News has been filtering through all week that Google is to acquire the online discounter, Groupon for $5.3bn. That’s BILLION!
This would make the dela the second biggest in corporate history. So the quote of Michael Gambon from the Layer Cake, “the art of good business is to be a good middle man”, may be born out in spectacular fashion.
Groupon’s model is based on offering discounts off a retailers products or service, typically over 50%, if enough people sign up for the offer, the discount is triggered and Groupon takes half of the value of the discount – in this example 25%.
What started as a way of independent retailers offering discounts to their local marketplace, took off in huge style earlier this year when Gap offered a 25% off discount through Groupon.
No doubt Google see the addition of Groupon to its armoury as a way to combat the development of Facebook Deals who are growing closer and closer to Microsoft and to position themselves on the front of the grid in the world of social commerce.
But is Groupon the right choice? What is Groupon? It’s not a technology company, it’s a discounter that uses email (and not selectively at that!) to promote its wares. As email comes under threat from tools such as Facebook messaging, is this the wisest path to follow?
This is fascinating and a wake up call to those who doubt the future of social commerce.
The following are excerpts from an article on Danny Sullivan’s Search Engine land blog…
Billboard magazine reports that The Beatles sold more than two million individual songs worldwide and in excess of 450,000 albums in its first week on Apple’s iTunes Music Store. (The Beatles’ catalog was added to iTunes on November 16th.)
According to Experian Hitwise, it was social media — not search — that drove a lot of the online interest and, more importantly, the online traffic surrounding The Beatles addition to iTunes. Consider this stat: On November 16, the first day Beatles songs were available on iTunes, 26% of UK traffic to Apple.com came from social media, about double the amount that came from search.
And Hitwise says Apple received a “huge spike” in UK traffic coming specifically from Facebook. The week prior to The Beatles launch on iTunes, Apple was the 86th most popular outbound destination from Facebook; after the launch, it jumped up to the 20th most popular. Hitwise says that one in every 200 web site visits that left Facebook went straight to Apple’s web site.
To an extent this demonstrates that you reep what you sew – sew what? (sorry). Certainly the blogosphere was buzzing with word that, according to Apple, “Tomorrow will be a day you’ll never forget” the day before the announcement that iTunes was to offer Beatles songs. But the fact that Apple chose to seed this information on social media so heavily shows just how important this movement is going to be in the future?
What is the long term future for search marketing given the consolidation of social and search functionality between Facebook and Microsoft in apparent alliance against Google?
As social commerce has grown over the last few months through sites like Groupon and location based apps like Four Square and Gowalla, Facebook today dropped their bomb in the middle of all of this.
Facebook Deals launched today in beta and is only available in the US to those businesses who have claimed their ‘places’.
‘Deals’ offers local businesses the chance to launch four types of deal – one off, group, loyalty and charity and the opportunities it affords local businesses are growing customer loyalty, growing through WOM (word of mouth) and recruiting new customers.
Let’s look at each.
Growing Loyalty – A local retailer can create a deal whereby a discount can be claimed if a customer checks in between 2 and 20 times.
Growing through WOM – If the average facebook user has 130 friends, the hope is that a deal will viral through you fans network very quickly.
Acquiring new customers – with 200 million people using Facebook through their mobile device, an opportunity now exists to attract nearby potential customers to your store.
This all sounds great and the sheer size of Facebook means the potential is staggering for local businesses.
But just a few months after Twitter dropped their offers function, I guess Facebook are treading lightly.
A gamechanger? What do you think?