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The Heart of Groupon’s Business Model

The heart of Groupon’s business model for their clients is not direct profitable commerce (it is only profitable upfront for Groupon). As many understand Groupon is not an ecommerce business. The business proposition that Groupon offers its clients is lead generation.

A very, very small percentage of Groupon clients make money when they generate all those sales. The business model here is aggressive acquisition through an engine that generates a huge amount of “hot” leads with credit cards ready. The challenge is to convert a workable percentage of those ‘loss leader” buyers into profitable customers and have a metric that covers the upfront investment.

There is a reason that the majority of their customers are small, local businesses. They do not have the upfront capital necessary to use more traditional acquisition models, and more importantly they are less sophisticated in the modeling abilities used to determine life-time value of a customer…. especially a customer acquired through aggressive discounting. So for now the growth is miraculous since so many are jumping on the bandwagon with Groupon recommended discounts that cannot possibly end up profitable for those making the offers.

If Groupon’s strategy is to grab the real estate now, and worry about how to evolve the model so that the businesses making the offers can truly benefit, then let’s wait and see how that is accomplished before final judgement is passed.

I am not saying that Groupon will not survive, and they certainly have a business model, although their sales for the year seem to be grossly overstated in many circles. I simply believe passing up what was offered by Google showed tremendous hubris and that I believe they will come to regret the decision… even if they never voice that regret or remain successful.

Ted Rubin

How to make your marketing alive in the moment

Marketers can learn much from storytellers. Over the past several of years, I’ve been studying storytelling and encouraging marketers to adopt the mindset of storytellers. One essential element of storytelling, though, seems to be uniquely in the domain of storytelling. It’s something Connie Regan-Blake calls “being present in the moment.”

Whenever I encourage companies to use video, blogs, and yes, even Twitter, for storytelling, my good friend, Sean Buvala, who IS @storyteller on Twitter, says, “Always remember, those are only shadows of an experience, not the experience itself.” Sean agrees with Connie: storytelling is a right-here-right-now-together experience.

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Rethinking Social Strategy

I really enjoyed this post by Brian Solis that articulates that social business and social strategy as we’ve been defining it are rooted in ideas that stretch beyond what we’re comfortable with today.

We’re eager for all-encompassing terms, and we have some in depth discussions about finding just the right monikers for the upheaval that we’re feeling and experiencing. By giving it a name, we can understand it better. Work through its characteristics and nature. Define it in a way that makes it clear for us.

But Brian’s post inspired me to comment on something that I’ve been chewing on for some time, especially as more and more information comes out about what, exactly, a “social strategist” does, or how we can articulate the nature of a truly social business.

Neither social strategy nor social business can be tucked into a singular definition or layer. They happen at every level of a business, and need to be considered in the appropriate context.

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Agencies Show Clients Too Many Social Media Choices

Recently I have had this conversation too many times with” social media” agencies looking for guidance in pitching a prospective client. They live by the old rules of offering a host of “great” ideas and suggest the client pick what they like. All this does is open the discussion to a myriad of “their” ideas as well as others offered up by the client and leads the client to believe that they do not have a firm grasp on what can work best… at least in their opinion.

They are afraid to stand by their convictions, take a stand, and truly lead a client in the what they believe to be the right direction. Hard to break old legacy thinking and start pitching “only” what you truly believe and not just what you think will get you the account and earn you fees. It is the effective solutions that will make you and your business shine for the long-run.

If you are going to specialize and call yourself a Social Media Agency… then be sure to bring your expertise to the table, tell it like it is, and only execute what you believe will work, is appropriate and will provides value.

Ted Rubin

Feeling Both Fear and Excitement about Facebook

On Thursday afternoon I was sitting in  Zoé’s Lounge waiting to meet another interesting tweep when all of a sudden Twitter began to erupt with tweets about Facebook being down. It was not dissimilar to the online reaction when a major natural disaster occurs, but of course this was only a virtual disaster. No doubt there was panic among those heavily invested and addicted to Facebook (see graphic below)  of which I am not one, but I thought this was a timely opportunity to share with you @JefftheSensei ‘s  post on his perceptions of Facebook which follows…

A rather smart chap I recently met by the name of Tommy ( @tommyismyname ) asked me for my opinion on a recent blog post of his regarding whether you love or hate facebook. This does require a name and email to download his FB report so be forewarned, but it is worth the read as Tommy is a very sharp knife in a drawer full of dull cutlery!

So do I hate or love Facebook? Neither answer works for me really. For what originally started out as a way to meet chicks for a couple horny college kids, its a smashing success. Whatever you believe, you absolutely have to respect what Facebook is – A Social Media Leviathan.

Personally I don’t use it, but I’m fascinated by its current power and future potential.

Why? Well, contrary to many other social platforms, Facebook has found one of the keys to success in B2C relationships – create an addictive positive experience. The constant flow of human drama from friends and friends of friends is reality TV served up in ADD fashion about your favorite people, your friends. It has taken gossip to a whole new level.  Add to this social games like Farmville and its ilk with the ability to compete and work with your friends delivers you addictive content of the highest order.

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Three Views On The Future Of The CMO

The world of marketing is undergoing a massive evolution, consider these three ideas shaping the future of the CMO.

1. Technology Transcendence

For kids today, technology is omnipresent. It’s just there, in everything they do. They are born digital natives. Technology is just a part of life (kinda like sliced bread is for us).

If you hold the highest marketing position in your company, it’s time you become a digital native too. Replace any fear of technology with the acceptance of it. It is no longer a separate “thing” to think about. It must be a part of your subconscious. You need to look through the technology lens and find all the ways it can help you.

2. The Collaborative Strategist

Did we really need the marketing automation software industry to be born to realize how important it is for marketing to be in lock step alignment with sales? One wouldn’t think so, yet it seems that it is the catalyst sparking more and more alignment conversations.

The CMO’s role is to open the door to collaboration and work together with your sales counterpart to determine the next best moves to optimize revenue growth.

3. An Open Point Of View

Working to control your marketing messages today is futile. It is no longer a battle that can be won. It’s time for the brand police to retire.

Changes to the way marketing messages are perceived and consumed have forced the need for a deeper understanding of consumption habits and an open approach to interacting and communicating with your customers. Consider the ease at which your message can be hijacked by consumers (think: BP Oilspill or Nestle), and you quickly realize why CMOs must relinquish control and be open.

How are you changing your view?

Jeremy Victor

“Google’s Groupon Bid Rejected” BIG mistake?

Groupon is getting way ahead of themselves and I think their rejection of Google’s bid is a Big mistake. My 2011 prediction… Google buys Twitter!

Richard Bashara says: Ted I’m going to agree with a “but,” look at Facebook. Zuck’s had how many chances to sell FB? You can’t deny that Groupon has set a trend. Perhaps trying to stay on top of the wave could pay off.

And if Google doesn’t buy Twitter, I’d be quite surprised. Who knows, maybe Twitter will try to stay independent though. As a publishing tool, it’s clearly becoming more active than Digg or Reddit.

Ted Rubin replies: Twitter is incredibly concerned, as they should be, about how to sustain and monetize what they have. Google is incredibly worried about Facebook and how to penetrate and participate in Social Media/Marketing. Solves a critical problem for both.

As far as comparing Groupon to Facebook, I think the projectory of their growth is where it ends. Facebook competitors have many more barriers to entry than competitors to Groupon, and they control the hearts and minds of their members. Groupon exists only as long as they can provide such unsustainable discounts. With Google… the value of their local search and local relationships/workforce came in to play and made them much more valuable than as a stand-alone. IMHO

Ted Rubin

Thinking Consumerism has Been Keeping Me Up

Recently, the topic of consumerism has been keeping me up…  When we think about consumerism, we think of all the bad connotations. We think about the over-indulgences which led to the recent economic crises; and some of us may even think about how those driven by greed convert their indulgences into situations like the BP oil spill. 

Last month I attended Rogers TabLife TO – a conference focused on the advent of tablets (iPad, Samsung Galaxy, Dell Streak, PlayBook). What struck me wasn’t the technology – in fact, it’s expected that the technology should overshadow anything we are currently used to – i.e. the laptop. No, what struck me was WHY these devices are gaining in popularity.

 The speaker line up was brilliant, and the majority spoke about how tablets were changing: media, newspapers, philanthropy and retail (among other things). In the end, what stuck with me was the notion that these devices are tools for a new kind of consumerism.

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What is Experiential Marketing and is it Social?

What does experiential marketing entail? It entails allowing a customer/prospect to engage & interact with a brand, product, and service in sensory ways that provides an additional intimate level of experience and information.

Personal experiences help people connect to a brand & make intelligent & informed purchasing decisions. “Experiential Marketing” refers to actual customer experiences with the brand/product/service that drive sales and increase brand image and awareness.It is the difference between telling people about features of a product or service and letting them experience the benefits for themselves.

Many think of this as a totally separate form of marketing from social, but to me it is the ultimate in social marketing. It is all about experiencing a product or brand… and what could be more social. In addition the power of social is not the initial reach, but the engagement and more importantly the sharing that follows and enables a brand to reach into each individual’s social graph. How better to do that than to give a consumer an “experiential” experience to share.

Ted Rubin

You Can’t Put a Price on Shared Passion

A colleague recently shared this Simon Sinek video, How Great Leaders Inspire Action, with me and it’s worth sharing with you. It’s not new, but is a thought provoking piece about how truly inspired, innovative companies like Apple are driven not by what they do, or even how they do it, but by their vision of WHY they do it. (It’s long, but you can watch about the first 3-4 minutes and get the gist.)

This, I suspect, is one reason why an increasing number of folks are starting their own thing. Because not just outstanding companies but also outstanding individuals are driven by “Why”.

I highly recommend that any leader that manages people also read this recent article by Gini Dietrich, Money is Not a Motivator. The money quote (pun intended): “We want to see our work rewarded in ways more than just pay…what keeps us motivated, day after day to get up and go to work, is the feeling that we’re part of something.” A-men. I’ve talked to people who have trouble understanding this, but I believe for many of the best and brightest it is truly NOT about the money. Money is great, but not what drives us.

If you’re feeling discontented with your job, it may be because your “Why” is not the same as that of your organization or the people with whom you work. Meaning, you’re just not in it for the same reasons. Their passion, perhaps, doesn’t match yours, in direction, magnitude, or both.

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