19 Oct Local Marketing and Daily Deals
Local marketing online was a “best kept secret” for years. But all good things come to an end.
In the early days of the world wide web, pay per click advertising could be bought for pennies per click. Today prices could bankrupt a small business in a competitive niche and could put a serious dent in anyone’s wallet even in not-so-competitive niches.
To beat the cost marketers discovered using locale in keywords worked very well. Local marketing online took off. It was a quiet little corner of the market for a couple of years until…
Local search ads that included references to towns and cities were not in demand until daily deal companies started paying handsomely to track down people interested in neighborhood goods and services. – Reuters
Daily deal services such as Living Social and Groupon opened the floodgates of competition for local marketing online. So much so that true local businesses are having a hard time competing for keywords. And that particular market is expanding. Google even has its own daily deal service called Google Offers.
Once local marketing is taken over in your area by one of these businesses, you can pretty much forget about competing with their deep pockets.
“In 2009, when Groupon was less than a year old, it cost the company about $1.50 or $2 to acquire each subscriber. It now costs roughly $7.50 per subscriber.” – Reuters (And today Groupon has more than 100 million subscribers.)
When you look at the prospect of having your local marketing contained on a daily deal site, things don’t look so appealing. Their cut is often 25% of the deal (or more), supposedly the customer expects a 50% discount (that’s what you’re told), and the business gets the 25% of the deal that’s left.
Unless the business owner is savvy enough to convert those (hopefully new) customers into returning customers this can turn out to be a much bigger loss than other local marketing methods.
Still, there may come a time when customers expect and demand this type of offer (if they haven’t already). What’s important is planning this strategically. Business owners could discount (and have discounted) themselves nearly out of business.
On the other hand, many small business owners have brought in a nearly instant flow of cash from their deals. It all depends on your local marketing goal. Is bringing in masses of people more important than profits? Are your costs low enough to allow for a 75% price cut?
The cost of local marketing for businesses, specifically PPC advertising, has greatly increased. How much money do these “social” daily deal businesses spend?
The Chicago-based company [Groupon] spent $345.1 million in online marketing in the first half of this year, the company said in a regulatory filing. That’s nearly half of its revenue for the same period. – Bloomberg Businessweek
Have you tried, or are you considering trying, Groupon, Living Social or other daily deal local marketing?