Zixxo Tries Again with Local Coupons

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.