Wednesday, May 18, 2011

To Deal or not to Deal - are local Daily Deal sites right for your brand?

Ever wondered if it made sense to add Groupon or Living Social to your marketing mix? Daily deals are great way to leverage two current trends, hyper-localism and budget consciousness. Many companies have participated in these deals, from Gap and Nordstrom Rack to your local restaurant or gym. How do you decide if it's for your brand? Well, like any marketing/media vehicle, there are a number of questions you can ask. Here are a couple simple ones:

Does this vehicle help me meet my marketing goals?
How targeted is it?
Is the vehicle/environment consistent with my brand?
What deal should I offer?
What's the ROI?
Which Daily Deal platform to select?

Here's some food for thought.

Marketing Goals
- Daily deals are a great way to build awareness, drive traffic and trial - especially helpful if you have low awareness and penetration into your key demographic.

How targeted is it?
- Because only people who are interested buy, it is highly targeted. This is a great way to introduce your products or services to new users since it's low risk for them. You might be subsidizing some of your current customers, but chances are, you'll also be able to bring back lapsed or occasional users are well. And since it's a social tool, your fans can share with the deals with their friends and bring in new users.

Is it a good brand fit?
- The great news for marketers, especially those who shy away from coupons, is that Groupon and Living Social and some of the newer sites including Rue La La (upscale deals including luxury brands such as Cartier and Hermes), Tippr and even Facebook are a great milieu for most brands. They are relevant, social, and hip.

What deal should I offer?
- It depends on your target audience and marketing goals. Among adults online who visit Coupons/Rewards websites, nearly half are interested in gardening, while roughly one-third are interested in home repair/renovation, religious involvement and landscaping. Other standouts include knitting/sewing (Coupons/Rewards site visitors are 19% more likely than the average adult Internet user to be interested) and gourmet cooking (18% more likely). (Source: Nielsen)

What's the ROI
- Most offers are around 50% off or more off the regular price. The daily deal platform normally takes 50% of the deal. That leaves you with a slim 25% margin. The best way to look at the ROI is to compare the cost per conversion versus other vehicles you use to see if it makes sense.

- Make sure you have your operational house in order. You don't want to invite new guests and have them be disappointed by out-of-stocks, customer service, cleanliness or other issues.
- If there's seasonality inherent in your business, you should also take that into consideration

Which daily deal platform to select?
- Here's some great info from Nielsen comparing the Living Social to Groupon profiles.
  • Visitors to Groupon and Living Social are similar in that nearly two-thirds are female and more likely than the average U.S. Internet user to be affluent. Living Social’s visitors trend slightly more affluent and more educated than Groupon’s with 46 percent having a Bachelor’s or Post-Graduate degree, compared to 39 percent for Groupon (the national average for Internet users is 25%). Visitors to Living Social are also 49 percent more likely than the average American online to make $150,000 or more, while Groupon’s visitors are 30 percent more likely.
  • Although the audiences to both sites share a similar gender and socioeconomic split, there are notable differences in the age and geographic location of their U.S. visitors. Groupon has a higher concentration of visitors aged 35-64 (57 percent compared to 51 percent for Living Social), with the Internet average being 48 percent. Living Social has a higher concentration of younger visitors with 21-34 year olds making up 33 percent of their audience compared to 25 percent for Groupon and 21 percent across the entire web.
  • While both sites offer deals in many cities across the country, Groupon is most likely to have visitors from the Northeast while Living Social has a high concentration of visitors in the South and Pacific regions.
Hopefully, this gives you some food for thought before you decide to plunge into the world of daily deals.

Have you tried any of these platforms? If so, share your story or advice!

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