Marketers evaluate impact of daily deals
Groupon provides daily deals
Daily deal companies Groupon and LivingSocial both initiated the process to become publicly traded companies in June, moves that could dramatically shift the direct marketing landscape as digital coupon companies gain momentum and marketing agencies evaluate how to leverage their services.
The IPOs will enable both companies to generate enough cash to research and develop new products and services, and promote their capabilities to untapped markets. As marketers become more comfortable purchasing discounted, exclusive and exotic products from ever-expanding daily deal, flash-sale and digital coupon companies, the need for marketing agencies to cultivate comprehensive retail brand messages and identities could ultimately become less important. Conversely, the prominence of daily deal sites could simply provide another channel for marketers to reach untapped customer segments.
Groupon says marketers are using the channel to build awareness. "We've seen people considering Groupon for marketing early in the process," says Julie Mossler, PR and consumer marketing manager at Groupon. "It can be the buzz-worthy component of the marketing mix."
However, she emphasizes the word "mix" and argues that "a good marketing professional understands where Groupon fits into the overall marketing strategy," she says. "Some brands might only need Groupon [to market], but Groupon can also play nicely with the other things marketers prescribe."
Unsurprisingly, marketers aren't willing to concede that daily deal IPOs represent anything more significant than validation for daily deal companies. In fact, each agency representative with whom Direct Marketing News spoke says daily deal sites will work almost exclusively as complements to a healthy marketing mix.
Debra Coughlin, CMO of Draftfcb, says she doesn't think brand building will ever die and as a result, marketing agencies will have to offer more than emailed coupons. "People feel more comfortable with brands that are tried and tested," she says. "These sites allow people to try things they may have heard of before but haven't tried."
Another agency executive agrees daily deals are simply another tool for marketers. Brandon Berger, chief digital officer at Ogilvy & Mather, says that they don't have to be viewed as "anti-marketing."
Previous e-commerce buying models not only didn't hurt agencies but actually improved their client's reach, according to David Shulman, president of Wunderman New York. "If you look at Priceline and eBay, these were market-changing models," Shulman says. "They have had impact but they haven't been a threat to marketers.
Shulman says Wunderman is "looking at" utilizing daily deal sites "for clients that might be appropriate."
"Say you're Ralph Lauren," he says. "They sell through retail and discount. [Daily deal sites are] one more sophisticated way to address the discount audience who shop and buy differently."
Jeannette Kocsis, SVP of digital marketing at The Agency Inside Harte-Hanks, says she recommends daily deal sites to retail clients and that they've been using the sites "in an overstock way" to liquidate inventory. However, she argues Groupon and LivingSocial still don't attract enough consumers outside of "deal seekers." She recommends the company use their upcoming cash infusions to "elevate" themselves by becoming "more appealing to people that aren't necessarily deal seekers."
"It seems like people who aren't participating don't see themselves as daily deals seekers," she adds. "These companies should make themselves more high-end, but also include ways for it to make sense and appealing for people that aren't digital-savvy."
LivingSocial did not respond to numerous interview requests.