Category Archives: Deals

Living Social CEO Tim O’Shaughnessy to Step Down: End of an Era

Living Social CEO and co-founder Tim O’Shaughnessy announced today on the company blog that he is stepping down. He will stay until a new CEO is found and installed – a process that he “hopes” will be completed during the first half of 2014. O’Shaughnessy previously worked at AOL, and transformed Living Social from its origins as a book review site.

O’Shaughnessy’s departure follows Groupon founder’s Andrew Mason’s departure last year, and marks an end of the founder’s era in the prepaid deal space. While we believe that prepaid deals are now a permanent part of the local marketing arsenal, the question remains whether there is a real future for the pioneer companies as they morph their models from high commission daily deals to shopping arcades, local targeting and business services.

Many, of course, have written off Living Social as a viable entity. The company sustained massive losses of $650 million in 2012 and $499 Million in 2011. Moreover, in a major loss of faith, Amazon wrote off most of its investment in the company. At the end of 2012, The Wall Street Journal cheekily suggested that it was one of the brands that would surely go extinct during the year.

Besides the losses, which were largely attributable to an expensive sales infrastructure, the company suffered major issues in 2013, including executive turnover; a multiple day outage; and having all its customers passwords hacked.

The company may choose to brand or merge with another entity that wants a head start in this space, such as a bank. But we see signs of life in many respects, including a deeper focus on mining their customer lists; efforts to morph beyond daily deals to coupons and other factors leading to deeper merchant relationships; mobile-oriented service, such as card linked offers; an enhanced focus on national advertising; retailer ties with companies such as Pier1 Imports, Macy’s, Reebok and OfficeMax ; and a pruning of unproven business areas, such as local events.

Last year, the company raised $110 million — including funds from many of its longtime investors –to get over the bumps. It also got additional money by selling South Korea’s T-Mon service for $260 Million to Groupon, and closed or sold several other international properties.

As O’Shaughnessy notes in his letter: “We now have the most stable and healthy business that we have ever had, and the luxury of having hundreds of millions of dollars in the bank to take us to the next level.”

We have more commentary on Living Social in this recent article by Steven Overly in The Washington Post.


Living Social CEO Tim O’Shaughnessy

PunchTab CEO on Loyalty Programs: ‘The Wheels Are Coming Off’

The utility of loyalty programs is stronger than ever, as they help businesses connect, engage, drive traffic, refer friends, purchase and track customer actions. But efforts to determine loyalty aren’t made easier with all the noise in the system.

Usage is coming in from all over the place (phones, tablets, social networks, reviews, etc.). And while new efforts can be enhanced by tapping into Point of Sale systems, hundreds of these aren’t compatible with each other.

“The wheels are coming off” for loyalty programs, notes PunchTab CEO Ranjith Kumaran. In fact, the evolution of loyalty channels has been moving so fast that PunchTab recently received an RFP from a major Consumer Packaged Goods company that specifically ruled out any comprehensive loyalty solutions. “They didn’t want to be locked into an inflexible system for several years,” says Kumaran.

PunchTab has been in development for three years. The Palo Alto-based company, which currently supports 17,000 loyalty campaigns, has raised $5.3 Million. Its whole effort is to track everything. The company is currently tracking 40 different loyalty-related activities.

“It is risky to build a program around a single channel,” Kumaran says. Eighteen months ago, that channel might have been Pinterest, he notes. Now the interest in Pinterest is “quieter.”

PunchTab’s approach is to incorporate information from multiple sources, such as FourSquare check-ins, or POS systems, or digital receipts. But mostly, the company focuses on workarounds that enable as much flexibility as possible.

One quick service example that PunchTab is working with is Arby’s Restaurant Group. Arby’s didn’t think it could do a loyalty program because it is working with 50 different types of POS systems. But PunchTab created a solution that focused on in store traffic data, allowing to identify tens of thousands of potential customers for a new product that it rolled out.

Looking forward, Kumaran is looking at the whole new range of channels that are expected to come on the scene. “Wearables,” such as smart watches and FIT bands, add a whole new set of data that can determine loyalty factors, he said.

Local’s New Year: Some Thoughts and Predictions

Over the years, we’ve seen some major paradigm shifts in the transition of local marketing to digital. In 2003, it was the rise of Google search as applied to small business –to this day, the biggest thing that ever happened to local. In 2007, the paradigm shift was the rise of Groupon and prepaid deals as a way to drive customer acquisition. This opened the door for all kinds of non-advertising marketing, from Facebook and Twitter to Card Linked Offers.

Right now, mobile is THE paradigm shift – both as a media channel, and as a geolocation device (Mobile hasn’t been a factor yet as an ewallet. But that is sure to come, with a whole new set of implications.)

Nothing happens in 12 month cycles, but this is what I see happening in 2014:

Hyperlocal Fails to Win Destination Status, Gets a Better Life as Feature
Hyperlocal seems so compelling; contextual content that can draw users who can be microtargeted on a block by block basis. But on a super hyper local basis, it hasn’t scaled as a business model or as a compelling destination site. AOL’s Patch is reported to be winding up as an independent entity, and National Local hybrids such as Examiner.com haven’t made an impact either. The one remaining super hyperlocal site is Next Door Networks, which has raised a $100 Million war chest. The site is based on user generated content and local cells of 30+ users. It is a much cheaper model than Patch’s local staff. But will it win sustained participation from users? My bet is that it won’t. But does that mean that hyperlocal is dead? In fact, hyperlocal is everywhere – in reviews, posts, articles, maps and enhanced listings. Its use is sure to grow.

The Sharing Economy Spawns Multiple Vertical Sites
One of the big local breakthroughs has been the development of shared listing sites for apartments (Airbnb), vacation rentals (BRBO) and rides (Uber). In 2014, we expect to see shared listings become more ubiquitous, with multiple entries per verticals, and the addition of many more verticals. We also expect to see an entire ecosystem grow around these sites. As AirBnB’s Joe Zadeh noted at Interactive Local Media in San Francisco, solutions are being added based on need. For instance, Airbnb has developed a freelance photographer program because hosts need good pictures of their apartments.

Social’s Impact In Local Is Too Fragmented, But Dedicated Word of Mouth Sites Make a Dent
Social leaders like Facebook and Google+ have tremendous volume at the local level. Facebook, alone, has over one million SMB advertisers. But its local usage is so fragmented that local can’t be a real focus at the vertical level. Review-based sites such as Yelp and Angie’s List get closer to the mark, and have broadened their reach beyond restaurants and service professionals, respectively. But they leave plenty of room for smaller Word of Mouth sites that can specialize in certain sectors (i.e. Plumbers) and really dig in. Look for some of the industry’s most innovative leaders try to break through with new models in 2014, including Justin Sanger with SupportLocal; Gib Olander with Local Viewpoints; and Matthew Berk with Lucky Oyster.

‘Big Data’ and Non-Advertising Marketing Boost Local Leads
The ability to base marketing on user engagement and behavior is a fantastic opportunity. Big data, specifically, mixes and matches various data bases to determine the likelihood of engagement. It has been successfully applied to support advertising campaigns. But can users be targeted as a substitute for advertising budgets? And looking forward, can transaction activity, store inventories and user location be wedded to search behavior as part of e big data? This is a greenfield opportunity in all respects. What we are looking for is the transformation of retail email and social lists to leads and promotions. Look for big data players such as Radius Intelligence, Retailigence, xAd, Urban Mapping and LocalBlox to showcase new opportunities in leads and geotargeting.

The Hunger for ‘Attribution’ Drives Big Data and Transaction Marketing
One of the biggest problems for local marketers is proving attribution – especially as users effortlessly move from a banquet of “spreadable media” – everything from articles to email to social media posts to YouTube. It is another reason we are keen on transactional media and loyalty media – the receipts say it all. Look for the gatekeepers of transaction media and loyalty marketing–everyone from Living Social to First Data, Bank of America, MasterCard, Amex , Google Wallet, PayPal and Square – to edge their way into consumer marketing.

Online Shopping Goes Local via Delivery
Interactive Local Media has largely been defined by tech factors, such as geofencing . But the growing use of online by commerce giants such as WalMart, The Home Depot, Amazon and eBay; their development of regional warehouses and delivery networks; and use of Facebook Connect-like one stop shopping suggests a new front in the war for local commerce. The imposition of local sales taxes also suggests a level playing field with local businesses. eBay’s purchase in 2013 of the Shutl courier service, and its expansion to multiple markets, really showed where this might lead.

Happy New Year everyone, and thanks for reading and being part of the local community.

IMG_1104

Closely Launches Perch 2.0: New Focus is on SMB Solutions, Rep Management

perch_logo_horz

What we hear from everyone is that SMBs can’t figure out what marketing solutions they should employ, how to go mobile, or measure how well they’re doing on the Web.

That realization is driving the direction of a number of new services, including an upgrade this week of Closely’s Perch product. Denver-based Perch, a 10 person startup lead by industry vet Perry Evans, continues to evaluate real time streams coming from Facebook, Instagram, Twitter, Yelp, FourSquare and Google+ as well as various promotions aggregated by the Yipit deals network.

But the new version extends the product focus, measuring and comparing SMB marketing and social activity via social, mobile, promotions and reviews. SMBs are also able to compare themselves to select competitors, while providing referrals to solution providers based on shortcomings seen in the SMB traffic (i.e. lack of Facebook traffic, reviews, coupons etc.). The referrals seem to represent a new revenue stream for the company.

CEO Perry Evans, in a discussion with BIA/Kelsey, says his team has positioned Closely to “provide value to businesses. We are not there to sell them things. We are just showing them areas they should pay attention to.” He also notes that the referral network is based on actual needs and goes way beyond standard affiliate models. “It is a deeper level of integration,” he says.
One thing that has been deleted from the new version is a “near me” features. Consumers don’t search for businesses base on immediate proximity, says Evans.

Evans also notes that Closely has added YellowBook founder Joe Walsh to its advisory board.

Groupon’s ‘Freebies’ Seeks to Attract National Retailer Promotions

Groupon’s transformation from a daily deals company to a  multi-channel shopping promotions and e-commerce portal continue with its launch today of Freebies, a new program that groups together online coupons, promo codes. sales, giveaways and samples.

More than 5,500 brands are said to be participating. Retailers taking part with special offers in the initial launch include Macy’s, Nordstrom, Best Buy, American Eagle and Sephora.  The effort is focused on the U.S., with international expansion expected in 2014.

The new effort pits Groupon against other providers such as ValPak, Gannett’s ShopLocal, Wanderful Media’s Find&Save, and adds to other Groupon branded efforts, including Groupon Local (local deals and offers),  Groupon Getaways (travel) and Groupon Goods (electronics and other products). Groupon also offers Breadcrumb for B2B merchant payments, promotions  and services.

Freebies is an interesting and ambitious application. By extending beyond daily deals and moving towards a shopping mall approach, Groupon has focused on becoming a more heavily trafficked site. The challenge will be to convince consumers to think of Groupon when they are researching their shopping choices.  In this case, the eyeballs (help to) win.

Groupon VP Sean Smyth and Wanderful Media CEO Ben Smith are speaking at Leading in Local: Interactive Local Media Dec. 10-12 in San Francisco. You can register here.

Money2020: Google Talks About Why It is in Payments


Google’s Payments division is seeking synergies across many of Google’s business units – hence the recent insertion of several AdWords executives into the Payments leadership.

Speaking at Money2020 in Las Vegas, Google Payment VP Ariel Bardin bluntly acknowledged that people don’t think Google has a real role in the payments world, and didn’t mind that Google Wallet was struggling to take off. But Google can help merchants in a number of ways, while also helping itself.

Merchants can get strong signals into consumer behavior by tracking payments. Tracking payments also helps tie together the various advertising and promotion pieces, said Bardin.

In a recent Google survey of 1,500 smart phone users, for instance, 45 percent said they wanted loyalty products from merchants on their mobile device, but just 4 percent actually have them. “This is an area we can help,” said Bardin.

Indeed, there are natural synergies with payments ‘Post,” “Pre” and “During” research into transactions.

In the “Pre” phase, Google has an interest in driving queries to specific shopping categories. Bardin noted that Google has indexed over one billion products (and is selling Product listing Ads) . It can achieve a 500 percent boost in queries to specific categories.

It can also send out geofenced coupons via its partnership with ValPak. “There are lots of coupons you can see,” said Bardin. There are also new mobile vertical applications, such as The Fancy, an Android app that is highly personalized based on user data, including credit card information.

In the “During” phase, the interest is in boosting Google Maps, Google Offers and Google Wallet. A lot of it hinges on getting more customer loyalty.

“Post” transaction, Google is developing a set of data and analysis for participating merchants, which currently include . Expedia, uber, priceline, toysrus, Hilton and others. Loyaly efforts, including points, play a big role in that as well.

Money2020: The CardLinx Association Debuts

Card linked offers are increasingly being used by merchants and consumers alike. Indeed, a group of early adopters have already started using card linked offers on a weekly or monthly basis, with usage expected to be constant and universal within just a few years.But a lack of standards are holding them back from the big time.

Cue The CardLinx Association, a standards body that includes such charter members as First Data, Bank of America, MasterCard, Microsoft, Living Social, Deem, Cardspring, Affinity Networks and Linkable. The idea: move card linked offers from being a series of disjointed offer schemes to a highly used platform.

Speaking at Money 2020 today in Las Vegas, Bank of America SVP of Ecommerce Jason Blackhurst noted that many merchants are already seeing a strong ROI on card linked offer programs. The issue: resolve their complexity and add standards.

“We expect seamless,” added First Data SVP Dom Morea. “That’s critical.”

Another issue: get rid of the stigma associated with card linked offered. Gift cards no longer have a stigma, noted Living Social CFO John Bax. “You can use them any time. But you don’t want to pull out a Groupon or Living Social offer on a first date.

To be successful, a number of things have to happen, noted another speaker. You have to have standards; it has to be promoted via word of mouth; the big technology companies have to adopt it to reduce friction between them; and retailers need to track inventory and use it as a strategic tool overall.