Groupon: Local Area Advertising

If you were already willing to discount your products and/or services by half, and of the remaining half of the expected revenues, only take in 25%, then maybe Groupon might be a decent advertising channel for local area advertising. But, if you think that 75% of an expected sale is way too high of an acquisition cost of new customers, you may just be among those who believe that Groupon is bad for business.

Like any advertising strategy, you should weigh the pros and cons of using the service, as well as the ROI and costs involved. For example:

Pros:

• Can bring in robust traffic to a storefront in a short period of time
• Consumers love Groupon and can't wait to tell their friends about it
• Customer pays for the opportunity of using a voucher instead of receiving a comparable offer in the mail for free

Cons:

• Groupon voucher offer language must be carefully constructed
• Groupon vouchers apply to one person only and cannot be redeemed for the benefit of the group; Customers have to read the fine print to see what they are really getting
• No lasting relationship with Groupon (no business directory listing, no customer reviews)
• Customers become Pavlovian in response to deep discounts for your products/services, meaning, they will only shop with you if a coupon or reward is involved
• Very high cost of acquisition of new customers who must have an extraordinary experience in order to become a repeat customer or spend more (without coupons) with your store
• Overuse of coupons can cause brand erosion, loss of operating margin, and decreased long-term profits
• Your business, existing employees, and in-store technology may not be able to handle the immediate influx of new customers (e.g., your hidden costs will rise because of this; adding new employees, training them on how to redeem Groupon coupons, increased staffing management issues) and quality of customer service or first-time customer experiences could suffer as a result
• You may, as a business owner, feel fleeced from the whole Groupon experience
• And, there's no unique technology nor business model that separates Groupon from its competitors

Alternatives:

• Entertainment Book, RelyLocal, PayBack Book, Goldstar Events, the "blue envelope" local coupon mailer
• Start your own customer email list and offer a monthly newsletter; Constant Contact starts at about $15/month; Vertical Response offers pretty decent rates and does postcards too
• If you're a professional services business owner, after hours business mixers, Chamber of Commerce events, and local/regional networking events through Meetup.com are excellent places to meet new customers

The Microsoft Advantage

One of the reasons for not adopting a game console through the various generations of consoles is because the decision standard I used was to find at least five games I would be willing to play more than once or would be engaging enough to offer more than 24 hours of play. Single user PC games have this flaw. Most are solvable within 24 hours, except those that are coded to deliberately become progressively harder by throwing more minions at you so you cannot. The result: none matched this criteria. All console systems are priced about the same. The console games are priced per brand and market opportunity rather than if they're any good or not. And for users, the measure for buying a game is based on the Borg-collective of gamers on sites like Gamestop, IGN, or CNET, where game ratings from hundreds of players factor largely for new players to consider the game title. Games aren't cheap anymore. The average new release costs a player $50-70 per user license, depending on what kind of bundle it is. And, you can't return a game after the box has been opened or you purchased it online and downloaded it. 


But, I digress, this post is not about console games, its title publishers, or consoles, but rather Microsoft's near-term strategy for its media portfolio.


Today's top console manufacturers are Microsoft, Nintendo, and Sony.


When a marketer thinks about media outlets, what generally comes to mind? Print. Broadcast radio/tv. Internet web/email. In-game advertising has been around for at least a decade, maybe longer. Barack Obama used in-game advertising during his 2008 campaign. It's nothing new. What is revolutionary and adds a whole new dimension to advertising is the ability to stream in real-time, ads and programs, from partner firms, like Netflix, Hulu, YouTube, or Pandora radio, through a new media platform, the game console.


This includes, but is not limited to video-on-demand (VOD), web conferencing, simucasts (from existing radio and web tv stations), HD radio, or user-generated content.


Here is a rough timeline of partnerships:


Microsoft
...and the WWW - no official add-on, but this capability has been around since 2005
...and YouTube - no official add-on, but this capability has been around since 2007
...and Netflix - May 2008 (Netflix gained a new distribution network; Microsoft gained access to partner media content)
...and HD radio - May 2009


Nintendo
...and Virgin Radio - Apr 2007
...and YouTube - Jan 2009
...and Netflix - Apr 2010


Sony
...and IPTV - Jan 2007 (IPTV has roughly 28 MM subscribers, though when introduced to the PS system, this was free content)
...and Virgin Radio - Apr 2007
...and Netflix - Nov 2009


After subscribers reach into the double or triple digits worldwide, what's left to conquer in the media universe? Someone else's subscriber universe for their revenue annuity, of course.


Ahh yes, but what is the advantage if everyone jumps onto the same bandwagon? KPI metrics and the ability to target content based on user behavior. You wouldn't know it from observing console users or buyers. When you register a product, all that demographic info you fill out in a questionnaire isn't just for marketing. It's for customer profiling. Even if a manufacturer is only able to get 25% of its users to register and opt into receiving more info, if XBOX Live really has over 17 million subscribers, that still represents a lot of data points. Microsoft has been at the partner integration strategy for a lot longer than anyone else and executes it pretty well.


Toshiba debuted a motion-sensing tv experience at CES 2009. It won't be long when more users of Internet-ready TVs will be able to change channels, switch between 'screens', or open up a video conferencing window just by using simple hand gestures, regardless of tv brand or media platform. Now how cool is that?


And a side note: Apple didn't show up to E3 because of a business decision not to. If you look at what companies comprise ESA, they are all top devs, publishers, and manufacturers of pc, console, and Internet gaming. Apple does not make a gaming device. Users may use the iPad/Phone/Touch, or desktop/laptop Mac as a gaming device, but that's not its core purpose nor revenue model. You'll find Microsoft and Sony at the E3 Expo because they are multi-verse companies.


Disclosure: I'm a PC.


Related:

This Is Microsoft's Opportunity
Microsoft and Netflix Unveil Partnership to Instantly Stream Movies and TV Episodes to the TV via Xbox LIVE
Obama's in-game ad bill: $44.5K
Apple and Windows Computers Living Together Under One Roof, Oct 2009 stats

Apple's iAd

Since when does ownership of a mobile device entitle the manufacturer to broadcast third party ads to your service plan? Has something changed radically in the way technology handles multimedia that users can block out advertisements if they don't want to see it? And, if that isn't the case and this is rolled out to everyone who owns an iPhone or i-device, who pays for the additional bandwidth these ads are going to suck up? Obviously, the end-user if they don't have an unlimited bandwidth plan for their mobile device. 

The revenue model sounds great for Apple with its very high barrier to entry for those who want to advertise on the exclusive and closed system iAd network. 6.4 million iPhone subscribers in the US isn't paltry. It may not make the most sense or make the best use of online advertising budgets right now; but in time it could grow from being a mere goldfish to an invasive carp species in a few more years. This is just one channel in Apple's distribution network for content that leapfrogs beyond how traditional media is served up.

End-users already pay subscription fees for bandwidth for their mobile device, they are now (or soon will be) at the mercy of ad serving on a device that used to offer a more private space.
Where should marketers draw the line when it comes to exclusive ad networks?


Read more?

Related articles:
Number of iPhone subscribers, 07/2009

Social Media for B2B

Disclosure: I am not a social media expert nor social media strategist. And, using social media for business promotion is debatable. But, like Twitter, it looks like the idea is here to stay until it evolves into something else. Frankly, I hate the rebranding of rebranding because it doesn't add new thoughts to the mix, rather it boils the thoughts into short 140-character statements that add little meaning beyond the initial insert. It's up to you to decide if these are indeed strategies and if they'll coexist with your marketing mix. Sooner or later, your business unit or department will be tasked with the question of whether or not to add social media to how you do business with customers.

On the B2B side, we used to call this word-of-mouth, relationship, grassroots, or brand ambassador marketing. Sounds pretty boring and low budget. These all have the same expected outcome. Get the customer to proactively self-identify, raise their hand, or ask for help directly from the business. "Social" has an incredibly positive connotation to it. Communication by words, visual imagery, video, sounds, or touch is all very human. Social media is the sharing of marketing and advertising content by a means of one-to-many relationships while at the same time disguises itself as a one-to-one relationship with a customer that the business wants to learn more about or nurture over time for future sales.

The synopsis is that social media implementation deals with a) knowing your customers and how they want to communicate with you about your products/services, b) the apps/hacks/and plug-ins that are used by the social media community, and c) building the right strategy for your business or business model.

Actions to consider:

1. Know who your customer is: go where your customers go, read what they read, see the experience through their eyes
2. Identify the path of least resistance for a customer to get a question resolved: postal mail, fax, telephone, web form, email, survey, social media status update
3. Legal implications and privacy concerns over what is "said" by the business and what is "heard" by the customer
4. Understand that the web is global and that inbound customer complaints might not even pertain to your trade region
5. Establish ground rules for participants using the same social media outlets
6. Build consensus across the organization of what should be achieved by adding social media to the existing marketing mix.
7. Be able to quantify the benefits beyond mere number of followers, page views, or retweets
8. Define your social media strategy plan

How customers actively engage with each other:

• By participating on a social network community (see Wikipedia for a comprehensive list)
• Video sharing
• Reading/writing/commenting with blogs
• Photo sharing
• Real-time (or fake time) status updates of what people are doing now

Here are some social media tools to help you manage your time:

• CoTweet - integrated with bit.ly, allows multiple users to post to one or more linked Twitter accounts, allows real-time or delayed Twitter updates, watch multiple conversations based on keywords
• Tweetdeck - allows simultaneous status updates on Twitter/Facebook/and LinkedIn
• Swix - easily create a unified scoreboard of all your key social media metrics (blog traffic, subscribers, FB fans, Twitter followers, YouTube subscribers, etc.)
• SlideShare - upload presentations and share online, tracks views http://www.slideshare.net/
• Icerocket - keyword search across blogs, web, Twitter, MySpace, News, images, etc.

In the end, businesses just want to create more meaningful conversations with their customers.

It begs the question, what does a conversation look like between say, Microsoft and a new Windows7 customer?

related articles:

Shankman: what social media is not

Nielsen: global time spent on social media sites

Amazon.com - Movers & Shakers

Here's something you don't see too often. Amazon has a link called Movers & Shakers, basically the top 3 items of each sales category. Under Toys and Games, the number one item today is the Deluxe Wood Chess Set (Sales Rank in Toys & Games: 201, formerly ranked at 13,379). Nothing wrong with chess, or that people probably buy more chess sets during the holidays because they're stuck indoors.. But for such a jump, I wonder if this is a technical glitch via Google search keyword or ad content network, or if really the company is truly moving a lot of chess sets this year.

Things like this make me wonder about the legitimacy of ranking, considering that for this particular product there are zero product reviews.

Movers & Shakers Link for Toys and Games (updated hourly)

Read more?

What You Need to Know about Amazon’s Sales Rank System

Brand Management

It's all about marketing, you see. What is the key difference between what Kobe Bryant did post-scandal and what Tiger Woods did? Managing the brand. What he should be doing instead of listening to his wife's demand of "...I'll let you play pro golf again when I can trust you.." is to put together a game plan for resurrecting his personal and professional brand. Look at how long it took for Martha Stewart to go from jailbird to partnering up with Macy's. It's not impossible nor improbable for Tiger Woods to be favored by the public again.

Read more?

Understanding and Managing the Brand Space
Brand Noise: The Evolution of the Martha Brand
The Infinite Asset: Managing Brands to Build New Value

From the Public Relations Problems and Cases blog:

- Football, Dogs & Money - The Michael Vick Story By: Brian Heenan
- The Big O: How Oprah Winfrey Built Her Brand
- My NHL: Re-Branding the National Hockey League

Other famous people with "transgressions" on their record:

Bill Clinton's post-presidential career (via Wikipedia)
Mohammad Ali bio

Airline fees are like bank fees

Article: Southwest adds charge to board sooner

Wow, this is a great [insert sarcasm] revenue generator. I scoff at this because the last flight I took on Delta Airlines charged $25/seat to upgrade to an exit row. As such, there were several empty exit-row seats on the flight. Good luck to anyone needing to evacuate through those rows. It doesn't matter how soon you board the plane or get settled into your seat; and likewise, it doesn't matter if you sit in First Class or Economy because if you have an aisle seat, you still have to get up and out of it to let in the middle and window seaters. What value is $10/flight to a passenger who gets to sit down first when the airplane can't even take off until everyone is seated?

It's bad enough that 150+ passengers have to share two bathrooms at the back of the plane. What's next?