Groupon and the growing number of other social-buying platforms have garnered a great deal of buzz recently about how e-commerce-based daily deals drive foot traffic into local businesses. Even AOL’s coming soon to the group-buying party, and the company sounds like it cannot build out its sales teams fast enough to get its “Wow” deals platform up and running.
“The deal of the day model has emerged as the most effective and fastest-growing local advertising model since the Yellow Pages,” said Ned Brody, AOL’s COO of media, advertising, and commerce, and president of paid services. “There are very few places where a small- and medium-sized business can go and purchase CPA-based advertising at all. And this is a very effective one. And so there is a significant market demand for it for small- and medium-sized businesses, which have been classically underserved by the Internet.”
But something important seems to be getting lost in the hype: group-buying platforms like Groupon, LivingSocial, and Woot have been accruing thousands upon thousands of active e-mail addresses every day. Indeed, while Groupon specifically has been hailed as an e-commerce triumph, what it’s doing on the e-mail front – still one of digital marketing’s more lucrative channels – likely has some underappreciated zip.
The Chicago-based company has more than 15 million e-mail addresses, nearly all of which are under one year old. Consumers have given the addresses while registering at Groupon.com in order to purchase a 50 percent off deal from a local merchant. Groupon – and each of its competitors speaking with ClickZ – said there are no plans to rent or sell the e-mail addresses, even though a third party would be hard-pressed to find a fresher list that is broken down by locale as well as purchase behavior.
“If you think about it, people are renting out our list by being featured as a daily deal,” said Julie Mossler, Groupon spokesperson. “They are getting access to our customer list for that one day. But we will never sell our customer data.”
In addition, Mossler explained that Groupon does not share e-mail addresses with local merchants running that day’s offer. “We do give businesses a trillion different ways they can capture that data when the customer comes into a store,” she said. “One way we encourage is to just ask for it.”
E-commerce firms that run Groupon campaigns don’t have to verbally ask for e-mail addresses, as Soap.com has recently shown. First, e-commerce-based voucher redeemers have to type in an e-mail address to complete that purchase. Therefore, new customers attained via Groupon or other platforms can be re-approached by the brand with other e-mailed offers, effectively eliminating the “one-purchase-and-gone” scenario that scares some daily deals marketers. Secondly, future e-mail offers can be targeted by the purchase data attached to the captured addresses.
Conversely, to get the same data, a brick-and-mortar marketer – as Mossler suggested – can take measures to accurately collect e-mail addresses from the voucher redeemers coming into a store and then log what they buy.
At any rate, in the case of the two-month-old startup, Soap.com, it already has e-mail addresses and purchase history data from up to 16,500 customers in the New York area alone. Those customers were accrued with offers that ran on only two days, Sept. 22 and Oct. 16. Not to mention the customers/e-mail addresses it’s picked up from Groupon offers during the last few weeks in Los Angeles, Atlanta, Seattle, San Francisco, Minneapolis, Boston, and Chicago.
While LivingSocial has kept its campaigns focused on local brick-and-mortar retailers, the White Pages new “DealPop” platform is being utilized by e-commerce companies in ways similar to Soap.com/Groupon.
For nearly all daily deal campaigns, the merchant picks up the loss leader. “We retain a commission on the total percentage sold,” explained Greg Mazanec, LivingSocial director of performance marketing. “That’s negotiated with the merchant. So if the merchant sells $1,000 worth of [vouchers], LivingSocial would keep a portion of that. And then we’d write a check to the merchant within 15 business days for their percentage of the total.”
According to recent research by Rice University, merchants seem mixed on the value of these campaigns because of the potential losses. But businesses that have spoken with ClickZ in recent weeks have seemed OK with the potential losses, looking at them as customer-acquisition spends.
For instance, Andrew Elgart helps run a family-owned movie theater business in Brooklyn, NY, and has tested campaigns on both Groupon and LivingSocial. Elgart said the efforts are marketing expenses where the business is guaranteed actual foot traffic – unlike billboard or newspaper ads.
“They come in here and buy popcorn and drinks,” he explained. “And that’s the idea of it…We want to get people into the theater.”
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