How to Survive the Social Buying Bubble

With GroupOn, EverSave, Living Social, BuyWithMe, Tippr and Now AOL, the 'Exclusive Deal' Market Is Getting Less Exclusive

By Published on .

Kevin Ryan
Kevin Ryan
Have your heard of the new bubble in the connected marketing world? Depending on who you ask, social buying is worth nothing, hundreds of millions or billions of dollars in annual sales. But what is social buying, exactly? Who's doing the buying and who's doing the selling?

The marketplace has gotten crowded fast. As of July, Experian says the top five are GroupOn, EverSave, Living Social, BuyWithMe and Tippr. There's a new one popping up every week. Literally. Last week, AOL jumped in with an announced plan to dust off the domain.

Two internet fascinations that have to yet to mature come together to form the basis of social buying; first, the burning desire for everyone to get the insider deal on everything and second, the idea of connecting to humans through devices, aka social community. Social buying starts to get complicated when you add targeting, the opportunity to show neighbors just how much they care about (insert charity here) or the ability to be geographically relevant. Social buying isn't about bargain shopping, it's about connected audience enabling, so what will it take to survive?

The original viral marketing
Social buying is far from new. Deals and discounts were the original viral marketing. The problem is there are far too many places to buy goods and services for mere mortals to organize them all.

Remember Cool Savings? It's still there. How about your favorite brand's sale emails? Already signed up for them! Of course, there are always the coupon aggregator sites. Post a discount on your site or send an email offering a discount and wait 2.3 seconds before it's blasted out all over the web. Some of these coupon sites are so good at Search Engine Optimization they rank higher than brands in search results. Now there's a fun conversation to have with clients.

There are plenty of ways for a brand to turn a sale into a trainwreck as well. Offer a huge markdown, sell out inventory, and promptly run out of goods long before interest dies down. Worse, how about the site that crashes due to demand while ads for the discount run everywhere. I've seen all of these things too many times to count.

The idea of getting an e-mail with a sale message in it is so 2009, today's bargain shopper is sophisticated (well, knows how to use Google) and determined to be the only person in town with access to the best and cheapest.

Too much of an OK thing
If the technology exists to get all your savings in one place, why not go for it? Privacy is a 20th-century memory and a new millennium political token, so why not surrender all your interests to anyone wanting to sell you anything from alcohol to zippers.

What I find particularly fascinating about the burgeoning social buying space is that people actually think they are getting a good deal—rather than unwanted inventory—or a simple margin thinning volume moving sale. But that's the magic of marketing, isn't it? Take the rubes for as much as you can, as often as you can.

Right around the time people began to discover the sheer volume of pornography online, people realized they could buy certain things cheaper online. Retailers would later discover the unending joy of being able to sell things cheaper online, largely as a result of not actually having to meet or speak to their customers.

The biggest challenge for "would be" social buying engagements is building audience. While Google is spending precious dollars and house inventory allocations to convince the world display is the next great thing, social sites are popping up everywhere.

Baffled local merchants
The arbitrage approach to audience acquisition is alive and well. Of course, we in the traditional advertising world look down upon those buying an eyeball for 25 cents and selling back the same eyeball to another advertiser for $2 but if you do it right, you are printing money. Directory sites and those who would engage local merchants do it all day long.

This brings us to the next challenge, engaging local merchants with an ad model online. To date, search ads have proven a bit too complex for your average local merchant. Third parties offering "local ads" online have yet to crack the code largely because it doesn't take even a half-witted business owner long to determine that a $3 click from a third party isn't the best deal when he can just buy it for 50 cents from Google.

The possibilities for connected buying are seemingly endless. It's good for national brands when they want to add a layer of publicity to sales or offload seasonal items. Travel brands almost always have distressed inventory and restaurants always want the tables filled.

How to make it work
Start with a clean design which I know is difficult, considering the cluttered nature of social deal. Geographic relevance is important, but only for goods and services consumed nearby. If a retailer is selling me a pair of jeans at a huge discount online, I'll buy them anywhere.

Using defined interests matched to deals that are in fact unique will be critical. Nothing lends itself to losing credibility than an exclusive offer that has little or no exclusivity. Brands should engage the daily deal with the specific intention of actually listening to their audience.

Some daily deals and social buying operators are offering a multi-layered experience for consumers. They have an easy to understand interface for merchants offer charitable deductions as part of purchasing experiences. When you add incentives for purchase, merchant engagement and the ability to take control of an experience, the cost of a consumer switching increases along with connective tissue.

The merchant, brand and deal site will all have to have their collective acts together to make the initiative work. Of course there will be the usual bottom feeders taking advantage of other's success and with so many players entering the daily deal space, it's challenging to determine which qualities will help the leaders pull forward but as history has taught us, buying an audience isn't enough.

Kevin M. Ryan is CEO of the strategic consulting and project management firm Motivity Marketing. He tweets at @KevinMRyan.
In this article:
Most Popular