The deal-a day marketplace is shaping up as a couple of leading brands in each market; some local media using white label solutions; and a healthy dose of aggregators repeating most or all the deals.
Seeing to cut across much of the deal a day ecosystem is Seattle-based Tippr, a well-funded 40-person company that focuses on white label deals with publishers, as well as its own destination sites. It now has deal-a-day sites in 12 cities, including Atlanta, Austin, Boston, Chicago, Dallas, Honolulu, Los Angeles, New York, San Diego, San Francisco, Seattle and Washington D.C.
The company officially launched in February 2010 in Seattle with 6,000 subscribers, and has grown from there, both organically and via acquisition. It recently acquired, for instance, ChiTown Deals in Chicago and Fan Force in Austin. Indeed, by some counts (i.e. Compete.com) it has surpassed BuyWithme.com and become the #3 deal a day site by usage after Groupon and Living Social (although well behind those sites.) It also says its user base is now up to 500,000 email subs and Facebook fans. Compete says it has 670,315 uniques.
CEO Martin Tobias, an early Microsoft pioneer who went on to launch several green industry and software companies, says he mostly envisions the destination sites as a demo that gives the company more credibillity to potential partners. He adds that he was originally inspired to do a deal-a-day venture by two things: his recent experience developing Kashless, an online classifieds and email postage system in 120 cities; and owning a couple of bars and high end restaurants.
A Groupon promotion was conducted at one of establishments, and the results were “OK.” But he thought he could do better. From his experience with Kashless, he realized that a promotional effort shouldn’t entirely be about a coupon or gift certificate. It should be about developing long-term customer relationships. “We’re always struggling to find effective ways to get people in the door,” he said.
One leg of the strategy is to offer three deals a day, instead of just one or two. The partner sites don’t have multiple deals yet, but Tobias says the company is working on it. Having multiple deals is especially important for giving new visitors “more than one thing to look at,” he says.
Another leg of the strategy is use its arsenal of products to work with as many local sites as possible and build a solid network. One effort to land local media sites as partners is to customize Tippr’s integration with local sites to match their look-and-feel. Tobias is proud of the site’s “rich and open” API, which he favorably compares to sites such as Groupon, which he believes are more closed and less flexible. They also maintain too tight a rein on customer information, he believes, noting that it rightfully should be shared with the merchant.
Mobile also plays a role. Coming out next week is is Tipper’s iPhone app, which is fully integrated in its white label platform. Android and Blackberrry services will soon follow. “Mobile is a very important part of the white label platform,” says Tobias.
The combination of the white label sites and the destination site, along with its strong financing, has put Tippr in position to work with top national brands, says Tobias One big deal currently running, for instance, is for the Rhapsody online radio service, which is offered at $39.95 for six months.
The company is now pushing especially hard for growth, signing deals with 38 aggregators, and competing as a white label partner against other white labellers such as Nimble Commerce, Analog Analytics, Ludic Labs’ Offer Foundry, Matchbin, Deal Current and Shoutback, among others.
At this point, Tobias argues that Tippr has developed “the largest footprint of white label deal-a-day sites, with 20 different sites using the platform, In some markets, there are multiple publishers using the platform. In Austin, for instance, there are five sites using Tippr. The impact is that Tippr’s deals are effectively verticalized for different audiences with different demographics, argues Tobias. He asserts this approach is superior to Groupon’s recently announced personalization strategy, which essentially has forced it to segment the brand, providing less volume to advertisers.
One advantage that Tippr holds over the others: the ability to leverage its acquisition of the Mercata dynamic pricing patents that kicked off the whole deal-a-day phenomenon in 1997 — something that Tobias says the company spent a lot of money on. Dynamic pricing is being increasingly embraced. It is the system that allows items to become cheaper when more people buy into them.
Patent law is always murky, but Tippr’s lawyers apparently see real potential to use the patents to land deals. Tobias says he just hopes to use the patents to “bring innovations to the market,” but it isn’t really clear how aggressive he will be in enforcing his patents. Legal actions typically take many years.