Category Archives: Deals

The Failure of ‘Gimmick Commerce’ Brands

Graphic from Recode

“Gimmick Commerce” is one way to look at the sites that entice people to buy things online via promotions, flash sales and subscriptions. Mostly, it represents things that people don’t need.
But it has almost totally failed, per Recode’s Jason Del Rey in a provocative piece this week. In the deals space, Groupon has pivoted to a marketplace focus (i.e. normal shopping) and is trading at just $3 a share. Living Social is publicly struggling and experimenting with new models, like card linked offers.

The other deal sites are gone or totally pivoted. Just yesterday, Nimble Commerce, the last of the major independent deal aggregators, announced it was selling out to BlackHawk Network, a leading gift card company.

Other “gimmick commerce” models have also failed to gain traction. The flash sales space is basically gone, with Fab, Gilt, Ziulily bowing out at fire sale prices, and One Kings Lane positioning itself to do the same. Del Rey concludes that none of these companies have been able to cut into the Amazon behemoth, which accounted for 50 percent of all ecommerce growth last year (although Amazon surely engages in its own Gimmick Commerce).

The only companies that are growing and safe from Amazon are the specialty subscription services. With the exception of some of the high loyalty food delivery companies (Blue Apron) and subscription razor companies (Dollar Shave) most of these probably aren’t keeping their customers.

It’s a big, brave thesis. Rey points to the difficulty of building new brands and creating consumer habits from scratch – and the never receding desire to buy everything from a single source. But it is kind of broad — I don’t know that all these companies should be lumped together. And it shouldn’t be inferred that the new technologies and features like big data analytics, buy buttons, card linking and targeted offers that act as a foundation for these sites are being rejected. They remain transformative and will probably account for a big percentage of the next generation of impulse buying, if not shopping altogether.

Does Email Still Drive SMB Marketing? Privy Says ‘Yes’


We’re said to be in a post-email generation, as Millennials increasingly rely on messaging and other channels. There will need to be a lot of adjustment for marketing strategies.

But email is still the most reliable connection for most consumers. It remains the primary input for customer lists, which are now being collected by 80 percent of SMBs, per BIA/Kelsey. In fact, no other SMB marketing feature ranks as high.

Are SMBs doing enough with their email lists? The obvious answer is “no.”

Optimizing email for leads and engagement is the role that Boston-based Privy has given itself. Founded in 2012 as an offers company during the Groupon boom, Privy has remade itself as a freemium/premium email marketing enhancer that is tightly integrated with more than 10 top email programs (Mail Chimp, Constant Contact, Fishbowl etc.)

The 10 person company currently has a base of 14,000 SMBs under its email marketing efforts, and is now growing by 3,000 to 4,000 new small businesses every month. It hopes to enlist 50,000- 60,000 SMBs by the end of the year.

CEO and Founder Ben Jabbawy tells us that the company’s initial focus on offers and then “closed loop marketing systems” was an effective way to acquire consumers, but businesses were slow to adopt. The new focus on email list growth has given the company a period of rapid new growth – even though much of the leads- based functionality (attaching offers etc.) remains pretty much the same.

Two types of campaigns are typically run, says Jabbawy. “The first is a generic, ‘Hey , welcome to the website’ type effort. They may see a 1.5 – 2 percent conversion. The second is offer-based. “Join our list and get X% off.’ Offer driven campaign can see conversion rates jump to 5-15 percent. Offers are (still) a great carrot to incentivize customers to establish relationships.,” he says.

While the core email programs provide a lot of services, Jabbawy says Privy’s ability to provide more sophisticated targeting, offer tracking and redemption fully complement them. “When businesses sign up for Constant Contact or Mail Chimp, they typically have (few) email contacts,” he suggests. “The majority have sub 100 email contacts, or sub 500 contacts.”

Privy is offering a feature-rich freemium tier, with paid plans costing either $19 a month, $79 a month and higher (which is mostly for Enterprise players.) Given the expense of cold calling and acquiring SMBs in general, Jabbawy says it is an attractive offering.

And while email is the focus, a Privy campaign just as easily leads in to website-based marketing. Privy simplifies getting SMBs onto Websites, he says. SMBs that have Shopify, WordPress and Weebly.com accounts are the company’s fastest growing channels.

American Express Cuts Back: Big Impact on SMB Digital Marketing Support?

American Express is under the knife, as it cuts $1 billion in spending with the end of its Costco and JetBlue co-branded cards. The cutback will probably cut into many of the forward looking promotion and marketing projects that Amex underwrites with Facebook, Twitter, Foursquare, Uber, Pinterest and others.

It will also lead to the departure of many executives – Leslie Berland, EVP, Global Advertising, Marketing and Digital Partnerships, for one, is rumored to be headed to Twitter as CMO – where she would be able to work with Buy Buttons, coupons and other promotions to fan commerce that would supplement or compete with Amex efforts. In this case, the use of Twitter and other social media to fan commerce will seem a whole lot easier than directly fulfilling sales and ecommerce.

For Amex, however, it is not all bad. If we want to be cheerful about it, the looming cutbacks also represent a great “focusing” opportunity for the company, which is perhaps the most aggressive digital marketer in the field with mobile-oriented initiatives for deals, loyalty, prepaid cards and wallets.

The company and its premium model have actually been under stress for some time — even before the loss of the two reseller deals (Costco alone represented 10 percent of Amex revenue). While there is Apple-like seamlessness in Amex as the acquirer, the issuer and the network, many merchants have been hesitant to pay the .5 percent Amex premium over other credit card issuers – especially after Amex moved away from its exclusive emphasis on the wealthy and rolled out the Bluebird debit product with Walmart and other value cards to compete for the high volume of underbanked customers.

Given the cutbacks, we wouldn’t be going too far out on the limb to predict that Amex won’t be underwriting major promotions from major merchants in the near future. This past holiday season, we already saw Amex end its subsidy of Small Business Saturday purchases (which went from $25 in 2013 to $10 in 2014 to zero in 2015).

One could argue that Amex has already incubated its digital offerings, which launched in 2011-12 out of a distinct business unit designed to “challenge the status quo.” Indeed, these efforts may not really require additional financial support. We know that a good promotion these days still results in tens of thousands of sales – Amex definitely remains an inviting publisher for deals . But they are no Super Bowl.

As for the focusing opportunity? That would be for Amex to reimagine itself as a marketing machine for its merchants – something that is well underway. That could mean a series of acquisitions (I might speculate that could mean one of the SMB loyalty plays, Big Data companies – Amex was an initial investor of Radius Intelligence–, or even a social media power, such as Twitter, Yelp or Foursquare).

At Money2020 in 2014 – more than 14 months ago — CEO Kenneth Chenault telegraphed the company’s next moves. When it comes down to payment innovation, it all comes down to one thing: Merchants want to grow sales. Does the innovation “help merchants meet customer needs?” he asked. “Do they provide incentives for changing customer behavior?”

Amex CEO Ken Chenault at Money2020 2014

My Podcast Predictions for 2016: I’m on ‘The Digital CMO with Mike Orren’

Can the daily deals model recover? Will beacons be big in retail? Why is the home services space set to soar? How will custom deals be more sophisticated in the new year? And how can marketers decide which “unicorns” to bet on and which to ignore?

Speakeasy CEO and social and hyperlocal media pioneer Mike Orren interviews me — The Local Onliner — about what’s happening in local and media in 2016 for his new show, The Digital CMO. It runs about 34 minutes….Here’s the podcast link.

Big Thinking/Re-Thinking Groupon: Local Onliner talks with CEO Rich Williams

Groupon is at a crossroads. The company remains a deals leader with a huge volume of customers (25 million in the US; 50 million worldwide) and one million merchants. But the company is seen as yesterday’s news by many, even as it keeps doing solid business and pivots from email to an always on, discovery-based marketplace.

New CEO Rich Williams has made it a priority to revive Groupon’s reputation and position within the industry. Last week, he released a letter defending the company’s position as a local, goods and travel leader. Today, he engaged Local Onliner in a wide-ranging discussion.

Williams, who previously held several senior-level positions at Groupon, notes that amidst all the iPad deals and travel offers, local remains Groupon’s “core mission,” as shoppers look for a one stop for all their goods and local discovery. “We’re doubling down (on local) in every way,” says Williams. Indeed, Groupon’s “people investment” to support local deals constitutes more than half of its 10,0000 employees. Local is so fragmented that “merchants need a higher touch model,” he says. “We make that big investment to help them grow their business.”

A lot of the effort will be to keep driving local discovery. “That’s core to who we are,” says Williams. Sixty percent of Groupon restaurant purchases, for instance, were sold to people who “had never heard of the business they ended up going to.”

As for the life span of the deals industry, Williams feels it is actually “super early” and that deals will remain a major driver for all commerce. “We are not running away from deals,” he emphasizes. It’s an exciting part of marketing that lets people feel like “they have won something.”

The important thing is not to be locked into stale business models. “Let’s be honest: how do you redeem a coupon today?” asks Williams. “Is it the same as 2013? Why? It doesn’t need to be that way.”

The goal, over time, is to reduce redemption friction entirely…and make it more seamless. Merchants will be able to have different ways to create offers for their customers,” says Williams. “They’ll work with different economic models.”

What will that look like? Instead of a general $10 for $20 spend deal, “you might see 10 percent off the bill, or take 20 percent off the bill” if you buy a $5 voucher, says Williams. Or you may claim offers where you may get a free desert just for redeeming a Groupon. “We see different kinds of value creation coming on the Groupon platform,” he says.

Card Linked Offers may also be part of it – a route that rival Living Social has taken with its Restaurants Plus effort in several cities. As luck would have it, I got a consumer survey sent to me last week asking if I would be receptive to a Groupon Card Linked Offer feature. It would allow me to take 15 percent off charges at participating merchants for any registered credit card and receive bonus points…all without having to mention Groupon.

Williams says it is premature to say that Groupon is going to launch the Card Linked Offers feature – it was just research. But he acknowledges there have been lots of conversations with card issuers.

Beyond the question whether deals will continue to drive Groupon in a marketplace, however, is the question of how to leverage the new “push vs. pull” dynamics in a mobile environment. And also add value to businesses with service features, such as booking/scheduling, point of sales and food delivery. The latter is a special sweet spot for Groupon, stresses Williams.

Booking and reservations have also taken off in some markets, he says. There are 1,500 to 2,000 health and beauty salons in Chicago using Groupon for booking and reservations.

Still, Willliams acknowledges that the company is late on some of these features, or narrowly-positioned. One option will be to open the platform for partners – especially in cases where merchants already have a solution. In some cases, there may also be a clearer shot at adding services in international markets that have less competition.

Local Onliner’s 2016 Trends and Predictions Re Customer Engagement Marketing

Our friends at Belly prompted me with some trend questions for 2016 for the company’s blog. I like where they were going, and responded as such:

What three marketing trends will have the greatest impact on customer engagement?

For the past several years, we always talk about (X) year being “the year of mobile.” And there has been tremendous movement towards a mobile centric environment for consumer information and services. But 2016 will represent a tipping point for mobile as people will increasingly use their mobile devices for commerce oriented features. Ewallets, mobile coupons, QR code info and card linked loyalty will become increasingly integrated into shopping activity. In 2016, there will also be something entirely new: The ability to pay all or part of purchases with loyalty points from different programs. We’ll see how that flies with merchants who don’t want to participate in such “coalition” marketing.” I suspect it will take some time to really take off.

There will be more social-oriented marketing, less “advertising.” SMBs are taking a social centric point of view in marketing. In many cases, they are beginning with a free Facebook account rather than a Yellow Pages ad or a Google AdWords campaign. Many go on to buy advertising on Facebook, or work with other social media or traditional media. But their real focus is on mastering social marketing. They are more likely to work with a marketing service that helps them get there.

We also expect to see more easy ordering and fast delivery options. Many local merchants have never really put much thought into easy ordering and delivery, whether they are restaurants, home services or speciality retail. But in many categories, national players are increasingly offering free or cheap delivery. It will be important for local merchants to match their efforts. The cost of delivery can be offset by more impulse buys, more upsells and customer loyalty.

There’s been a lot of discussion surrounding beacon technology and its impact on the customer experience. Will this technology be exclusive to the big brands or more accessible to the small business owner in 2016?

Beacons are one way to determine who is in the store and to target users with special offers based on their browsing and purchase behavior. The technology is relatively inexpensive, but managing it and acting on it takes some resources, so SMBs are less likely to use them. The exception: SMBs that buy into loyalty and CRM programs that include beacons as part of the subscription.

How crucial are brand evangelists for a business’s success? How can a small business go about building this base of loyal customers?

Brand evangelists who help SMBs with social media and commerce are increasingly important, not only for acquiring new customers, but for engaging existing customers. Getting existing customers back in the store and buying more is mission # 1 for many SMBs.

What social media trends do you predict will influence customer engagement?

Loyalty programs that include cash back, points flexibility and special perks; Opt in Messaging from favorite merchants that feature offers.

Last year we made a list of predictions for marketing trends in 2015. Which were fulfilled and which missed the mark?

A: Individualized Messaging

Not yet. Most programs don’t really have the volume of merchants or knowledge about their customer to offer truly individualized messaging. Most messaging will continue to be targeted on the general basis of locality and gender. In 2016, we might see more messaging based around recent purchases.

B: Powerful Storytelling

Better and better. Storytelling is getting increasingly powerful, especially as more merchants add video, which remains the media channel with the highest engagement. We’ll look for more “organic” testimonials via reviews in 2016.

C: Reputation Monitoring

Continues to Grow, but shifting. Reputation monitoring via social media tracking continues to grow in importance, but is increasingly integrated with presence management (web site hosting, listings updates etc.). It is all a major part of the new marketing.

D: Trackable Customer Acquisition / Lead Attribution

Critical. Attributing the right lead to the right marketing channel is a key part of the new presence management environment. With the average SMB now using 7 or 8 channels, and also reconsidering their marketing budget, attribution should shape up as being a top priority for 2016. We also look to see attribution increasingly linked to close the loop marketing, as SMBs do a better job tracking marketing efforts to actual sales, and then re-engaging these with loyalty efforts, new offers etc.

E: Customer Retention

Critical. More SMBs are planning to engage loyalty programs in 2016; and many existing loyalty program users are upgrading them from paper-based programs. From the consumer side, however, there are a glut of loyalty programs and they don’t often use them on an ongoing basis. The challenge in 2016 is to keep consumers interested and engaged.

Is Groupon ‘Misunderstood’? It Probably is Under-Appreciated

Newly Elevated Groupon CEO Rich WIlliams

Groupon is “misunderstood”; people haven’t updated their view of Groupon as a full blown marketplace rather than a “daily deals” company; and it actually is “the unquestionable leader in local.” All this per newly-elevated CEO Rich Williams, in a public letter.

“We have unprecedented experience in local, and what we believe is the right vision and strategy to make our goal of becoming the daily habit in local a reality,” says Williams, who has held executive ranks with Groupon for four years. While the company is going through many changes, “there are some very important things that are staying 100% the same: our mission to connect local commerce; and our vision to build the daily habit for local commerce, the marketplace where people discover and save on amazing things to eat, see, do and buy in their neighborhood. “

In his letter, which was sent to the press/analyst community, Williams concedes past strategic errors; and promises to move away from a reliance on the high volume,“empty calories” of low margin electronics sales. He also promises new marketing efforts and shopping features that will attract “millions” of new customers. And while Groupon has closed down a number of international programs – this week closing down the Scandinavian countries — it will redouble its efforts on several of the remaining international markets, including Australia, France, Germany, Italy and the UK.

Williams candidly acknowledges that the company has brought a lot of its troubles onto itself. It has highlighted — and then de-emphasized — one strategic initiative after another. I’d like to hear more about the status of several initiatives, including offer personalization; the food delivery effort; the Breadcrumb loyalty and POS program; self serve deals; and the extended publisher network.

Groupon also has moved away from offering exciting and creative deals. Now, its inventory includes a number of predictable and/or shoddy goods. While the company claims to personalize deals for users, I haven’t seen it. (Not to be prudish, but I recently got an email promo with a lot of sex toys in it.) Moreover, some of the pre- discount values on the site are exaggerated.

So — write off Groupon? Definitely not. At the end of the day, we’re still looking at a very large, mobile-oriented marketplace with more than 500,000 items from one million merchants being marketed to nearly 50 million consumers members. That volume speaks for itself. And it is a unique offering, if not yet a blue chip one. Based on Williams’ note, they’ll keep working to get there.

Here are six highlights from Williams’ letter:

1) “Groupon is a misunderstood company. We’re misunderstood by analysts. We’re misunderstood by media. We’re misunderstood by consumers — both those who haven’t visited our site in awhile and those who’ve never purchased from us.”

2) “Too many people still think of Groupon as ‘that daily deal email company.’ The reality here is twofold: first, we’re a marketplace — and a big one — one with more than half a million deals in three different categories. Sure, email is still important, but more of our purchases come from on-site search than email, and more than half our purchases occur on mobile.”

3) “There’s more to our marketplace than deals, including an increasing number of market rate and low discount offers, and new ways to save time as well as money. They’re just in their early stages and we want to move faster.”

4) “MYTH: Groupon isn’t growing/Groupon is going out of business. We’ve definitely grown: since going public, we’ve grown billings and revenue by over 90%; we’ve had seven consecutive quarters of double-digit billings growth in North America; we’ve doubled our customers over the past five years; we’ve increased the number of deals on our platform by 500x since we went public in 2011.”

5) “MYTH: Groupon is bad for businesses. The vast majority of our deals (82% as of the last report) are breakeven or better on the deal itself (i.e., no overspend or cross-sell required). That is simply unheard of in high volume small business advertising and customer acquisition.”

6) “MYTH: No one can win in Local — There are a number of big companies — Amazon, Facebook, Google — who’ve tried and died in local….(but) We have sold nearly a billion Groupons life to date. Add to that our nearly 50 million active consumer and 1 million merchant customers to date and you have a lot of proof of the possibilities in local.”