Groupon

The Media that Pays

As the realm of digital marketing continues its rapid evolution, there is a constant stream of new tools and tactics available to us. One that has intrigued us of late is the rapid ascension of Groupon, a tool in which we have now had the opportunity to assist several customers in recent campaigns.

In our early work with the service, we found that they have excellent distribution, presence in 150 markets, great open and engagement rates and, most importantly, a strong ability to drive conversion.

One of the items that’s most intriguing is Groupon's uniqueness in being a high quality media that pays the advertiser for the placement of media. When we run a campaign through Groupon, we not only have zero upfront cost, but our clients can also expect to be paid by Groupon for the placement of the media weeks after we run the campaign.

Through these initial local and national campaigns, we have developed several key learnings, which include:

Offers through Groupon need to provide exceptional value, typically 50% off or more. Further, the value of the purchased Groupon needs to be such that a customer can utilize the Groupon and receive something of value (i.e., If your store sells $100 and up items... a $50 Groupon won’t be considered viable).

If you run a Groupon, think through all elements of fulfillment. On the day the Groupon runs, be sure that your site is optimized for the traffic (via content) and load. Be ready for the rush of orders as well, as 25% of all Groupons purchased will be redeemed in the first 30 days.

Most problems that retailers have with Groupon go back to the retailer—either by structuring offers that don’t create current or future value or in not being ready for a surge in redemptions.

For marketers hoping to issue Groupons in multiple markets, do everything you can to promote awareness for your Groupon offers so that the initial markets are successful. Groupon City Managers in other markets will notice offers that work and ignore those that don’t.

If there's no cost to run a Groupon, how do the economics work? Basically, Groupon and the retailer split the Groupon. Run a $25 for $50 Groupon and Groupon will keep $12.50 and send you $12.50 for every Groupon purchased. The real cost is the unredeemed value of the Groupon which in this case is $37.50 per Groupon sold ($12.50 for the Groupon share and $25 for the remainder of the customer's Groupon). In our experience, while some customers will just buy $50 and that's it....we find that most well structured offers provide new customers of value to the retailer and customers who tend to have average order volumes consistent with other shoppers.

Groupon is increasingly selective on which offers to promote which is a natural bi-product of an organization that has over 200 new customers signing up every single day. If you want to work with Groupon, you have to stand out in a crowd and do everything you can to make it easy for Groupon to work with you.

Groupon is experiencing amazing and unprecedented growth. They are doing their best to manage it, but expect a bit of chaos. To that end, we’ve had 3 account managers in 6 months - all great people but as the business grows, people are getting promoted, getting new territories and as a partner you need to be ready for that.

Groupon is developing many new products like the Groupon Store, and over the holiday they used Grouponicus. While the Deal of the Day is the place to be, these alternative distribution products are still very attractive and are driving results.

There are many competitors to Groupon, some that are performing reasonably well and some that are not. In our early experience, however, the entire field is still playing catch-up to Groupon.

In our experience, Groupon is a great tool for many B2C marketers and retailers - it has fantastic reach, it drives real traffic and helps a marketer efficiently increase sales. We look forward to working with our B2C customers on more campaigns with Groupon and experiencing similar success.