The tech press is almost as finicky and mercurial (yes, I still practice my SAT words) as the Hollywood trade press. Groupon has a down month in revenue, their president leaves, and the Wall Street Journal interviews a few savvy local business owners and the next thing you know, Groupon’s out of business! The whole house of cards tumbles.
I know it’s fun to handicap tech darlings, but if you look and listen to what is happening in the daily deal space, you will see a very rapid and healthy maturation of this space. Big brands are getting involved to move product inventory, deal sites are segmenting audience by offer type, and vendors are using creative ways to cross-sell and upsell using value-added experiences. This will all ultimately help the ecommerce sector using deals to grow and protect margins.
Nate Richardson, the CEO of Gilt City, used some interesting language at a conference recently when he said “we’re about curated access”. Gilt City, who often runs deals similar to Groupon and LivingSocial, is going to carve out its place in this market by focusing on “access”. That means things like backstage passes, meeting the celebrity chef, private seatings, etc. This is an important “members only” branding that Gilt Groupe built with their fashion business and will be a way to move up in size and quality of deals they offer.
LivingSocial is reinforcing their social commerce roots through what they call “escapes”. These are deals people tend to buy in groups or with friends to destinations like wine vineyards, ski mountains, concerts, and bed and breakfast resorts. But with more than 600 feet on the street in major metros, they will use this social experience focus to make standard daily deals more social and create packages like pub crawls, shopping sprees, and fashion shows.
Yelp and Thrillist are two companies that spent a lot of time in their early days of audience development running local events and promotions to give email subscribers a different local experience. Their subscribers have come to expect this kind of customisation and community. This continues as they move into the deal space as well (see the Thrillist deal scotch, shave, and a photo with a model at local barber shop) .
So what does this all mean? Daily deal vendors are learning quickly that quality, targeting, and experience is what will win. If you listen and look closely, this is not a house of cards. These companies are turning their crowd sourcing capabilities into defensible assets. They will ultimately be seen as experiential marketing firms that can mobilize audiences locally with much greater efficiency, visibility, and profitability than traditional marketers.