The Golden Age of Advertising?

Groupon today announced deal personalization. Simply put, this is HUGE.

It was not long ago that companies relied heavily on expensive and marginally-effective print and yellow page ads, among other archaic marketing channels.  Along came Google Adwords (i.e., pay-per-click “PPC” ads) and allowed advertisers and users to help find each other through keyword and geo-targeting.

Adwords campaigns are great because they bridge an essential precision gap, which now easily (well, sort of) lets a company target their market, keyword by keyword, location by location.  However, there is a down-side: cost.  Sure, they’re more cost-efficient than print or yellow pages, but keywords don’t come cheap, and still require lead conversion.  Granted, you can find lower cost clicks on ad platforms that are cheaper than Google’s but, Google serves up the bulk of ads, so it doesn’t make sense to not use them. The other issue with Adwords is that a company should, ideally, have a dedicated PPC staff person, because, without appropriate supervision, the advertiser is generally overpaying for clicks, and may simply not have the time or skill-set to manage the campaigns.

Then came Groupon, which created a whole new business model for local advertising.  Rather than paying for an ad, albeit a targeted PPC ad, the advertiser simply waits for their deal to run, at which point, given Groupon’s well-established popularity (as of this writing, about 250k daily subscribers in San Francisco), results are guaranteed. Actually, very BIG results and savvy patrons are guaranteed. Did I mention that the advertiser doesn’t pay for running the ad (other than the loss-leader promotion itself), but instead collects their portion of the promotional proceeds after the run-date?

There is no doubt about it, Groupon is riding high on an amazing paradigm shift in local advertising, indeed, one that has propelled this San Francisco dentist office.  Yet, even though Groupon may be the greatest thing since canned peaches, Groupon shouldn’t be used by the faint of heart.  Big results translate to immediate large volume for the company, which requires them to drink out of the proverbial hose. This is a real risk for a company since it WILL be exposed to public scrutiny.  Groupon consumers are, by their very nature, tech-savvy, super-consumers.  They live on the internet, use social media and prefer to communicate publicly.

But by their very nature, local businesses (are supposed to) provide personalized care and attention to their patrons, yet, by not spacing the huge volume of new patrons, Groupon’s volume non-intentionally creates a potential impediment to a more stable and (possibly?) typical experience with a particular company.

But now we are introduced to Groupon deal personalization, and this is what I mean by the Golden Age of Advertising.  Although Groupon was already a win-win-win (for itself, the advertiser and the consumer), it has now been super-charged. Among other huge benefits, using consumer preferences, the new model will more effectively serve ads (again, good for everyone), and the advertiser may now not need to drink from the high-volume hose again, because Groupon now has the option to stagger deals over time to different users.

By the way, I realize that Groupon may not be the first to market with this particular concept (Yelp and others have tested similar functionality), but they are certainly the most popular deal aggregator to be actively making a big push with this concept. And, ultimately, although the all-mighty Groupon will continue to grow, I don’t believe that it will cause the downfall (or even down-tick) of PPC or other local advertising.  For one, Groupon is for promotional purposes only which, in most cases, is a loss-leader for the company – so it’s not for everyone.  And, Groupon simply does not offer the stability, continuity or precision of a PPC campaign.

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