Regular JacoBLOG reader Mike Seltzer recently shared an article devoted to the “Groupon effect.” The article from Fast Company asked the key question:
Do Groupon And Living Social Do More Harm Than Good?
The article acknowledges rampant growth in the deal space, but also points to substantial losses for both Groupon and Living Social, as well as deal attrition that raises questions about whether growth is sustainable.
One of the key takeaways from the Fast Company analysis points to problems revolving around the low business acumen of many companies that test drive deals. As Living Social CEO Tim O’Shaughnessy is quoted, “Ultimately, it’s up to the merchant to offer a great experience so a member will want to come back.”
Well, we know how retailers struggle in that area, and the article provides three case studies of businesses that tried deals with varying success. And that raises the question of whether radio can do better in the deal space, a theme that we’ve written about before.
The Fast Company article suggests that some retailer TLC and guidance from sales reps could be a difference maker in making a local deals venture profitable and a growth category.
Groupon, in particular, is showing signs of impending trouble. Last week, it restated its Q4 earnings (down) due to refund reserves and other internal issues. This points to problems with Groupon, perhaps leading to the eventual perception that companies that do deals with them might be a little desperate or needy.
That doesn’t mean that deals are in trouble – but Groupon may be moving into the same shaky territory that ultimately took down MySpace – being first-in but too slow to fix problems, recognize problems, and create necessary enhancements.
A strategic radio deals program could easily go beyond the guidance – or lack thereof – provided by the Groupons and Living Socials. Working direclty and closesly with retailers, radio sellers could ask key questions. Is it really a great deal? Does it give too much away? Is it targeted to the station’s core audience? Can the database be used to hyper-focus on a key demographic or mindset? Will it only appeal to “deals people” – those who don’t care about brands or loyalty and just want a bargain? Can it lead to the purchase of other products and services?
Just as a great DJ can be a musical Sherpa who can guide and steer listeners to the best musical experiences, radio salespeople have the opportunity to one-up the Groupons by truly offering guidance and direction that could help local retailers solve their problems.
I am seeing signs that some radio clusters (and perhaps their parent companies) have soured on deals. Groupon’s turbulence should reinforce radio’s opportunity to do deals, but to do them right. Given the medium’s need to shore up local retail business, a strong service-oriented deals program could help local companies while reinforcing the value of radio to generate traffic and motivate sales.
Too often, radio managers and their corporate higher-ups just see digital channels with dollar signs. They either are making us money – or they’re not. It’s easy to lose sight of the fact that by serving audiences and advertisers first, the money will flow. I can tell you that in our all-formats Techsurvey 8 (to be released later this month at the Worldwide Radio Summit in L.A.), local deals programs look better than you might think. And in certain formats, they are actually ahead – or at part with – the aforementioned global deals leaders.
So when it comes to deals, what business should radio be in? Selling coupons or providing solutions?
Jacobs Media has consistently walked the walk in the digital space, providing insights and guidance through its well-read national Techsurveys.
In 2008, jacapps was launched - a mobile apps company that has designed and built more than 1,300 apps for both the Apple and Android platforms. In 2013, the DASH Conference was created - a mashup of radio and automotive, designed to foster better understanding of the "connected car" and its impact.
Along with providing the creative and intellectual direction for the company, Fred consults many of Jacobs Media's commercial and public radio clients, in addition to media brands looking to thrive in the rapidly changing tech environment.
Fred was inducted into the Radio Hall of Fame in 2018.
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Fish Tales. Dust it off, read it again.
Kudos, Fred. Thanks for keeping these issues on the radar. Two important constituencies are driving the deal space – a cost-conscious public and merchants needing more register rings. Developments in this space merit our attention not only because they may be instructive in assisting our efforts they can also provide a richer understanding of the competitive realities of local options available to consumers and retailers.
Please allow me to suggest: radio can and should capture a serious share of the deal space, however, that will require a serious discussion about the accepted “format” of our legacy revenue engine. Radio’s herd instinct helps and hurts most new business initiatives. It helps when leadership becomes aware of the potential latent in the latest silver bullet and moves into action, compelling a comparable competitive offering. It hurts when those offerings are half-baked “me-too” packages which too often end up being perceived as another soup of the day burden which must be forced into the battle by our sales managers and sellers. My thought is there’s danger in confusing activity with progress.
Let us learn to face reality as it is, not as it was or as we wish it to be. Radio sales, like all selling, is a process, not an event. Revenue is always a trailing variable. The greatest sales tool is still the testimonial, the local merchant telling other local merchants about getting positive results, the ROI produced when they involved radio in their marketing mix. I’ll leave you with the words of George Lois, one of the original Mad Men. “Creativity can solve almost any problem – the creative act, the defeat of habit by originality, overcomes everything.”
Dave, thanks so much for contributing in this space. Part of the “half baked/me too” mentality is driven by fear of new categories eroding traditional revenue. It will require separate initiatives and different sellers. Maybe then, Lois’ “creativity model” will emerge. Appreciate your thoughts as alwaays.
Fred –
Your last comment about “fear” is telling in my opinion. The fear of trying something new and failing. The fear of not knowing what the right thing to do is. So radio has become risk averse. It seems radio would rather copycat instead of reinvent.
Eddie Lampert, the holdings Chairman of Sears talked about reinvention this morning on CNBC. He said “all retail and all media are in need of reinvention so Sears is more willing than ever to try new things, fail and learn. If you don’t try new things you have no shot”. (His comments are at 19 minutes)
https://video.cnbc.com/gallery/?video=3000081922&play=1
Can radio do deals? Sure. Our platform has many advantages over the Groupon model; the most important is our ability to make the concept personally relevant which causes sharing (W-O-M). If radio would listen they would understand that the only people who love deals / coupons are the users. In fact – Digital coupon users shop more and spend more.
https://www.mediapost.com/publications/article/171495/digital-coupon-users-shop-more-spend-more.html
Revenue sharing as a business model has shown to be a huge winner on another platform. This is the revenue model radio can use to tap into the 80% of local business that doesn’t advertise. Radio cannot be afraid to experiment. Like Mr. Lampert said – “It’s best to find out what’s next while you’re making money cause when you’re not making money you don’t have options”.
Mike, thanks for your eloquent comments and your perceptiveness. Sears is being forced to shift and experiment. There are multiple messages for radio. Appreciate it.