Groupon's Ripple Effects

This week in Boston, The Kelsey Group is holding its East coast local media conference with speakers from Foursquare, Google, Facebook, Gilt City, and other leaders in the local media market. It is a must-attend event for many in digital media because “local” is one of the fastest growing areas online in terms of product innovation and ad spend. Here are some reasons the pace of local ecommerce to will only continue to accelerate:

1) The ubiquity of local reviews and photos. Over the past few years, Yelp, CitySearch, CityVoter, Open Table, and Trip Advisor have all helped fill in the local landscape with reviews about all kinds of businesses including the transient kind like food trucks and farmers’ markets. Smart phones and services like Twitpic will combine photo data and reviews to build mini websites for businesses that don’t have them.

2) The rise in vouchers. As deal sites (Groupon, Gilt City, LivingSocial, etc.) continue to educate merchants and consumers on vouchers as a product, we’ll see a big rise in the number of local verticals adopting these tools. Visa, Clovr, and others will streamline how this sales process is handled at the point of sale and on mobile devices.

3) The proliferation of geo-location games. The race for marketshare between Foursquare, Gowalla, Whrrl, SCVNGR and others means lots of marketing dollars will be spent on getting display ads out in business locations. As consumers continue to get peppered with invitations to engage at retail locations they will eventually learn to be more aware of their surroundings in-store and seek opportunities to upload photos, reviews, and get deals.

4) HTML 5. With all the investment in geo-location, there will be an acceleration in web-based location services based on HTML 5 that don’t require users to download an app. This speeds adoption since services can be delivered through a browser. The privacy argument slowing some of these apps will give way as adopters of Foursquare, TripIt, Google Latitude, and Facebook show no fear.

5) QR codes — These promotional tools are really easy to distribute and businesses like the novelty of them. Since most new smart phones come with scanners there will continue to be a huge spike in usage.

6) Social media and small businesses. Many small businesses are now getting more traffic on their Facebook pages than on their websites. This trend will only continue to grow as Facebook continues to roll out deals and other forms of advertising that provide incentives for business owners to increase their fans. At the conference Maz Sharafi, who helps run Facebook’s local product team, said that most consumers have an average of 130 friends. That word of mouth opportunity means you can expect business owners to shift online behaviour off their static websites and onto their Facebook fan pages and Twitter accounts. 

7) Advertisers will demand geo-targeting. We saw the highest CPMs in 2010 from advertisers who wanted regional advertising targeting. Centro, quadrantOne, Geomentum, and BIM will continue to find display premiums by putting campaigns in front of the right locals.

Despite all the excitement, you hear a lot of people in the industry say this is “the first inning”. Indeed a number of products are simply just launching and the dynamics in the daily deal space are extremely fluid. The local ecosystem is large and consolidation needs to happen to simplify the experience for small businesses, brand advertisers, and consumers.


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