Coupons have long been a solid direct marketing tool. From money-off incentives to walk-in redemptions, the coupon has been important for offline direct response – but can it translate well online?
The idea of online coupons is not new, but is back in fashion online thanks to the opportunities presented by mobile location marketing and to sites like Groupon, currently rumored to have been acquired by Google.
The US phenomenon that is Groupon has seen great success in the major US cities by offering a combination of discount coupons and group buying. As a central hub for bargain hunters, Groupon works with companies like retailer Gap to distribute exclusive money-off vouchers. The consumer has to buy the voucher but receives a substantially higher discount with their coupon; the discount kicks in when a predefined number of consumers buy the voucher.
Location is also a hot topic among social networkers right now. With foursquare and Gowalla leading the charge for local ‘check-ins’ and ‘discovery’, the mobile phone is becoming a great platform for instant voucher codes. If you have ‘checked in’ recently you may see special promotions from local vendors. The ‘mayor’ of your local coffee shop may get a free coffee every day. Not quite the mass sales potential of a national coupon campaign – but effective nonetheless.
Of course, many local pockets of interest can be harnessed together for a larger campaign. Recently in the UK, Dominos Pizza has been running a coupon campaign offering discounted pizzas at each of its 627 stores.
Group buying relies on numbers to make it work. You may recall companies like Letsbuyit.com in the first dotcom boom – great ideas that didn’t work through lack of scale. What works well in New York will not necessarily translate to Edinburgh.
Groupon can deliver these deals on a large scale because it has national coverage at a local level, the potential reach of partnering with Google will extend this local reach much further. The number, and size, of North America’s large cities offers the coupon companies and the retailers local reach and volume. Porting this business model to the UK or other European markets becomes harder due to the small number of major cities.
But that is not to say no other city or location can make coupons work. With foursquare, any local business can offer incentives. Emerging companies like Rippll are developing solutions to serve coupon-based ads into existing mobile platforms offering reach without needing its own base of customers.
The potential Google Groupon deal will offer Groupon massive opportunities to reach into the UK, couple this with Google’s mobile and local business models and there is potential for success. If anyone can overcome the challenge of small scale cities, these companies should.