The last 12 months have been some of the most volatile times in the daily deals space. In 2010, Forbes hailed Groupon as the fastest growing company ever. Two years later, at a $3.6 billion valuation, it’s half the value of what Google was willing to pay for it before it went public. Now, some critics, Forbes included, are calling for Andrew Mason to be removed or step down as CEO.
Groupon’s struggles aren’t isolated. Living Social has struggled to attain profitability and in November slashed 400 jobs trying to do so. There’s even been a shakeout with the white label daily deal software providers, the vendors that help media and others develop the long tail of the deal industry. Two years ago, there were 15-20 providers, including most notably Analog Analytics, Deal Current Network, Deal Pigg, Group Commerce, Nimble Commerce, and Tippr, providing software to local TV, Radio, and Newspaper groups in the daily deal space. At the end of 2012, there were only a couple top providers operating profitably and gaining market share. The rest have closed down, stopped accepting new clients, or diverted resources to new projects.
However, merchants are still in search for a low-cost way to reward regular customers for their purchases. So what should publishers and merchants be focused on in 2013?
1. Marketing fewer deals with higher quality. Daily deals continue to work for some, but not all merchants. In one sample of a major TV deal program in San Diego, 43 percent of the total annual deal sales came from just 25 deals, or about one tenth of the total deals ran that year by that publisher. Deal programs should focus on working with the right type of merchants, not all merchants.
2. Picking the right loyalty program. Many companies are trying to figure out what’s next after an initial new customer is introduced to a local business. Older organizations in this space like Rewards Network/iDine, are seeing a new wave of competitors with some major venture backing. Companies like Belly, Mogl, andLevel Up are putting a heavier focus on making things fun and easy for consumers and simple for merchants to track. The trick that loyalty concepts will need to prove is that their programs bring in new incremental business, not just deal seekers, and are not just garnishing a percentage of revenue from existing customers.
3. Trading advertising for services and products. The daily deal industry started long before Groupon, but back in the 90’s and early 2000s it was a booming trade business. Merchants would trade their products and services for a no-cash required media trade. For example, Jim gives his local radio station fifty $100 gift cards in exchange for $5,000 in advertising credit on air. The radio station turns around and sells those gift cards at a discount and recoups the free air time given. It’s a win-win for everybody (merchant, radio station, and consumer who gets a great discount.) This brings more perceived value to the local merchant because Jim now gets an email blast and $5k in air time.
4. Competing with banks? How financial institutions affect the local offer market will be seen in 2013. Last June the daily deal white label Analog Analytics was purchased by Barclays Group, and JP Morgan Chase just announced the acquisition of Bloomspot. Other financial institutions are sure to follow. These organizations see this as a consumer benefit and won’t need to be profitable as a stand-alone business. Some banks, like Bank of America with their AmeriDeals program are starting to go after this market on their own.
5. Investing in digital coupons. Google Adwords and Facebook’s advertising platforms work great for the large and savvy merchant. Local merchants are still in search of an advertising outlet that costs nothing upfront and only costs money when customers take action. Coupons.com, Coupon Cabin, and Retail Me Not have proven that performance based digital coupons work at the national level and Emarketer reported that 92.5 million people redeemed a digital coupon in 2013. We expect local merchants will start searching and requesting a similar marketing channel in 2013 and beyond.
A majority of publishers are adopting coupons and seeing great results. Actions by consumers on coupons grew 42% from 2400 in December to over 3400 in January. The number of coupons grew from 417 in December to 516 in January.
If you are considering adding digital coupons to your site, but haven’t yet then you should read this article from Emarketers.
We don’t believe that coupons are replacing deals, but we 100% believe that offering deals and coupons will lead to a bigger opportunity.
As a result, we are going to be sharing a lot of market knowledge and to start here are three tips to running a successful coupon program.
1) Make Sure You Get a Great Image From an Advertiser
We see so many merchants use bad photos, out dated photos, cheap stock art in advertisements and wonder why they don’t get a response
Here is a great example of an image that is awesome from, Cafe Ventana, a St. Louis bistro. They have a great picture and their logo placement is clean and clear.
2) Use Great Tags, Not Just the Business Name
Remember consumers aren’t typically looking for a specific business, but a business type.
So use tags that help a customer find what they are looking for in a certain category or neighborhood.
We recommend at a minimum: City, Neighborhood, Zip Code, Specific Services or Food Type.
3) Create Incentives to Sign-Up & Advertising Packages
When you first launch your coupon program, give new advertisers an incentive to try online coupons:
Create packages to entice advertisers to run more than one coupon at a time to increase your revenue faster. In our system, you would just divide the monthly spend and enter that for each coupon.
Bundle coupons with additional advertising to increase performance and your average sale.
SignPost, Local Offer Network, Boomtime, Analog Analytics and Second Street Media now incorporate a range of local offer formats. These can include deals, coupons, gift certificates and contests. So is San Diego-based Deal Current, which is specifically focusing on coupons to move beyond deals: both traditional, flat rate coupons, and performance-based coupons.
While deals remain attractive for their games- like excitement – especially in high margin categories — coupons are preferable to deals in many instances. They don’t churn as much and aren’t as time pressured – coupon customers tend to stick with the channel for years on end, and tend to add to their budgets as results are proven. They also work everywhere, unlike mobile-limited channels such as Groupon Now; and they don’t require businesses to share revenue.
Deal Current’s innovation with coupons is offering a performance-based option. It enables publishers to work with advertisers with no upfront costs. As President Patrick Dillon notes, “It is like AdSense, but better because you don’t pre-fund the account.”
Dillon notes that a performance-based model incentivizes publishers to circulate the coupons around the Web with SEO and aggregators. A performance based coupon, in fact, might look and perform like a text ad, but will cost 40 percent less than comparable online ad choices.
We would like to introduce our two new team members that have a combined total of 4 years in the daily deal industry–working at Zulily, on Active.com’s Schwaggle team, and a daily deal pure play in Chicago, IL. Lianne and Joanna will be helping grow our service and support teams and further develop key collateral, training documents/videos, and improving other marketing initiatives for our clients.
Lianne brings more than five years of daily deal and media knowledge to her role at Deal Current. Prior to joining us, she worked on an Emmy Award Winning investigative report and crafted primetime news stories at 10News and KUSI in San Diego. Afterwards, she was a Marketing Associate for a start-up daily deal company in Chicago, then took a role with Active.com’s Schwaggle (a national daily deal program for athletes). She will be a key player in improving collateral, updating training docs, and launching a marketing campaign to support your efforts.
Joanna brings ten years of customer relations experience to her role at Deal Current. Having launched her career in the eCommerce field, Joanna brings daily deal experience to our team. She launched a successful high-volume call center for zulily, Inc.; the largest flash sales site in the world tailored to moms, babies, and kids. Joanna joined zulily as the 50th employee there, and left when over 1,500 were on staff. Her expertise in project management, customer retention, team building and training development will be a huge asset to our team.
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.
We are happy to announce that the San Diego Business Journal released their 2012 Most Admired CEO nominations today and Jimmy Hendricks was recognized for the third year in a row.
Jimmy was nominated in 2010 and was awarded Most Admired Small Business CEO in 2011. We are excited for the continued recognition in San Diego.
For more information or to register for the event, see below:
Location: Paradise Point Resort & Spa, 1404 Vacation Road, San Diego, CA 92109
Time: 4:00 p.m.-7:00 p.m.
Food & Beverage: Heavy appetizers and cash bar.
Estimated Attendance: 650
This event recognizes local industry leader’s great achievement within their companies and in the community. The winners and finalists are lauded for demonstrating determination and insight yielding huge successes for their organizations. These executive have taken the lead in driving their businesses and the local economy. The San Diego Business Journal honors these CEOs by hosting an exclusive reception and awards program to honor the winners, finalists and guests.
Deadline: Thursday, October 25, 2012
Criteria: Must be located in San Diego County
Judging: An independent panel of judges selects the winners
$60/individual and $500 for a group of 10
Ticket price includes: 26-week subscription to the San Diego Business Journal ($15 allocated to the subscription). Current subscribers may gift the 26-week subscription to a colleague.