Groupon:

Groupon bands thousands of users together to get bulk discount deals from local businesses in various cities. They have managed the most successful execution of this strategy to date and have become profitable by taking a cut from each business that offers goods or services on the site. The ability for Groupon is to tap into the concept of ‘collective buying power’ is very valuable and makes Groupon a great company.

While Groupon are very good at using social media tools to build their database, they are not a social network and their growth is limited by a number of factors. Firstly, there are reportedly over 150 competitors to Groupon and copying the model is as easy as putting on sales people in a city and developing the software (I have heard of developers quoting under $5000). Secondly, because there is only one deal per day per city, the deal is based more on what offer the advertiser of the day has and this doesn’t necessarily apply to ‘me’. Finally, as a web business their network growth is tied to theiractivity and the principle of Metcalfe’s law does not apply. So in my opinion their long term value is limited by these factors of ease of competition, relevance and limited exponential growth opportunity.

Fourqsuare:

Foursquare is a location-based game and social networking website for mobile devices. Users “check-in” at venues on their mobile handset and they are then awarded points and sometimes “badges” for their activity. The company has received much attention because marketing campaigns with popular brands like Starbucks that allow for special offers and coupons to be promoted to users. In addition to benefits like checkin validation, in-store redemption, businesses can view stats on visitors and get detailed breakdown of their activity.

When compared with Groupon I believe that as a social network, Foursquare have a much brighter future. Their value is in the database of “check-in” activity and the ability potential advertisers will have to target promotions based on this activity. Like Facebook they do face issues around privacy and the use of this information, but the ability to promote time sensitive special deals liked to location is highly valuable provided deals are relevant to the user. When assessing long-term business value, (1) it’s difficult to copy Foursquare as their value is in the network and the “check-in” activity, (2) because of the volumes of data being collected, the promotions in Foursquare will have greater user relevance and (3) as a social network there is much greater opportunity for exponential growth of their network.

One limitation of Foursquare is the low average age of its’ users. As a consumer in my 30s i can think of many of my peers who “check-in” and use their service but with over a million checkins each day I’m sure that they are happy with their niche in the market.

Technorati Tags: Foursquare, Groupon, Local Business

1. An 18 page newspaper format magazine promoting property in the area. This publication has almost no useful editorial content and promotes approximately 110 properties from 24 advertisers.
2. The local business area newspaper with 52 pages, an average of 3 ads on every page and a classifieds section.
3. A Melbourne Weekly newspaper with 76 pages and hundreds of ads and real estate listings. Too much effort counting.
4. A DL size brochure for Telstra Bigpond internet plans.
5. An 8 page A4 catalogue from Optus Telecommunications with new phones.
6. A 24 page Coles Supermarket catalogue promoting over 100 specials.
7. A 28 page independent schools guide brochure with 1-2 ads on each page.
8. A 30 page Target catalogue with hundreds of deals on CD’s and DVD’s.
9. A 20 page Target catalogue promoting clothes, undies and toys.
10. A 20 page ‘the good guys’ catalogue promoting white goods.
11. An HBA Health Insurance flyer.
12. A Spy Cam security monitoring brochure.
13. A Plush furniture promotional brochure.
14. A 2 page chemist brochure.
15. 2 Subway foot-long brochures with 12 coupons.
16. A Video EZY brochure with 2 offers.

In summary, I have been hit by 292 pages of stuff / spam / junk mail in just one day. (please feel free to correct my calculations as they are really rough). The amazing thing is that this influx of ‘spam’ never stops and usually ends up in the recycle bin before making it into the house. The only reason I took notice today was because the thickness of the junk inspired me to write this article.

There is no question that much of this Spam advertising approach works because if it didn’t then none of the advertisers would promote. The issue is the waste and I wonder how many of the approximately 1500 products promoted to me today get any response at all. I have limited my example to just what I received in my ‘snail’ mailbox but think about the number if you add in all the radio and television promotions, daily newspapers, Internet banner ads, spam email, billboards and don’t forget the ads above the urinal, on buses, trams, taxis, hotel boards, and bus stops.

Perhaps there is something I like in the 1000’s of ads that will be sent to me today but finding that promotion is like finding a needle in a haystack and who could be bothered.

This may appear to be a bit of a rant but my point is there must be and is a better way for business. My personal view is that businesses need to rethink their promotion strategy and focus on advertising delivery models that enable them to (1) pay for promotion only when the promotions work or (2) pay for promotion that is highly targeted.

If this were the case I would only get information that I’m likely to be interested in and I would be much more likely to buy.

Less information + more relevance = more sales.

If you are an ad agency rep and you make your living off all the junk that was sent to me today please give me your thoughts as I may be getting this whole thing all wrong.

Technorati Tags: Local Business, Small Business Marketing

Last week was a very exciting week for me as I commenced the development of my new website platform called Myzerr.com. Following months of planning the under-construction page went live yesterday and can be viewed at www.myzerr.com.

I have founded Myzerr on principles of delivering services that significantly improve the promotion of businesses online. The end users of Myzerr are our number one priority and the focus of Myzerr search will be to deliver information that connects businesses to customers based on relevance.

Over the upcoming months I’ll provide more updates on the development and welcome any feedback regarding the logo, site look and structure.

To keep up to date please visit Myzerr and register by entering in your email address or visit our Twitter page to follow us.

Technorati Tags: Discounts, Local Business, Myzerr