Online coupons lower DM costs. And when redeemed, they’re living proof that an advertisers’ message has gotten through. But they also make up the bottom rung of the media food chain. It’s hard to get consumers to look them up, and hard to get advertisers excited about them. They can also be hard to sell.
A couple of years ago, Bay Area-based Zixxo discovered the downside of coupons the hard way. It launched a franchise model based on charging $30 for coupons, and free classifieds. But the site never really caught in.
Now, founder Mike Hogan has come back with a new, improved model. He reimbursed the franchise fees of the two people who bought into the original model, got a six-person team together, and updated his model to be entirely self-serve. The site is free to advertisers for now, but there are plans to eventually charge 50 cents per coupon. That level of fee would be much cheaper than DM when all the “waste” of a mailing is added in.
In a conversation with The Local Onliner, Hogan said he has been greatly inspired by all the changes that have occurred in coupons since he first came on the scene. He noted that consumers are now routinely getting together for coupon “trains,” sharing codes, and going on eGroups to hunt for the best coupons. With Zixxo, they can also share coupons, as well as RSS them. They can also tell advertisers about which coupons are not ultimately shared.
On the advertiser side, the biggest change is that many advertisers now think in terms of pay-per-click and pay-per-call. One PPC feature that advertisers like is the ability to control sales volume by turning ads on-and- off. Mechanics, for instance, might get all the business they can handle and turn off their Google campaign. Now they can do the same with Zixxo’s coupons, which can deploy strict expiration dates.
Hogan feels that that he had learned from his past failure. Now, for instance, he is determined to rely entirely on self-serve, which sets him apart from competitors such as Boodle (custom coupons) and coupons.com. “Let newspapers and Yellow Pages do local,” he said – hopefully, over time, as Zixxo affiliates.
To be sure, Zixxo has plenty of startup issues. In deciding to go for a general release, instead of building up local bases, the site delivers a tired collection of national coupons , such as Office Depot, Staples, JC Penny, Sears etc.
The site also defaults to 20 miles as the local designation. While users are free to set the proximity of their choosing, Hogan said that 20 miles ensures that they have a better chance of seeing some coupons. The site has only been live for a week, and is adding a coupon every 30 minutes. But it is still too far.
The site also has an awkward review feature that lets users look at a one star “bad” rating for Planet Hollywood in the same line as its coupon. Although users need to register to rate coupon providers, these things can become quickly sabotaged. Perhaps it would have been much better if Hogan had tried to partner with one of the review sites.
But these things tend to get cleaned up. Ultimately, I agree with Hogan (and others) that there is a bright future for online coupons ahead, and for the self-serve component as well.
Last year (according to CMS) there were 323 Billion coupons distributed in the US and almost 5 Billion redeemed. Clearly consumers ARE looking for coupons. The fact that over 50% of Sunday newspapers are purchased FOR THE COUPONS is further indication that consumers are looking for them. The fact that consumers pay $30-$50 in droves for Entertainment Book of local coupons is further proof that consumers love coupons. 79% percent of all US consumers use coupons. It isn’t hard to get them to look them up at all.
In terms of our initial iteration, we made a strategic decision within a month of launching our free classifieds+coupons to carve off the classifieds and focus on online coupons. You can see our classifieds (which are 95% completed in a similar revamp) at http://www.southland.la. We are doing this for another company, and a few newspapers have mentioned an interest in this powerful classified ad solution. (Note also our coupons were $30/month originally)
I believe the self-service aspect of coupon creation is very powerful, as you note, but equally powerful is our multi-faceted syndication. Coupons are available through our website, affiliate websites, email, RSS and MOST importantly through an API such that coupons can be integrated through mashups into Internet yellow pages, local newspaper websites, maps, mobile phones, etc.
Of course, combining any form of advertiser content with user-based ratings is risky, but in the end, advertisers go where there are customers and customer go where their voice is heard. Not including user-ratings and reviews is more risky than including them in this current era of a read-write web.
online couponing has always had a financial model issue. Until Zixxo (or any online couponer) gets enough traffic to make it worth a business’s time, they really can’t charge for their services. Also, the Gen X, Y, Z etc. ‘kids’ don’t coupon as much as the boomers, which coincidentally are not bigtime internet users. The first online couponer that can couple coupons online with coupons offline will win this race I think. Bundling this service for an advertiser gives them a revenue model AND distribution.
There are two critical pieces to the online coupon puzzle: content and consumers. ZiXXo’s model is based on hyper-syndication. Instead of trying to be a destination site ith the challenges of uilding content and traffic ourselves, we tap into the existing traffic of partner sites. Our affiliate model makes sure everyone profis accordingly and our various mechanisms, including an API make it easy.
Regarding the kids not couponing, that is largely because they shun inefficient paper-based solutions. These same kids don’t subscribe to newspapers, they want to get their info online, they want to share their opinions, they want to be able to share deals with friends, they want their local deals to come to them in the form of custom RSS feeds, etc. ZiXXo addresses all of these things.
I think this is a cool idea but there is little mention of the “800 pound gorilla” internet coupon fraud. One of the major hurdles in the widespread adoption is the $500-$600 mil dollar per year coupon fraud issue. Any coupon that can be printed can be changed, i.e. amount increased, BOGO added, etc. The fact that most fraud come from retailers and redemption houses is a major problem which the industry has not solved as of yet and prevents mainstream adoption for many higher end manufactures.
A lot of coupons, coupon codes and their informations are provided by the Couponalbum.com from its over 1200 branded stores of USA….!!.
http://www.Metroseeq.com does not charge advertisers for putting coupons on their site… This eventually charge of 50 cents will not work
I love printing up coupons and using them at the store, I know the Job Lot does that.