Our President Patrick Dillon was recently quoted with other experts on the outlook of the daily deal market on News Net Check.Read the original full post here.
Almost two years after Groupon’s IPO and amid repeated dismissals of the space as dead, deals soldier on as a viable revenue source for local media companies.
BIA/Kelsey has projected the deals space will reach $5.5 billion in revenue by 2016, up substantially from the $1.8 billion generated in 2011. But industry experts warn that deal vendors, pure plays and media outlets included, need to mature beyond one-off, email-based arrangements to attract loyal customers of their own.
“What we’ve seen is the deals companies say, ‘I can’t keep on going to the endless amount of local businesses and trying to sell deals to a new one,’” says Peter Krasilovsky, VP at BIA/Kelsey. “‘I have to keep my merchant customer base.’”
Questions of whether deals drove loyal customers, sharp discounts and unfriendly revenue shares for merchants prompted many skeptics to warn of the deals space’s downfall after Groupon’s IPO, the largest of any Web company since Google.
Groupon, which has banked over $1 billion in investor funding, saw its share price drop almost 90% in about a year. The Chicago-based company has rebounded, recently reaching a 52-week stock high following a CEO change.
The space has also thinned since late 2010, when Amazon poured $175 million into LivingSocial and rumors circulated that Google would buy Groupon for nearly $6 billion. “At that point, the men were separated from the boys,” says Andrew Moss, founder of BuyWithMe, which had raised $36.8 million to compete as a third pureplay. Shopping website Gilt acquired BuyWithMe in the fall of 2011.
Today, Groupon and LivingSocial remain the two dominant pureplays to compete with local publishers, broadcasters and entrepreneurs. (Groupon also offers an affiliate network, available to media companies, where partners can place Groupon deals on their sites for a commission.)
“The deals space has leveled off,” says Patrick Dillon, president and co-founder of Deal Current, a white-label deals software company that works with The Buffalo News, Pittsburgh Post-Gazette and, in some markets, Clear Channel Communications Inc. “Now, it’s going to start growing again.”
One reason industry experts remain bullish on deals is its evolution since 2009. For a few years now, BIA/Kelsey has referred to the deals space as the “promotions marketplace,” Krasilovsky says; others prefer performance marketing or prepaid offers, given the stigma associated with “daily deals.”
Groupon has acquired Savored to bolster its restaurant reservations and SideTour to likely make a play in events hosting. Its e-commerce play, Groupon Goods, now represents 38% of the company’s total sales, according to AllThingsD. (A Groupon spokesperson could not be made available for comment.)
LivingSocial formed a Merchant Solutions division in late 2011 to assist merchant clients with other digital marketing initiatives. Like Groupon, the company has bet heavily on its mobile app full of always-on deals. “If [a merchant] came to us and said, ‘Hey, send me 50 customers a month,’ we really didn’t have that as an option,” CEO Tim O’Shaughnessy recently told The Washington Post. “Now, we do.”
At local media companies, most minus the personnel or financial resources of a Groupon or LivingSocial, similar pressures to evolve are on.
“I’m still bullish on deals for local media,” Krasilovsky says. “But it’s not the savior, as a standalone, that we might have thought it was a few years ago.”
Local media companies leverage their content, market reach and sales staff to curate offers for a local audience, usually partnering with a white-label technology company like Second Street that provides the platform. These deals often complement the media company’s other digital marketing services.
Shawn Wilcox, VP and director of sales at the ABC/NBC affiliate in Traverse City, Mich., stresses that his company is not a deals player, but rather a multimedia service provider. His sales reps are selling more than deals.
“Our sales team [consists of] truly digital-ready consultants as sellers,” Wilcox says. “Their job is to go out and speak to any individual client about what their marketing opportunities and needs are and then to custom tailor a solution. Sometimes that includes deals, sometimes it doesn’t.”
Deals, or prepaid offers, can be more than one-time arrangements, Krasilovsky says; pureplays have added inventory via always-on mobile deals or deals supermarkets. For local media companies, deals can be bundled with ads, website management and other digital marketing services as they move toward quasi-agency roles.
“When you do business with the local media company, in my case, you might get promotional commercials, you might get an interview in the morning news, in print,” Wilcox says. “You’re going to get something tangible out of it.”
Moss, whose BuyWithMe had early relationships with The Boston Globe, an ABC affiliate in San Diego and Entercom Communications Corp. in multiple markets, says local media companies should consider additional e-commerce plays. He points to Thrillist, a men’s lifestyle media company whose men’s shopping site JackThreads closed its millionth order about a year ago.
“[Publishers] have to decide whether they want to try to leverage their content and audience they have that likes their content to be transactional,” Moss says. “That’s the choice that they should be thinking about. It shouldn’t just be, ‘Let’s do that, but let’s be daily deals.’ They should think about the best way to be transactional.”
Second Street’s biggest line of business is its contests, a platform they license to more than 2,000 media partners, Coen says. A media company, for example, can run a weekly NFL picks contest on which they can sell a sponsorship to a sports bar.
“Email, contests, ballot and deals are really very interrelated from a promotions perspective,” Coen says. “What you really find is the key to success with deals is your email database. The way to grow your email database is to run promotions, which can be contests or even deals.”
The benefit: a diverse, interactive content mix to drive a loyal consumer audience — and a merchant who wants to reach said audience.
For local media companies, deals can be that way in the door, both with discount-hungry consumers — digital marketer Constant Contact reported last year that, over a period of six months, four out of five deal subscribers purchased a voucher — and SMBs in search of new customers and ad pay relative to the business it drives.
Wilcox says his ABC-NBC duopoly, which partners with Second Street in Nielsen’s 119th-largest DMA, has signed up over 75,000 to its email database and grosses annual revenue over $2 million. Wilcox says some local merchants, satisfied with the outcome of a deal, then purchase additional forms of advertising.
“When you do deals successfully, you have people calling you,” Wilcox says. “We have clients who do deals every month, every quarter, have signed up for annual campaigns [and] pour more dollars back into other TV and digital products.”
“People who says that deals are dead, mainly they’re saying that the broad, daily deals model as a replacement for other types of advertising,” Krasilovsky adds. “That hasn’t panned out. But deals are an important element in the overall mix. They’re still there and still making quite a bit of money.”
The last 45 days have been an exciting time for the tech team at Deal Current Network with two major updates
Here is a screenshot of the homepage and please let us know what you think.
Have you ever noticed when you visit a big site like Zappo’s or another e-commerce site, that you start seeing their ads on blogs, YouTube, and media sites right after. That is called Remarketing.
Remarketing is the process of showing ads only to people who visited your site recently or during a set time period like the last 90 days. This process increases your brand exposure, reminds the customer of your website, and increases sales.
The great thing is it is very cost effective and makes your program seem much larger than it may be.
Advertisers and customers will both think: “Gosh, this company is everywhere. I see it more than Groupon.”
So here is some information and how to get started.
A Short Video Overview of Remarketing
Here is a short 50 second video overview of Remarketing by our CEO Jimmy Hendricks, from a recent advertiser marketing seminar in San Diego. We are piloting short 90 min training seminars to teach small businesses about online marketing, offers, and coupons.
Why Should You Use Remarketing?
Remarketing allows your business to look bigger than you really are. Say you talk to an advertiser, and then they visit your website, and start seeing your ads on other websites—this will remind them of you and make you seem more powerful than you really are. The same thought happens with consumers.
Also, Remarketing is very cost effective. We ran banner ads in San Diego for two weeks, targeting an audience of 25,000 people, and the cost was under $200.
Examples of Remarketing Ads
The great thing about Remarketing is your ads will show up on local websites (when those sites have ad space left) for a fraction of the cost.
Here is a perfect example of our ads on the San Diego Union Tribune. One day we had all 3 spots on a page load and our total cost from that website was about $15.
How to Get Started
Step 1: Watch the Google Remarketing video. http://www.google.com/ads/innovations/remarketing.html or on the video to the right.
Step 2: Create a Google AdWords account
Step 3: Create an “Audience” within your Google AdWords account. The video explains how to do this.
Step 4: Create 4 common banner sizes for your program. You can start with less, but these are the four most popular sizes (File max size is 50kb and sizes need to be exact):
Step 5: Google will need to approve the ads which typically takes 3 business days. You can email them on the third day if not approved and this speeds up the process.
Step 6: If you have more questions check out this cheatsheet http://www.wordstream.com/blog/ws/2012/12/19/google-adwords-remarketing-cheatsheet
Yesterday the founders of Deal Current Network, Jimmy Hendricks and Patrick Dillon, spent 90-minutes teaching San Diego businesses owners how to market their business online. In attendance were media representatives from NBC 7 San Diego, San Diego Magazine, Fox 5 San Diego, Get1Free Magazine, Pacific Magazine, and San Diego Family Magazine. Small businesses owners like Laura from Pacific Nature Tours, Connie from Click Through Coupons, Tomio from AVI Technologies, Bonnie from Sanctuate, Michael from Infinity Financial Services, and Anthony from Aserenity Skin and Body were able to network with media representatives as well as gain valuable information for their business.
Hendricks, talked for about 40-minutes on simple website design and key SEO techniques get your website on the first page of Google. He also discussed, which social media profiles are a must, and how to trade your services with media groups for advertising.
“I came in here thinking I know a lot and I probably learned about eight new things I didn’t know. I highly recommend it, it was very organized, amazing presentations—these guys know what they’re talking about.” – Connie, CEO of Click Through Coupons and Marketing Director at FIT Athletic Club
Dillon, wrapped up the seminar talking about the San Diego daily deal and coupon space, how to make coupons work for your business, and performance based coupons versus flat rate coupons.
“Our business does a lot of daily deal marketing and to see all the different opportunities available in San Diego was very beneficial.” Laura, Pacific Nature Tours
“I was very excited about the digital coupon section because one of the things I found the digital coupon does is it gives you incredible track-ability and flexibility. You can see where your clients are coming from and make adjustments to the coupons that are not effective for you, opposed to print and other types of media.” Anthony, Aserenity Skin and Body
Overall, the morning was a success for both Deal Current Network and San Diego business owners. Take Back Local was able to gain valuable feedback to make the next seminar on 3/29 an even bigger success.
“I highly recommend this seminar to anybody who is a business owner or marketing person. They talk about different strategies that I think are useful and things that are up and coming that you should be aware of.” Steve, NBC 7 San Diego
For more information watch us on San Diego CW6 below or visit TakeBackLocal.com
2013 is going to be an exciting year for local advertising. We know that with a new year, comes a new revenue budget, and sometimes new vendors to serve you better.
We wanted to share a testimonial from San Diego 6, CW, about why they chose Deal Current over any other provider in the market to power their Meals & Steals program.
“As a station, we were very happy with the level of service that Media Web Connect provided us over the years.
However, we were looking to grow and expand our program. We were courted by many different vendors, but ultimately decided to partner with Deal Current based on their professionalism, presentation, expertise, and of course…the Network. By using their Network model, we always have a full slate of offers on our site whether it’s one of our clients’, or one we’ve picked up from the Network. This has increased our traffic and sales.
My biggest concern was moving over everything we had built with Media Web Connect and launching with Deal Current. That fear disappeared very quickly as the Deal Current team walked us through each step in a clear and efficient manner. We did not experience a single issue during the transfer. “ – Scott Potter, Local Sales Manager, San Diego 6
If you would like to learn more, please email us at firstname.lastname@example.org.