What Mobile Deal Apps Mean to Merchants – Tracking

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Whether or not daily deals make good marketing sense for local merchants will be more transparent to them once the mobile initiatives of Groupon and LivingSocial are better established, suggests Lou Kerner, social media analyst for Wedbush Securities. He said the mobile data that will soon be available will trump what's been accessible from email- or Web-driven deals.

"Among the many great attributes of mobile is the ability for merchants to track what is going on with their daily deals in a way they haven't been able to," Kerner told ClickZ News. "Merchants will be better able to tell if customers are returning, they'll better understand how much daily deal customers are spending above the voucher… by enabling better tracking, mobile is really going to help the marketplace expand."

When asked about the types of metrics mentioned by the analyst, both Groupon - in a "quiet period" before its IPO - and LivingSocial danced around the subject. LivingSocial is giving Instant Deals merchants an iPad to record voucher redemptions and to take stock on how their mobile-based campaigns are going. The merchants can view the names of the customers who buy and redeem the deals, but what other data they can see is unclear. Spokesperson Maire Griffin said, "Merchants are finding the interface through our iPads really user/merchant friendly and they are seeing new faces through their door every time they run a deal."

In another example of mobile's tracking potential, apps with a location layer can help close the loop between a deals consumer and a repeat customer by observing a consumer's interactions with a business and a neighborhood over time.

So Groupon and LivingSocial are mid-sprint in getting their mobile deals features to market. Chicago-based Groupon in the last three weeks has quietly launched "Now!" in 10 major U.S. markets as well as Vancouver, BC. LivingSocial has so far taken its Instant Deals feature live in hometown Washington, DC and New York City, and is expected to announce new cities as early as this week. Both platforms allow restaurants and bars to run time-sensitive deals, so a cafe looking to drive lunch-hour foot traffic can run a special from 11 a.m. to 1 p.m., for instance, geo-targeting the offer to within a half-mile of a user's location.

While Groupon's mobile initiative is currently in more markets, Kerner said it's too early to tell which is winning. "Both of their mobile efforts are pretty embryonic at this point," he said. The analyst added, "I think Google Offers is well-positioned, they are really targeting mobile as well. I think we will see a lot of innovation around the use of [near field communication] chips, digital wallets, and smart phones."

Do mobile deals mean email will be phased out as the niche's main distribution channel? A new Harte-Hanks industry-wide report on email marketing says open rates averaged 17 percent for 2010, down from 26 percent in 2009, and 2010 click-through rates plateaued at 3 percent compared to the year before.

Kerner suggested that daily deals distribution in the future would consist of multiple digital channels. "Email has had a really long life and will continue to be used, and there will likely be other distribution forms as well," he said.