Daily Deals Service Sells Through Local Media Partners

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With local merchants getting peppered by sales calls from daily deals sites, white label provider TownHog thinks it's onto something. It's letting the sales force from broadcast station and newspaper partners sell the deals, sometimes packaging them with traditional media.

Lilia Martinez-Coburn, TownHog's VP of product and marketing, said the established local relationships between media players and merchants provides a leg up when competing against the upstart sales teams of Groupon, LivingSocial, Google Offers, Facebook Deals, etc.

"These are the same people who have been selling the merchants radio or newspaper ads for the last 10 to 20 years," she said. "It's a totally different conversation."

Instead of collecting cash from a deal, some restaurants and bars use the money to buy a TV or radio spot, Martinez-Coburn said.

She said radio stations sometimes mention a daily deal on-air as a piece of the ad sale. "And that's part of the allure to merchants," Martinez-Coburn explained.

And newspaper and TV/radio sites can routinely devote house ads to their deals. So TownHog and competitors like Tippr and Group Commerce can let the media company push the local offers and grow the email list while they share revenue.

Martin Tobias, CEO of Tippr, said traditional media brands' existing audiences were lucrative foundations for deals players. "Groupon is breaking the bank to build its online consumer brand from scratch," he said.

TownHog, San Francisco, distributes deals for media partners around the nation, namely CBS Local Offers (40-plus participating TV and radio stations), Cumulus Broadcasting's SweetJack.com - which entails daily deals for the company's 300-plus radio stations, the San Francisco Chronicle's SFGate.com, and OpenTable. Out of those examples, the 20-month-old TownHog now only directly sells SFGate.com's daily deals.

Last month, the firm laid off 10 salespeople and currently has 30 employees. Martinez-Coburn said her company streamlined partly because media outlets have changed their attitude about the potential behind daily deals.

"When we first started working with the partners, we had to [sell] the deals for them," she said. "They are now beginning to turn their [operations] into one that sells deals."

Meanwhile, the marketing VP predicts the burgeoning digital deals niche is on the verge of contraction.

"If you look back six months, the activity even then was so much higher," Martinez-Coburn said. "There were 15 websites going up every week. It's definitely slowing down. In three years, you certainly are not going to have the same level of activity as you see now."