DM CONFIDENTIAL – The web deal space has operated as a direct response machine. Buy ads, send them to an email sign-up, optimize email yield. It’s a push driven-driven model that depends on user scale in a given market to turn a single blast into thousands of purchased coupons for a featured merchant.
That model, while not perfect, has both unlocked local commerce dollars and been a scalable, repeatable process. Acquire and monetize. Mobile is still struggling with both – acquiring and monetizing.
The mobile deal space is as of yet, fairly non-existent, or at best confused. Part of that is because of the platform. Mobile means different things to different users at different times. The earliest version of mobile was either a direct port of web functionality or a slight extension of web functionality.
In the case of the deal space, mobile meant a way to view deals, purchase deals, update account information, or more often than not, a way to redeem deals with merchants for those that didn’t want to print or forgot their vouchers.
Mobile as a redemption vehicle for consumers makes sense. And, were we two years from now with the deal space just starting, redemption probably wouldn’t have started so low-tech. From the deal companies perspective, mobile is anything but about consumer redemption. It’s all about transaction.
It is their hedge for what all of them see now — higher cost-per-user acquisition and lower lifetime value. Mobile is their best guess at staving off the quick and eventual flattening of margins and consumer overload from the email channel.
Mobile doesn’t work like the web. Today, I spoke with KimaLabs, ex-Amazon guys and makers of some cool mobile commerce apps. They’ve been thinking about and operating in mobile a lot longer than I have, and explained that mobile is a much more ADD user experience.
It’s all about short bursts of attention. You’re competing with life much more when on a mobile device… or at least Angry Birds or its equivalent. It’s also a very browsing oriented medium not search oriented. More scrolling, swiping, and pinching, less typing.
The same things that make mobile different from the web in theory make it quite well suited for the deal space. Deals are impulse decisions. They aren’t the product of searches, and they are very local.
The issue is the psychology. Deals work so well on email because it’s a captive audience. It’s why branding works so well on TV. It’s about how it is received. (Email also means easy access to a deal you might want but don’t want that second.)
Flash sales like Gilt can work on mobile because the threat of losing an item means people will buy from any connected device. Deals are time based but not scarcity of quantity based. Nor are they on the whole so overwhelmingly compelling to stop what you might be doing to buy just because you saw the deal on your phone.
Search has been the first iteration of mobile deals. Groupon helped conceptualize the process with their interface that makes sense – Eat Something, Go Out, Get Pampered. The problem? The deals and the behavior.
1. The Deals: Evergreen vs. Perishable
The mobile deal landscape on the major players still kind of sucks. The holy grail are temporary deals that help attract users when merchants need them. That problem either requires great integration (OpenTable knowing availability) or lots of effort on the merchant to upload and activate. Deal sites don’t have the first and merchants don’t have a lot of the latter. What we see instead are evergreen deals that merchants don’t mind showing at any time, but they don’t bolster the “now” vision.
Examples are those that Mobile Spinach offers – easy to consume deals that don’t ever expire, e.g, $3 for $6. Then again, perhaps the problem has been trying to use perishable deals on mobile instead of promoting more easily digestible options. The sheer management factor for merchants using the typical “now” platforms almost insures subpar user experiences.
2. The Behavior
I’m no expert on mobile, but I like to watch people. When do they use their phone a lot? I’m hooked on Google Maps, but that doesn’t seem to be the majority. When looking at Twitter, Foursquare, Instagram, Facebook, and even Email we see the problem.
Deals on mobile are not social — the space is called group buying, not social shopping; you don’t need friends or feel compelled to share with friends. They don’t make you want to broadcast. The apps don’t compel you to open them as part of your behavior.
Deals on mobile are not games — browsing feeds is fun and passes the time well; scrolling for deals, not so much. As is the case with not being social, you just have limited reason to open up a deal app; you don’t check-in on it; you don’t get rewarded for using them; you don’t get hooked on the crack. You don’t need both, but you do need at least one.
Is All Hope Lost?
No, but as a direct-response business (local discounting), they still need a reason to message their consumers. That’s not there yet in mobile. We could see a world with great push messages based on location, interests, and other social / geo data. Not now, though.
My advice from the cheap seats, help those apps with touchpoints to consumers monetize better as you, the big deal sites have the merchants. For now, though, don’t try to be the vertically integrated play in mobile. Treat mobile like the international space. Watch others, learn from the data you see, then, buy the better ones.