ScoutMob: Mobile Deals, Flat Lead Fees

Atlanta-based ScoutMob has cut out the high commissions and has launched as an all mobile site as it prepares for the next wave of deals beyond the world defined by Groupon and LivingSocial.

The two-year-old, venture-funded site has 40 employees. It raised $1.5 million in a Series A round, and is looking at a $5 million Series B round.

The site is now fully launched in New York; Atlanta; Washington, D.C.; and San Francisco. It also has “lite” versions in Boston, Chicago, Nashville, Dallas, Denver, Austin, Los Angeles, Portland and Seattle. Soon, it will also launch in San Diego, Phoenix, Houston, Miami, Philadelphia and Charlotte.

A key to the site is that it refers customers to deals via a phone’s geolocation capabilities. Indeed, 60 percent of its new traffic is coming in via smartphones, says site founder David Payne. At the end of the month, the site takes a flat $3 or $4 lead fee for each redeemed offer (depending on the size of the market).

Payne told us that he devised the lead fee because he just doesn’t believe that $12 or $15 commissions on a $30 deal is sustainable over time. He compares the lead fee to OpenTable, which charges per-diner fees.

Payne also thinks it’s important for consumers to see “dozens or hundreds” of deals, rather than focus on a single daily deal. Deal curation is important too, and the site has recently been diving into experiential deals such as local tours or, coming up, Halloween parties.

To get the best deals, you can’t fake the localness of a site, says Payne. He also notes that the site has been inspired by the way Yelp built local sites around community managers. The fully launched sites have local writers, managers and sales in each market.

Even with that local focus, it takes at least 12 months to hone a subscriber list at the local level, says Payne. He adds that he site now has 300,000 subscribers in Atlanta, its original market, and is moving up in its other markets as well.