Serving Two Masters: Balancing Consumers and Advertiser Needs in the Deals Space

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ADOTAS – For daily deal businesses like Groupon, Living Social, and hundreds of others, serving two masters — advertisers who want to build brand loyalty and repeat business, and fickle subscribers who want relevant offers, not junk — is no easy task.

With 685 (and counting) group sales and flash sale providers now flooding the market, some consumers are either beginning to tune out due to “deal fatigue” (“Oh great, another offer for 25% off a mani/pedi – ho hum,”) or they skip from discount to discount, never intending to “commit” to a merchant they’ve engaged with. Advertisers, on the other hand, are looking for more. Closing the deal is just step one in what they hope will be a long-term (and mutually beneficial) relationship between a consumer and their brand.

The question is, how can daily deal providers keep both of their constituencies happy, especially as the market becomes increasingly saturated? With the news not so great lately in the deals biz — reports of falling traffic for some of the big players, Facebook’s dropped attempt at offering local deals, and Groupon’s IPO woes abound — it’s now more important than ever for dealmakers to get it right.

The successful players will be those that excel at targeting the right offer, to the right audience, at the right time. My company recently conducted a study on daily deal email marketing strategies, and here’s what we learned about what’s working for successful industry frontrunners like zulily, Living Social, HauteLook and others, what’s not and how deal providers can do better:

Subject lines need to engage — fast. An advertiser is not going to do another daily deal if the first one isn’t successful, so don’t blow it at the subject line. One flash sale company we looked at was listing every brand name label included in its offers in the email subject line, making it hard for the reader to make sense of it at-a-glance. When you have mere seconds to capture attention, clarity is essential. Compose subject lines as if you were writing for a billboard on freeway, or the only click your email is going to get is the one that drags it to the trash.

One person’s junk is another person’s treasure. What does this old chestnut have to do with anything? It speaks to the importance of relevance. Even a 95% discount on carpet cleaning is meaningless to a person who has hardwood floors. But to a person who just moved into a condo with wall-to-wall in every room? Treasure. Never forget that relevance is step one in engaging the consumer.

Lazy targeting risks more than a missed sale. Some people might jump on a discount for Botox treatments. Others… might be offended. A poorly targeted offer risks more than a missed opportunity to make a sale, it can also put your advertising partner’s brand in a bad light.

Behavioral analytics are great, but smart targeting should go further. Nobody wants to be stalked with relentless offers for kitchen gadgets or baby gear after a one-time gift purchase. The real gems are the details that subscribers self report, like the fact that they are designer shoe addicts or that they eat out twice a week.

This type of data helps ensure that consumers get the most relevant (there’s that word again!) offers and that advertisers get to know valuable information about their market. (Tiffany’s, for example, might want to focus more on brand-conscious designer shoe people and less on the extreme bargain hunters.) Deal providers would be wise to provide multiple opportunities (and incentives) for subscribers to share their preferences.

Have good timing. Flash sale provider HauteLook uses burst email delivery to ensure that every message to its millions of subscribers arrives within the same 10 minute window every day. This enables them to emulate the experience of an offline sample sale, where women line up at the crack of dawn to get the best stuff and the brands that participate are viewed as “exclusive.” Consistent timing can thus create a sense of expectation and urgency that dramatically increases open rates, clicks and ultimately revenue.

The deal itself is only part of the equation. While a great deal is essential, keep in mind that, in most cases, the goal of your advertisers is repeat business. Your email copy should not only communicate the value of the deal, but also the value of the merchant that’s making the offer. Flash sale provider Gilt Groupe does a nice job of this by using beautiful imagery and engaging and evocative copy from the site’s “senior curator” to make the day’s top advertiser truly shine.

The daily deals industry must serve both consumers and the businesses that advertise well in order to maintain success and viability. If consumers are not seeing relevant, timely offers, they will disengage. Similarly, businesses offering deals must see positive ROI. A smart email strategy can help strike the right balance.

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