The future will be fun
After slogging through the management-intensive world of telemarketing last week, it's about time for a pizza contest.
There's nothing like the staid, uber-dignified Washington Post Company trading pizza for e-mail names and, well, having fun doing it.
This week's report is not only free of personnel issues (at least on the media side) but we have to report things like "prepare your merchant for too much success" under "lessons learned." The Capitol Deal's pizza contest report was only held up by a day due to "customer service" issues that happen when more than 100,000 people are asked to use a promo code.
(This quirk is not to be overlooked; By issuing promo codes, Papa John's, as well as The Capitoll Deal, captures e-mail names and circumvents one of the key flaws of daily deals, from the merchant standpoint. See "lessons learned.")
The truth is that many of the new business models are more fun because the merchants are excited and participating. They get a check at the end. And in fact, after the initial shock of the dollars-to-dimes there are a lot of entrepreneurs and intrapreneurs thriving in the new environment.
Still, there are more challenges ahead for deal partners to continue earning the attention of merchants, as pointed out at BIA/Kelsey's Deals3D conference last week in San Francisco. Future trends are emerging - and there is no place better than San Francisco for a front seat. The best summary I read came from Jed Williams of BIA/Kelsey's blog on the final session on the future of deals: Based on the brightest minds (Closely’s Perry Evans, Wantsa’s David Strebinger and Deal Current’s Jimmy Hendricks), here's what's in store over the next year:
1. Integration issues, yet again
Integration did not come up at the conference, which was not aimed specifically at local media companies, but all kinds of entities in the deal space from providers to banks (Amex offering deals via Facebook). But the trend is heading this way, I quote from Closely's Perry Evans, via Williams blog:
"Deals, offers and specials are on a collision course, morphing into a seamless stream of promotions."
Hence the inveitable question, what to do about directory partners that have coupons and decide to add deals, or single deal platforms that morph into ongoing stores with multiple deals, and so on.
There are only three choices: a) keep initiatives separate and "park" the losing propositions as long as they have some revenues. b) re-negotiate existing contracts with tech partners to integrate at least the deals so that they are populated across all platforms c) Migrate to integrated solutions, as much as possible. Pick one.
3. Merchants want better ROI overall
"Merchants won’t pay 50 percent to get people to walk across the street.” The price ranges they will pay: Existing advertisers will pay 15 to 20 percent, and newly acquired merchants will pay 25 to 30 % for high-quality lead generation."
We see media companies negotiating in competitive markets, though nothing close to to these ranges for now. But when a city the size of Phoenix has 32 deal companies competing, the ultimate winners will be consolidators, and established local media companies with additional revenue streams, according to Williams.
3. Merchants want more value from deal partners
Margins will only remain at a reasonable ratio for deal providers that create a solution that “businesses feel can become an every-day tool.”
"The brands that break through will be those that “offer integrated services – two to three different products and analytics that convert customers into repeat visitors.”
That about sums it up. They want things like e-mail management, sms, one-stop analytics, and the ability to control their own dashboards - that are driven by the deal, not separate from it, and included in the price.
Finally, a caveat:
Don’t forget about the potential consolidation of the enormous group buying sales engine. “There’s a whole new sales force being created on the back of this industry.”
Sigh. Just make sure that some of this new sales force belongs to you.
Many thanks this week to Tim Condon, Director New Ventures, Digital at the Washington Post Company, and to Jed Williams, BIA/Kelsey for sharing what great minds in the deal space have to say.
