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Alex Baxter
A fragile worldwide economy and uncertainty about the future has led to a renaissance in coupon redemption and discount seeking, and subsequently a new wave of digital savings and “deals” providers. Gone are the days of conspicuous consumption, and in vogue are the penny-pinching, coupon clipping strategies prescribed by grandparents who lived through the Great Depression.
Thus, we’ve seen huge growth in digital couponing, on mobile and the Web, with adoption rapidly increasing. Leaders in this space have not only experienced significant on-domain traffic gains, but have also seen syndication growth by powering coupons channels on other sites. The growth in savings products doesn’t end with coupons, however. There has been a recent popularity surge in a new category called Group Buying, and it deserves an online publisher’s attention. In my latest installment, we’ll explore these two categories: the tools available to you, and the vendors who power these offerings.
Online Coupons
Newspaper FSIs have been a part of our lives for as long as we can remember. That insert with little rectangles and squares, framed by a dotted line that we folded and tore or took scissors to and cut, is still the most effective couponing tool that advertisers have at their disposal. A burgeoning slate of online offerings now complements the tried-and-true print product we’ve come to know, and they give publishers an opportunity to tap into a potential revenue source.
Coupons.com, from Coupons Inc., currently leads the way in delivering online downloadable and printable coupons. SmartSource.com, a product of News America (News Corp.) and RedPlum.com, a Valassis product, round out the leadership in the consumer products coupon space, while Savings.com looks to differentiate with a focus on retail discounts.
Typically, these coupon providers require users to download a printing tool to their machine for security and coupon integrity reasons. An email address is captured in the process and the user is asked to opt-in to a weekly email that delivers the latest coupon specials. For a publisher, this is all relatively turnkey. You simply drop an iframe into a blank page on your site(s) and the partner takes care of the rest.
It’s a nice offering to have, but the payout is relatively small, without volume. The rev share you receive is based on coupon prints that your site(s) delivers, and the coupons provider may be getting anywhere from 5 cents to 9 cents per print from featured brands, so your cut is pennies. But don’t discount the opportunity. This is a product that can drive a loyal user base that frequently prints coupons and returns to your Web properties for other offerings.
Group Buying
The Group Buying space is booming and becoming increasingly crowded. Major players include Groupon, LivingSocial, Tippr and DealOn, the concept being to provide daily product/service deals, at local establishments/outlets, at a discounted rate when a minimum number of individuals buy in to the offering. Groupon, the industry leader, currently delivers daily deals to 158 communities across the United States and Canada. Their model is to drive X number of users to commit to purchasing a deal, and once that number is hit, credit cards for each of those users is charged and the transaction completed. You also have a modification of that model out of DealOn, a platform created by remnant advertising company AdBlade. DealOn has no minimum required number of hand raisers to lock in a deal. They start at a certain discounted price or percentage discount, and increase the savings as more users buy-in.
Regardless of what form the group buying model takes, it encourages participants to share and socialize the deal so that discounts either get locked in or enhanced, so it becomes a win-win-win. The consumer gets what they want at a price they like. The retailer drives awareness and new customers that they hope to convert. And the group buying enabler builds what is today a high-margin business. The simplest way that you, the publisher, can participate in this trend is through one of the affiliate programs that these companies offer. Groupon has struck several deals with larger newspaper groups of late and continues to lead the way in this space. Do your due diligence and shop around if you’re in the market for a group buying partner. Revenue share terms, regional coverage and promotional requirements vary greatly, and an informed decision will prevent major headaches down the line.
Recent developments in group buying worth mentioning are taking shape on Facebook. First, retailers are starting to offer their own daily deals. Walmart recently launched CrowdSaver on Facebook, a deals app that requires a minimum number (5,000 has been popular) of participants to “Like” the offering in order to lock it in and make the product price available on Walmart.com.
Second, Facebook has created a deals program tied to its Places product, the location check-in application similar to FourSquare. Local businesses now have the ability to offer discounts and incentives, through a self-service UI, to customers who use FB to check in to their store. National retailers like GAP have also signed-on to participate.
Mobile
I would be remiss if I didn’t mention the savings ecosystem without touching on its intersection with mobile technology. Mobile coupons arrive in a variety of forms. Companies like CellFire focus on getting savings onto your grocery loyalty card, and visual search companies like SnapTell and Snipp will deliver a coupon after taking a product or QR code picture and delivering it via MMS or an app to a recognition engine. And, finally, SMS companies like 4INFO will deliver coupon codes via text messages.
These types of coupons, however, are still limited by the medium. There is no singular platform or universal scanning protocol being employed by retailers that can generate or recognize a scan-able coupon on a mobile device (the exception here being Target’s recent investment in mobile barcode scanning technology). Coupon codes are great, but the majority of point-of-purchase registers will not accept them. And once the consumer is actually in a physical retail location, many coupons on WAP or delivered through an MMS message are rejected by cashiers as not acceptable.
This is a good starting point for a publisher’s understanding of how to navigate this new and dynamic world of savings platforms for the Web and mobile. I have vetted most, if not all, of these partnerships and opportunities with relative success and encourage you to reach out proactively or respond to calls you’ve been receiving from some of the vendors I’ve mentioned here.
Both coupons and group buying require scale to drive any meaningful revenue, and you should look for ways to organically embed and promote these features across the various product offerings at your disposal. Mobile accessibility cannot be overlooked as smartphones proliferate and consumers spend more time snacking on bytes of information while on the go. Look for partners that allow for mobile functionality within their syndicated offering so that you can deliver across platforms to your user base. All that said, best of luck launching your savings platform, and happy bargain hunting.
Minsider columnist Alex Baxter is VP and GM of Parade Digital.
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