ILM West: Deals/Coupons Market Evolves, Shifts to Loyalty

Declaring that deals have officially “jumped the shark” could well be an overstatement, considering that revenues are still on the uptick (BIA/Kelsey forecasts that the U.S. market will grow to $5.5 billion by 2016) and hundreds of companies continue to invest in the channel. However, the broad deals market is clearly evolving and segmenting in new ways, a topic explored during an ILM West superforum.

Merchant loyalty programs are seen as the next “white space.” BIA/Kelsey estimates that independent loyalty and transaction-based platforms have raked in $222 million in investment capital since 2008. One early leader is Five Stars, which CEO Victor Ho says will integrate with 95 percent of point-of-sale systems (a major value proposition, if true, in the fragmented POS landscape). Through the card issued to merchants across Five Stars’ network, participating businesses can see all transactions that go through “down to the line item.” There are integrated marketing components as well, with auto-posting to Facebook and e-mail and SMS campaigns driven by the transaction data.

Perry Evans at Closely is working on a full SMB dashboard product that includes promotions, loyalty and competitive intelligence. The latest rollout, Perch, gives a “birds-eye view of what’s happening in your marketplace,” showing a live feed of how a business and its competitors are posting and engaging across several social networks and local sites (Yelp, Twitter, Facebook, Foursquare and others). This starting point provides SMBs with a “frame of reference for their participation” through promotions, offers and other forms of customer contact.

Following the adage “what’s old is new again,” another sector seeing uptake as the luster of deals subsides is online couponing. DataSphere SVP Gary Cowan calls coupons ‘deals’ before there were deals, and positioned them as a strong option because the content is the ad and exists down in the decision funnel.

Valpak, which has long controlled massive volumes of rich local coupon content through its well-known direct mail brand, is now pushing this asset progressively across platforms with several mobile initiatives, including Apple Passbook integration. What was once a traditional direct mail company is now “transforming into multi-media distribution,” according to President Michael Vivio. Meanwhile, Valpak’s acquisition of Savings.com layers national coupons on top of its existing local content assets.

But don’t forget about deals. The original “daily deal,” with its massive discounts and huge margin splits, is evolving into more merchant-friendly models. Constant Contact’s SaveLocal, for instance, gives merchants full control over their deals and only collects a couple of dollars, says GM Dave Gilbertson. Meanwhile, with inevitable market consolidation and sales force contraction (e.g., Groupon pulling feet-on-street sellers to manage costs), Second Street President Matt Coen sees benefits for media companies with brand advantages that can offer full, long-term solutions. “Those that diversify will be strongest.”