Groupon vs. Local Radio

This morning’s blog post comes from sales guy extraordinaire, Paul Jacobs, with some thoughts on the Internet couponing phenomenon.

The media has inundated us with stories about the explosive growth of Groupon and its potential to take a serious bite out of local media's revenue.  With over 50 million subscribers worldwide, and more than 600 daily deals in more than 500 markets, there's no question that Groupon has tapped into a major consumer need to get a great deal.  Combined with a simple digital platform instead of traditional sources like newspapers and Val-Pak (a company that's probably headed in the same direction as Border's), Groupon is a force to be reckoned with.

Out of curiosity, Fred and I each signed up for Groupon a few months ago.  As you might have read in the JacoBlog, his wife's personal fitness business has tried Groupon with tremendous success, so we wanted to learn more about how it worked.  We filled out the profiling questionnaire, and as you'd expect, we clicked on things that most Boomer males like (I'll spare you the details).

Every day, we began receiving offers on our iPhones and laptops.  Never being one to pass on a good deal, it was one of the first emails we would open every morning, after reading the requisite trade pubs.  And here's a sample of what we’re receiving from Groupon:

Now if you know me and Fred, you have probably figured out that we aren't looking for a great deal on a mani-pedi, we tend to have two left feet, and while we like to think of ourselves as cultured, there are many things we'd rather do than take in a good opera.

The bottom line is that Groupon hasn’t really made the effort to get to know us.  If they did, we’d be regularly getting deals for restaurants, concerts, and retail stores within 20 miles of our homes.

So, while we can’t refute Groupon's explosive growth, we don't think that local media outlets should run and hide.  Radio stations have been in the database marketing game for a decade or more, and who knows more about the local marketplace than a good radio sales staff?  Many radio stations are generating tremendous revenue from half-off deals, and we're talking with many of our jacAPPS clients about in-app local coupon programs.

Companies like Groupon and Pandora are a serious threat to local radio's grip on local revenue.  They are bright, shiny objects that have amassed huge followings, and now are apparently about to generate billions in IPOs and enter the world of Wall Street.

But at the end of the day, if Groupon can't consistently send me coupons for deals I care about, they will fail.  This is a beachfront that radio can . . . and must . . . defend.  The time is now for the industry to step up and not only beat them back, but actually do local couponing and discounts the right way to generate significant revenue growth.

And while you’re at it, better relationship marketing has to be at the root of any company’s coupon or database program.  Whether you’re offering concert presales or restaurant discounts or anything else to enhance your sales efforts, keep in mind that success will be enhanced when you deftly marry your listeners’ interests with your clients’ offerings.

It’s simple, but despite its success, Groupon isn’t there…yet.

Groupon has opened the door to a new way of discounting in the same way that MySpace opened the door to social networking.  It's up to the radio industry and other local media outlets to insure that Groupon winds up in the same place as MySpace.

Comments

[Bill Jacobs]

I've wondered the same thing about the targetting of Groupon's deals since my experience, not surprisingly, is the same. After doing a little digging I discovered that 77% of Groupon's subscribers are women which certainly helps explain the lack of deals that benefit men.

[Fred]

Maybe they need to do GUYpon. They are missing the boat on men. Jacobs Media is finishing up a national study among more than 40 male-centric stations that clearly illustrates the power of male shoppers. It is coming soon, and I believe it will turn some heads. Maybe Groupon will get the message.
http://www.grouponworks.com/why-groupon/demographics