inordinate amount of  data and create an ad for hundreds of thousands of people.

Geolocation Applications

Mobile marketing has been around for a while in the form of texting and other basic methods, but with the advent of mobile GPS, Geolocation applications, which reveal both your location on a map and real-world location (i.e. restaurant, store, etc)  it has become one of the hottest applications around and marketers cashing in on its potential. This has also spurned a whole new market referred to as Location-Based Advertising (LBA). Now when you are walking down the street on your way to dinner and pass the movie theater, a coupon may pop up on your phone for 2 for 1 tickets. It is important to note that LBA is an opt-in service so you will not receive coupons, discounts and incentives unless you subscribe to the company’s service. You can retrieve LBA two ways: where the location drives the discount from the company or when you are at a location and initiate contact with the company for instant discounts. 

Similarly, though still in its infancy, location-based social media games like Foursquare and Gowilla that notify friends of your location at any given moment, has marketing savvy written all over it too. Restaurant, shops and other businesses reward those who frequent their venues regularly with points, badges and other incentives (yes, you can be a mayor of a bar). These social media games only will get more popular as advertisers figure out how to capitalize on data collected about places where people are frequenting and with whom.

Smart Signs

Now let’s step offline to another area into an area where you are an unwilling participant but the target nonetheless of shrewd marketers. Say you’re a 35-year-old woman walking down the street and a digital sign advertises 25% off a womens’ clothing store right next door. Five minutes later, a teenage boy is walking by and the newest Wii game is advertised for the electronics store down the street. Technology has now evolved to recognize facial and other body features to create an instant demographic and in turn, rotate advertising messages in airports, malls, and other public places.  One wonders rather sadly if this trend will lead to embarrassing scenes like a large person seeing an ad for Weight Watchers while walking through an airport.  Advertisers are hesitant to talk about who is using this technology, claiming it would give their competition “inside information” about their marketing strategy but somehow I think they are more embarrassed.  

The most important thing for consumers know is that an innocent click at a web site, or even walking down the street, we are willing participants in turning over personal information to advertisers. So don’t be impressed when you see an ad that seems perfect for you, just turn to the mirror and congratulate yourself for a job well done. 

Photo credit: Boston Police Department