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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Traditional Marketing Does Not Exist

If I had a $1 for how many times I’ve heard the rhetorical question “Is traditional marketing dead?” or purporting that it is, my business office would be located at the top floor of a fancy San Francisco building instead of my small condo. I even heard this phrase  as part of “common knowledge” last year on a phone interview for a job from someone squarely in the internet space. Makes sense given his world revolved around ecommerce. For fun, I made the case for other forms of promotion, not sure if knew instantaneously I wasn’t a good fit for the job, was sticking up for my generation of marketers, or being a devil’s advocate. Lo and behold, they hired someone else. 

Fast forward to now:  I’ve had over a year to think about traditional marketing and what it actually means (nor not). I realize that the answer to this question affects not only the way thousands of companies seek out and market to customers, but also me professionally and personally. What should I spend MY time focusing on? What’s important to know for the future? I watched and waited, I scoured Mashable, TechCrunch, marketing articles and editorials, Linkedin groups, talked to people. I want to know what trends that have come and gone and maybe more importantly. what is noticeably absent from the mix – perhaps even permanently.

My first thought was we need to get rid of the word  “traditional”. It  not only sounds stodgy and connotes ancient, it  doesn’t capture the essence of what marketing has and will continue to be: an ever-changing transformation of strategies, tactics, and  tools to reach customers and prospects. As mentioned on this blog before, a recent marketing class instructor said  “There is no such thing as online and offline marketing anymore – it’s all marketing” and this was an aha moment for me, reinforcing the fact that innovations in technologies, shifts in communication and creative strategies, and business and consumer drivers dictate what direction the marketing mix will go, not simply salivating over anything internet related.

Think back to some of the trailblazing times in last century’s marketing: the first print advertisements in a newspaper; the first highway billboards seen for miles; the first advertisements for hair care, cigarettes and indigestion cures on black and white TV; and now social media communities churned into marketing machines. Some forms of communication go out, but many never leave. What works stays, what doesn’t goes away (fax advertisement anyone?).

Which brings us full circle to the same question: is traditional marketing dead? And does traditional marketing collectively include any communications that is print/offline and not on the internet? Is it one-way marketing pushing out promotion vs. two-way communication encouraged by social media communities and customer feedback? The answer depends on your definition of traditional, but the most popular one seems to be one that focuses on “old school” direct mail, advertising, trade shows – anything offline vs. the Big Dog: the internet, with a heavy emphasis on social media, particularly as of late. In fact, young B2B marketers have probably never even produced or received a hard copy direct mail at work, but ironically might be getting a postcard twice a year from their local carpet cleaner offering 20% off…which happens to be quite successful for their business.

The important question marketers really have to ask is not whether there is such a thing as traditional marketing and if it is dead, but what is the best way to reach their target? Context is everything – smart companies assess and deliver the right mix of gravitational pull for their own business and do not fall prey to the latest trends because they are in fashion or techie appeal.  It might not be a Facebook Fan page that grabs your customer’s business if they are not internet-savvy; or consider hybrid marketing like the Yellow Pages which have print directories but also support  a web business to reach their targets wherever they are. Compare a  high level executive receiving a hand-crafted invitation to an exclusive CEO event in the mail versus an email.  It may not be as convenient or include flashy html but it strikes the right emotional and business cord to open up a real and personalized invitation (with texture yet!). Or a multi-level, integrated campaign for a new consumer product which is advertised on the web, in print, on TV and retail. One communication channel may have more impact than the other but they all work together in concert, one is not more relevant than the other. Lastly, a high tech companies that offer customer events both webinars and in person events maximum impact with different audiences and objectives. All of these examples come back to: there is no such thing as online and offline marketing anymore. The truth is that traditional marketing does not  exist, smart decisions to reach your target do.

While it would be foolhardy not to be on top of critical pieces of the internet pie – be it email marketing, ecommerce, social media, the alphabet soup of  SEO, SEM, PPC, etc. – we must not be myopic and dismiss the successful tools used for years to reach our prospects and customers when they hit the bullseye.

Taking a Marketing Cue From The IKEAs of the World

Look at any marketing textbook, business book or PowerPoint at a marketing conference and you’ll see different definitions of what a company brand is, but they all look familiar. First the brand focuses on the external: the symbols such as the logo, colors and other physical attributes of the company, and then the layers are peeled away to reveal core characteristics like personality and qualities that embody the brand- what you want people to think and feel when they engage with your company. Defining, creating and promoting the right image are paramount to your branding success, but just as important is whether it  reflects and resonates with your audience. In other words, your prospects and customers (and anyone else looking in your direction) have just as much power to define your brand as you do. And in these times of consumers and businesses cutting back wherever they can and evaluating the value of vendors with an eagle eye, I am hard-pressed to find anything more important than brand caché. And If you don’t believe me, look at how well lower-end brands are doing these days, and not just because of these leaner times.

Big marketing muscle is coming from consumer brands like Target, H&M and Ikea, known for their inexpensive yet fashionable and decently-made products because they are doing a great job branding their products. High-end brands like Hermes, Mercedes and Apple will always have their followers, but “middle brands” such as Dell, Nokia, Pontiac and others are getting squeezed out by what is called “mushy middle” as coined recently by some marketing consultants. These brands are losing the power of  “average” and getting lost in the swampy midlands of high and low brands.

So what lessons can be learned for marketers from the low-end leaders?

1) The Brand Promise is More Important Than Ever

With this new standard of “normal” and conservative spending, it’s more critical than ever to do what you say and say what you do. Your pricing, quality and promotion strategy should all align with your customers’ experience and perception of your brand. When those are mismatched – sometimes horribly like Toyota recently – the effects can be devastating. Target is very successful in good times and bad because it stays on course consistently with its brand promise. Target claims they have low prices with good value and style and…they do. If your customers get a whiff  of anything else, they will likely stray, either temporarily or for good.

2) Make Sure Your Brand Is Everywhere You Are

An instructor of a class I recently went to said “There is no such thing as online and offline marketing anymore, it’s all marketing” and that’s so true in these times. Whether your company simply has an online store or is engaging aggressively in social media like many of the low price leaders, remember your company may be seen in a TV or print ad, for instance. Extending the brand means it is elastic wherever your brand goes. Sometimes it’s more of a challenge for stodgy company to make that jump, say Wells Fargo Bank. But lo and behold they have developed a strong presence online for their diverse audience, including YouTube, interactive games like stage Coach Island and other social media tools to reach their customer base.

3) Embrace Your Brand

Whether your brand is Bulgari or Burger King, incorporate the consumer perception into all your promotion. An example of a great brand that might raise eyebrows is SPAM, yes SPAM (I won’t launch into a Monty Python diatribe here). They are one of the most successful branding stories despite their low-end product because they have taken the experience of customers and integrated it into their company image. Not only are they a part of Americana, but they have capitalized on SPAM’s cheesy popularity even though most people think it is disgusting. Think: SPAM museum, SPAM festivals, online games, fan club. Conversely, IKEA has embraced the shabby chic reputation with humor and authenticity when speaking to their audience through advertising and other promotion- they know how they are seen and seem to enjoy it, poke fun and say “we get it too” – don’t try to be something you are not. 

When all is said and done, the most important thing about your brand is whether it can be shaken, turned inside out, tested time and time again, and your customers continue to buy.

Image courtesy of Kinetic

DIY Design: The Death of Creativity?

Perhaps you’ve done it already: design a product on a web site yourself using a configurator. And then pay for it. Then it’s shipped to you. And you hopefully enjoy it. This new level of customized product development and selling  — no marketing required — has mushroomed to unseen levels with the growing capabilities and sophistication of online retailing.

We’ve seen mass customization before in the offline and online worlds. For instance, when buying a custom home (get it? custom) or a tract home with “options” and other big ticket items like personal computers or cars – but they have their limitations. And certainly making your own T-shirts, mugs and the like has been around forever. But with the explosion of online retailing, never before have so many products available to customize: from simpler items like designing your own jeans (bell bottoms anyone?) to creating an entire room of custom furniture. We can decide the material, colors, finishes  and a plethora of other choices with the click of a button, a mere hope, preference or coincidence before.

If you haven’t seen this new DIY design trend, here are some examples. And these are just some of the hundreds of web sites one can go these days to make  exactly what we want.

http://bspurses.com/our-collection/purses/

http://www.thomasville.com/Design-Your-Own/

http://www.dressbydesign.com/

When one thinks about this idea of consumers purchasing precisely what they envisioned, it is the golden ticket for a sale. We  should —  theoretically — be elated with the purchase (maybe not the price since we will pay more for this customization) but  it is made-to-order in its truest form. And while DIY design can be very enticing to people who know exactly what they want, it is not ideal for the consumer with a fuzzy idea of what they want and are moved through the sales cycle by information gathering, inspiration and desire.

I then started mulling over this designed-by-me concept and it seemed to bring up some important questions about the shopping, evaluating and buying experience that we might not even realize on first blush. For instance:

Where Art Thou Thrill of the Kill?  If I am designing my own product, I will surely love it, but there will be none of the joy or excitement in discovering such a “find”. How many times have we been with friends or by yourself and been looking for the “perfect” something, only to find it at some rare shop or a place we normally shop slashed 50 percent off? How great is that?! (Truth be told women probably get this “feeling” more than men) What makes that moment so special too is that we found something we wanted  – an essential part of the buying and long-term valuation process.

Where art thou Creativity?  What does this mean for product development and design (and conversely for marketers) when they are pushing the concept of DIY and that’s it. DIY design also deletes the strategy and planning (and fun) for the professionals who design products (not to mention potentially deleting their jobs as well). Sure they can provide the pieces to choose from, but there are no finished creations. just a mish mash of checks and stripes and squares as it were. And this is sad for industry in some way. It creates a production-driven environment that is dictated by parts of the whole.

Where Art Thou Future?  This all got me wondering too…What about other kinds of products we can create. What if I like an artist’s style, for instance.  Can I take certain colors, styles and images and blob them together to create a Keith Haringesque mural for my own pleasure?Or Monet? And if I’ve done it myself, is it really art or more of a paint-by-numbers product? Part of the mystery and joy of life is surprise, passion, desire…we don’t know where we will find it on the open marketplace. 

And don’t get me wrong, I could very much enjoy a clutch purse I myself designed of yellow leather with zebra pattern and silver-plated handle and also claim bragging rights if anyone likes it (“Why yes, I designed it myself”)

But I also know my creation was not very…creative.