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Direct Response Marketing

Mobile Spotlight: Mock Paper, Scissors

1 Jun, 2011 By: Nicole Urso Response

Virtual coupons and daily deal websites have introduced bargain hunting to a new generation, but direct mail is still a standard for local businesses.


Virtual coupons and daily deal websites have introduced bargain hunting to a new generation, but direct mail is still a standard for local businesses.

TLC’s new series “Extreme Couponing,” which launched in April, follows shoppers who clip, calculate and meticulously strategize into saving hundreds, even thousands, of dollars on grocery store purchases. Bystanders ogle at the parade of shopping carts brimming with dozens of mustard bottles, stacks of cereal boxes and mountainous packages of toilet paper. Checkout clerks gather in amusement as the coupons perform a disappearing act on the register’s grand total and the extreme couponer one-ups the store yet again, leaving with their booty of mostly non-perishables.

Discount shopping and direct mail coupons are not new or novel to direct response marketers who thrive in an industry predicated on limited-time offers, yet the thrill of cashing in on discounts has captivated a new generation of consumers. Coupons are not only acceptable to use, they’re cool to share.

The coupon craze is undeniable, and it’s helping to shape today’s customer loyalty programs, social media platforms and mobile marketing standards. They’re even making a big impact on the industry where it all started — direct mail.

Daily Deals

The recession and the rise of Internet usage and smart phone adoption culminated in a new generation of budget-minded consumers and savvy discount shoppers that like their deals quick and on the go. In 2007, the year that the housing market plummeted and Apple founder Steve Jobs announced his iPhone, LivingSocial was launched and grew to become one of today’s most popular daily deal websites.

LivingSocial promotes one deal every day with discounts of up to 90 percent on local restaurants, bars, salons and other businesses in more than 200 markets worldwide. Users sign up for a free account and

 

one deal is E-mailed to them every day. Rather than spending hours clipping Sunday newspaper inserts, deals are redeemed with the click of a button and can often be redeemed with a paperless voucher on users’ mobile phones. LivingSocial lives up to its name by encouraging users to share the deal with friends. They can E-mail it, post it on Facebook and Twitter, and if three of their friends purchase it too, then their deal is free. LivingSocial is also available as an iPhone and iPad application. There are about 28 million subscribers to the service, and according to financial documents intercepted by popular tech blog, TechCrunch, the company is worth $2.9 billion.

Groupon, which was founded a year later in 2008, is the dominant daily deal competitor and worth at least twice as much. According to rumors about an impending public offering, the company is worth $15 billion. Its subscriber base is roughly 70 million; its reach spans more than 565 markets worldwide; and its mobile application is available for iPhone, Android and Blackberry.

In March, the company announced a soon-to-come business extension called Groupon Now, a mobile application to serve up local deals based on the user’s GPS (Global Positioning System) location. It’s similar to Foursquare, an existing location-based application, that enables users to check in to a business, publish their check-in to friends via Facebook and Twitter, and browse for nearby offers.

The daily deal business model is simple to replicate, which is illustrated by droves of competitors putting their spin on it.

Gilt Groupe, the creator of popular sample sale website Gilt.com and travel website Jetsetter.com, launched Gilt City in April 2010, now available in six major U.S. markets, including New York, Los Angeles and Miami. Users receive discounts of up to 75 percent on luxury spa services, high-profile restaurants and designer wedding cakes among other things.

If anyone questioned whether the new wave of couponing would be a recessionary phase, Google and Facebook answered the question with almost simulaneous announcements of coupon platforms.

Facebook launched Deals in November 2010, giving merchants the ability to create offers and publish them directly to Facebook. The coupon system is an extension of an existing GPS-based product called Places where users check in and share where they are with Facebook friends, which is also similar to Foursquare. Today, Facebook Deals are available in limited test markets, including San Francisco, San Diego and Austin.

Google’s ambitions were made clear when Groupon declined its $6 billion acquisition offer in December 2010. The Internet giant then decided to build its own system and launched Google Offers this April with 50-percent discounts to U.S. test markets including Portland, New York and the San Francisco Bay Area.

Virtual Couponing

With the variety of coupon ventures saturating the marketplace, advertisers are turning to the experts to focus their efforts and monitor consumer response. Hipcricket is a Seattle-based mobile marketing agency that recently launched HIP SocialConnect, which enables marketers to gather informatio

n from their Facebook fans and send them offers or notify them of special events directly on their mobile phone.

“Advertisers can easily capture multiple levels of opt-in data from their Facebook fans, including E-mail addresses, mobile phone numbers and locations,” says Eric Harber, Hipcricket president and COO. “The permission-based information is often used to provide relevant offers in mobile marketing campaigns including mobile coupons.”

Los Angeles radio station KIIS 102.7 FM used Hipcricket’s platform to build its loyalty program. Listeners use SMS short codes to opt-in to receive announcements about music artists and to participate in special promotions. KIIS is now using Hipcricket’s new SocialConnect to integrate its mobile marketing campaigns with its Facebook page that has more than 30,000 fans.

“This is the logical extension for brands — use the existing customer affinity to strengthen the brand’s presence on their customers’ mobile device by offering them relevant offers,” says Harber. “These offers are highly desired with 73 percent of mobile subscribers desiring a coupon, according to the Yankee Group.”

Harber says that Hipcricket’s services are also accessible and used by smaller, local businesses. “A Baltimore Chevrolet dealer worked with Rock 98, a Baltimore radio station and Hipcricket customer, to unveil a campaign to drive users into their dealership,” he says. “The dealer bought ad time with the station. Rock 98 listeners were given the chance to purchase a car for $98 if they joined the station’s mobile loyalty club and their name was drawn. The campaign was a success — the dealer sold 34 cars to members of the club in a single day after not selling one car for more than a month.”

Setting the Standard

Virtual couponing introduced a new era of marketing, payment and redemption options. The technology allows speed and convenience, but it has not come without growing pains. Groupon, for example, has been sued several times with accusations of false advertising among other violations of advertising alcohol and setting expiration dates on coupons against state laws.

To help marketers create responsible offers, the Mobile Marketing Association (MMA) published the “Guidelines and Best Practices in Mobile Price Promotions” for North America in April.

“Our research shows that consumer interest in mobile coupons continues to grow, giving brands, merchants and marketers a powerful new opportunity to establish and maintain relationships with consumers,” said Greg Stuart, CEO of MMA, in an official statement when the guidelines were released. “The MMA created ‘Guidelines and Best Practices in Mobile Price Promotions’ to give the ecosystem an industry-standard framework for capitalizing on that opportunity while protecting the consumer experience.”

The report includes best practices for offers that have federal and state-level laws to consider, including contests, food, alcohol and pharmaceuticals. There’s also information on how to design coupons, especially when using terms such as “free.”

Advertisers and business owners considering a mobile marketing campaign or who may want to test a coupon offer on one of the many daily deal websites, could contact the MMA directly for more information or work with an MMA-compliant marketing agency.

Old Made New

Mobile coupons, daily deals and SMS short codes are extensions of traditional direct mail, according to John Patinella, senior vice president of franchise operations for Money Mailer. The company has been delivering coupons since 1979, now includes more than 200 franchisees and delivers its mail packets to more than 18 million homes per year. It was also named Entrepreneur Magazine’s No. 1 advertising services franchise for 2010.

“Other avenues, like mobile marketing and online marketing, are just another distribution method, or an extension, of our shared mail package,” says Patinella.

The company launched its first mobile app on iTunes in May and is rolling it out to other app providers in the coming months. Users will access Money Mailer’s database of local offers by searching for a business by name, browsing offers by ZIP code or using their phone’s GPS.

The coupons are also available online at MoneyMailer.com and published to additional coupon distribution networks.

“Money Mailer’s focus is really on local content,” says Patinella. “Our brand is what’s in the envelope. We made our niche by focusing on small, local business owners that consumers want.”

In a world of dynamic metrics and razor-sharp demographics targeting, Money Mailer provides a solution for a small business’ advertising needs.

“Our franchisees work very close with our customers, and they do it the old-fashioned way,” says Patinella. “In terms of sophisticated tracking methods, the majority of our clients, the majority of our competitors’ clients, it’s done the old fashioned way — counting coupons.”

The Yellow Pages is also breaking into virtual discounts. AT&T recently announced plans to launch daily deals via its Yellow Pages directory site YP.com in test markets including Los Angeles, Dallas and Atlanta.

But Wait, Come Back!

Deep discounts are a powerful incentive to bring new customers through the front door, but those people may not convert into repeat visitors.

Welcomemat Services is a direct mail business, started in 2003, that focuses on building loyalty between new homeowners and local merchants.

“New movers are actively seeking neighborhood stores, shops, medical resources and restaurants to provide them with services and products to fill their daily needs,” says Welcomemat President Brian Mattingly. “Research indicates that new movers are five times more likely to become loyal. With no established habits, shopping or driving patterns, new movers give businesses the opportunity to gain new loyal customers.”

The company targets new movers using proprietary systems and public records to determine changes of address nationwide. It then delivers packages of “invitations, not coupons” to try local businesses. The word coupon is discouraged at Welcomemat because the focus is on loyalty, not volume.

The cost to advertise in a Welcomemat packet is approximately $200 to $350 per month, and advertisers are given access to the backend tracking and follow-up tools to help solidify loyalty.

Groupon is on a similar track with its location-based deals, and the introduction of “Groupon Stores,” which allow businesses to run as many deals as often as they like. Customers can also follow a store, so merchants build a following. Coupons are just the beginning. ■


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