Venture aims to attract merchants by charging less than rivals.
Toronto company Mobile Fringe has launched a service that sends coupons and deal offers to consumers within 1,600 feet of a store. The service, called Push a Deal, aims to snag merchants with lower pricing, enticing consumers with the ability to browse deals aggregated from competitors as well as exclusive deals.
To use Push a Deal, merchants log onto a web interface to set criteria including time of day and proximity to their locations. Consumers who have downloaded the app will trigger the push when the GPS on their smartphones cross the "geo-fence" set by the merchant; the company recommends targeting consumers within a half mile of a location.
Consumers using the app choose to receive emails or texts pushed directly by Mobile Fringe. For example, a message might read, "Free Grande coffee at Starbucks in Robarts Library Cafe today and tomorrow. You are 500 meters from this deal. Get directions?" The application can enable deals or discounts on any kind of goods or services. Users also can check deals in their vicinity offered by LivingSocial, Groupon, and others and aggregated by Mobile Fringe.
At this point, app users cannot set parameters for time of day to receive messages, but Mike Egan, Fringe Mobile's manager of business development, points out that deals are already time-contextual, for example, dinner deals are sent out around dinnertime.
Mobile Fringe launched Push a Deal at the University of Toronto, with a strategic relationship with Aramark Canada, a company that provides food services to universities. Students at the University of Toronto's St. George campus will be alerted to nearby deals from food service locations, cafes, coffee shops and takeout restaurants. Aramark will promote Push a Deal with special offers including free food for a month at New College and free Starbucks coffee in a cafe.
While Push a Deal is similar to LivingSocial's Instant Deals and GrouponNow, Egan says Push a Deal is more affordable for merchants.
The company takes 25 percent of the discount. For example, if a t-shirt shop offers 25 percent off a pair of $60 jeans, Mobile Fringe receives 25 percent of $20, or $5. In addition, retailers pay a cut only for deals that are redeemed. Groupon, in contrast, typically takes 50 percent of the discount.
"We asked companies why they weren't using deal sites," Egan says. "The number one feedback we got was that it was too expensive. The price with us is quite a bit more reasonable."
The self-service web portal merchants use also shows how many app users are in a vicinity at the time, which gives merchants a better idea of how many customers might show up. Egan says the response rate typically ranges from 1 to 10 percent.
The company's big challenge will be to build up a big enough user base. Egan says more than 5,000 users are currently signed up.
To date, the company has done in-location campaigns to create awareness of the app and encourage word of mouth. For example, partnering with a restaurant to offer a $1 hamburger and fries deal for a very limited time.
"Our members tell their friends, and we can get almost a flash mob showing up at these stores," Egan said. "We had 250 people show up at a burger and fries deal. It was a good thing we were ready for it."
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Susan Kuchinskas has covered interactive advertising since its invention. The former staff writer for Adweek, Business 2.0, and M-Business covers technology, business and culture from Berkeley, CA.
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