Coupons Gone Social

Not long ago coupon inserts on Sunday’s newspapers were the easiest and probably most common way to save on thousands of products and services from free Big Mac’s at McDonalds to casual dinners at Olive Garden. But today the social media phenomenon has revolutionized the coupon industry. Sites, such as Groupon.com, provide to their subscribers a daily offer on restaurants, spa treatments, movie tickets, etc. via email or smart phone. Then they rely on social media to spread the deal. If a certain number of people sign up for the offer then deal becomes available to all, if the predetermined minimum is not met no one gets the deal that day. 

From a marketing standpoint this could be one of the most effective ways to really benefit from all the social media fever that has taken over the retail industry. For businesses is a great way to really convert “likes” into bucks. Business owners not only benefit from higher volume but they are also creating buzz about their products and services in the social media world. On the other hand consumers are taking advantage of great discounts without the hassle of clipping coupons and saving them on their wallets for months to later discover that they had expired weeks ago. The idea is definitely convenient, easy to use and could really save customers money. In fact, today on Groupon.com for $30 you get five Vector tanning-bed sessions or three spray tans at AbsoluTans, which has a value of up to $75. I guess ideal for the cold gray days were are having in Miami these days.

The business plan behind these sites seems to be very successful. According to a recent report on Bloomberg the top provider of online daily discounts, Groupon, has pushed into hundreds of new cities and doubled its subscriber base over the past three months. That has helped its valuation soar since December, when it turned down a bid from Google Inc. (GOOG) for $6 billion. The company now has 70 million users and reaches more than 500 markets, up from 300 when Google made its offer. The company is now in the talks with Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) for an IPO of over 25 billion dollars.

But even though it all seems wonderful to Groupon, the company faces strong competition from dozens of sites. By just searching on Google for “Groupon competitors” I came across six different companies: Livingsocial, Gilt City, Buy with Me, Tippr, Juice in the City and We Give to Get. Without mentioning that after Google failed to buy Groupon it is striking out on its own, making many people wonder if the company is really worth 25 billion or if smaller competitors will soon become Groupon’s worst nightmare.

In reality there is no much difference between all the “social-coupon” competitors. They all follow the same business model and they even make their websites look very alike. At this point what will really differentiate Groupon from all the others is a huge $25 billion IPO, which will give the company an edge over competitors, generating enough cash to grow in smaller cities, partner with additional retailers, but more importantly buy out every small venture to consolidate its market share.

In the long run I believe we will see how there will only be two major players in the industry who are backed up either by large amounts of money as Groupon or by giant internet players like Amazon, current investor on Livingsocial.com. And even though social media will allow smaller firms to be created at the end it will still be a game of few.  

Norberto Munoz

 References:

• Deals Galore, Competitors Abound: A Primer On Groupon-Like Startups

http://techcrunch.com/2010/07/11/groupon-competitors-guide/

·         Spawn of Groupon

http://www.slate.com/id/2280963/

·         Groupon Valuation Soars as Possible I.P.O. Nears

http://dealbook.nytimes.com/2011/03/17/groupon-valuation-soars-as-possible-i-p-o-nears/?scp=3&sq=groupon&st=cse

Google and Facebook are changing the electronic world, but would it be a safe world?

1. Google Mobile Payment Systems

As discussed on a previous blog entry, mobile payment is already a reality in the US thanks to the coffee house leader Starbucks. By using a technology called near-field-communication (NFC) and with the assistance of a special ship, cell phones are now capable of storing coupons, store loyalty information and more importantly credit card information that can be transmitted to a register with a simple tap. In fact, the technology seems to be so promising that last week several news sources reported that the world’s largest internet search company, Google, will soon become a new entrant in the industry. Google is said to announce plans to start a pilot program in New York and San Francisco that will allow retailers to accept payments through smart phones by using the new Google Mobile Payment System, which aims to make mobile payment a mainstream method of payment in the US.

But while mobile payment systems could definitely make our life easier it also has a lot of potential to increase issues related to identity theft and privacy. Before adopting the technology I assume many consumers could have the same questions I have: Can I accidentally swipe my phone? What if someone hacks into my phone and obtains my bank account? How much information will I be sharing? What happens if I lose my phone?

While there are no readily available statistics indicating how many people lose their phones each year, a Yankee Group survey of 2,900 households with wireless phones last September found that 19 percent had bought cell phones in the last year to replace ones they had. And as we know Google has been scrutinized in different occasions about its privacy policies regarding many of its services such as Google Maps, Google Earth and Google Groups. Also, it is not clear yet how banks will respond to complaints about unauthorized charges made with stolen phones. As of today, most of them offer a zero liability on unauthorized purchases but how will they address this new technology? I guess until these questions are answered I will be reluctant to become an early adapter. How about the rest of you?

1. Facebook Search Protocol

A couple of years ago Facebook was a social media site that could be used to share information with a select small community of your own choosing. High school friends, family members, relatives, neighbors, work colleagues and many other of your friends were the typical set of people who could have access to the information posted by you. But today, the company is just so much more than that. Just recently they received the patent to a Search Engine that combines “any type of search engine results with the popularity of each result among members of a user’s social network.” In other words, your network of friends will help you decide what things to buy, what events to attend and any other decision you are faced with while searching the web.

But let’s not forget that just in October 2010 a Wall Street Journal investigation found that many of the most popular applications on Facebook have been transmitting information such as peoples’ name and in some cases even their friends’ names to dozens of advertisers and online tracking companies, allowing corporations to track your web activity without your knowledge. Would that be the case with this new search engine? I know the technology sounds great and that many people will use it, because of its convenience, but what price are we willing to pay in the name of technology? Aren’t we giving away our privacy to companies we do not even know? 

For decades the American consumer has fought for the right of privacy and to keep away corporations and even the government from our daily activities, but it seems like we are willing to grant all those right in an electronic world. Again, as in the case of Google Payment System I find myself reluctant to use this technology mainly because I do not trust the privacy settings of these companies and because I do not believe they are concerned with creating a safe electronic world.

Norberto Munoz.

References:

·         Losing a Cell Phone: A Pain Even Insurance Can't End

http://www.nytimes.com/2001/04/05/technology/losing-a-cell-phone-a-pain-even-insurance-can-t-end.html?scp=5&sq=cell%20phone%20theft&st=Search

·         Swiping Is the Easy Part

http://www.nytimes.com/2011/03/24/technology/24wallet.html?_r=1&ref=googleinc

·         Google Is Said to Test Mobile-Payment System With VeriFone

http://www.bloomberg.com/news/2011-03-15/google-is-said-to-ready-payment-test-in-new-york-san-francisco.html

• Facebook further reduces your control over personal information

http://www.eff.org/deeplinks/2010/04/facebook-further-reduces-control-over-personal-information

Myspace: Gone with the wind

In the romantic novel Gone with the wind written in 1936 by Margaret Micthell, the novel’s protagonist, Scarlet O’Hara, uses the title phrase when her home is overtaken by the Yankees, she wonders to herself if her home is still standing, or if it was “also gone with the wind which had swept through Georgia.” Today, in the year 2011 social media users are asking themselves if the once top visited social media site Myspace, is still standing, or if it has been overtaken by Facebook and Twitter, who have more than 800 million users combined. At the same time investors, and users, are also wondering If Myspace still has a chance of reinvent itself to avoid an evident death.

Among the alternatives that can save Myspace from a painful demise, focusing on a niche market and finding integration among music artist, movies, and television shows seems to be the most appealing. In fact, in an interview with The New York Times Michael Jones, the president of Myspace, a unit of News Corporation, said that the more than 120 million Myspace members were primarily using the site to listen to music and share opinions and information about that music, as well as about movies and television shows. Therefore, the company had decided to revamp its Website, narrowing its focus on entertainment for people 13 to 35 years of age, also known as Generation Y. And Mr. Jones said Myspace would no longer seek to compete with Facebook, but rather to complement it. “Our focus is social entertainment,” he said. “Niche players have long staying power.”

Unfortunately, succeeding with this new strategy will not be easy. “They are definitely trying to become more relevant again,” said Debra Aho Williamson, a senior analyst at eMarketer. “But it is going to be hard, because so much time has gone by.” As with any product, technology also has a life cycle in which those who become too complacent and lack innovation can never make it back. And while Myspace is already creating joint ventures with music companies, that niche is already under attack by new comers like Reverbenation and Bandcamp.

Besides failing to innovate and be competing in a market that has been attacked already by many other sites, statistics gathered by metric companies such as Compete.com, and Alexa.com have only signaled a strong decline in users and daily visits to the Myspace. According to recent reports, the site had 54.4 million users at the end of November 2011, a loss of more than nine million from the previous year. These findings only confirm that as the house of Scarlet O’Hara in the popular 1936 novel, Myspace is officially gone with the wind.

 

Compete.com

 (Video taken from Currentv.com)

Norberto Munoz
A Marketing Dose!


References:

• The death of Myspace
http://www.pedestrian.tv/entertainment/features/the-death-of-myspace-a-former-employee-looks-back/31505.htm

• Hot Social Networking Site Cools as Facebook Grows
http://www.nytimes.com/2011/01/12/technology/internet/12myspace.html?ref=myspacecom

• For Myspace, a Redesign to Entice Generation Y
http://www.nytimes.com/2010/10/27/technology/27myspace.html?ref=myspacecom

• How to Save Myspace from a Slow and Painful Death
http://e-marketingforsensiblefolk.blogspot.com/2011/03/savingmyspace.html

Out of cash? Maxed out? Use your Smartphone!

Just when the American consumer ran out of cash and maxed out all credit cards technology offers a new way of buying that makes it easier and faster to buy;  your own Smartphone. The practice used by Japanese consumers since 2007 to pay at fast food restaurants and implemented in Africa as a secure way of transferring funds between bank accounts has finally made it to America in the hands of the master in marketing and coffee houses Starbucks.

The technology is innovative and definitely convenient. Starbucks, who started to implement it this month, says that more than one third of its customers use smart phones. “We’re providing them with the fastest way to pay,” said Brady Brewer, vice president for the Starbucks card and brand loyalty in a statement in The New York Times. By turning cell phones into credit cards near field communication (NFC) allows customers to pay for their lattes at the 8,000 Starbucks stores nationwide plus an additional 1,000 stores inside Target.

However, this new method of payment comes with a couple of drawbacks that would make it hard for the average consumer to fully accept and adopt it as their preferred method of payment in the near future. First, the use of a Smartphone to pay for habitual purchases could immediately increase the risk of overspending and promote impulsive purchases. Even though the Starbucks Card Mobile is not directly linked to your bank account, at least for now, the easy access to funds would suggest that more lattes will be purchased since for many paying with their phone would become fashion and virtually painless to their pockets. We will have to wait and see the purchasing patterns of those customers who chose to pay using their smart phones.

Another drawback is the risk of your phone being stolen or your account being hacked. Not only you would have to worry about excessive international calls and the hassle of replacing your phone, but now you would also have to worry about your Starbucks account being used for unauthorized purchases. Will Starbucks protect your purchases as most credit card issuers do? And what safety measures will the company use to protect the application from hackers?

From the marketing standpoint is a great idea to please consumers while also allowing the company to track consumer behavior more easily and to establish a new way to stay in touch with clients. NFC will definitely be part of our future, but as many other technological advances it will take years before a significant number of consumers adopt the technology. In 1997 Mobil Oil Corp. introduced Speed Pass with a similar technology that connected to bank accounts and credit cards as well with very little success. Despite great efforts by Visa and MasterCard it took decades for consumers to replace cash with plastic and it will also take time now to make consumers change from plastic to wireless.

Norberto Munoz
A Marketing Dose.

Sources:
http://www.starbucks.com/blog/starbucks-card-mobile-goes-national

http://bits.blogs.nytimes.com/2011/01/18/now-at-starbucks-buy-a-latte-by-waving-your-phone/?ref=starbuckscorporation