Wednesday, December 15, 2010

"It is not the parts that matter, it is their combination." Vladimir Nabokov

"There is a moment when every work in the process of being created benefits from the glamour attaching to uncompleted sketches. 'Don't touch it any more,' cries the amateur. It is then that the true artist takes his chance." Jean Cocteau

"The only real voyage of discovery, the only Fountain of Youth, consists not in seeking new landscapes but in having new eyes, in seeing the universe with the eyes of another, of a hundred others, in seeing the hundred universes that each of them sees. And this we can do with a Renoir or a Debussy; with such as they we fly indeed from star to star." Marcel Proust

Today's image: The Passage of Time by ToniVC. Beautiful, amazing shot. Thank you for sharing.

Nobody likes it but the audience

One of the biggest business success stories of 2010 is Groupon. Andrew Mason and his team have reinvented, actually reimagined, that old, well-worn shoe of retail pricing promotion - the coupon - and in the process they've "made the coupon cool." Andrew's stated goal is to "change the world...transform the way people buy from local businesses" and he's done just that in the world that is local advertising. In about two years Andrew and his team have emerged as a major player in the local advertising market (a $133 billion marketplace according to BIA/Kelsey) and are operating at a profit. They've also attracted the attention of unsolicited buyers including, so we are told, Google. While they continue to expand aggressively, adding new markets each week, the Groupon copycats are in hot pursuit with new imitators launching almost daily.

So how is it that the local advertising incumbents (e.g., newspapers, broadcasters, direct mailers) missed the incredible opportunity discovered by Groupon? Why have their coupon initiatives failed to achieve the success realized by Groupon? After all, the technology being used by Groupon is not at all proprietary. Using email to deliver coupons has been around for almost two decades. The simple facts would appear to be the incumbents failed to recognize coupons for what they could be, the suits saw them for what they were/are and ultimately no one liked the Groupon concept except the audience (and a significant majority of Groupon's client merchants). According to Andrew, the Chicago Groupon subscribers now number about one million (representing more than the combined circulation of the Chicago Tribune and Chicago Sun-Times).

Compare and contrast: What innovations have local incumbents launched during the past two years that can compare with Groupon's success? What enterprise launched by a newspaper, broadcaster or other ad-supported media firm in the past two years is now producing free cash and worth, at least, a one billion dollar evaluation?

How did this Groupon success suddenly happen?

My sense is Andrew and his team didn't know everything about the coupon business. Maybe they failed to understand or appreciate the accepted best practices and industry dogma. Perhaps they had no idea that single digit redemption rates were considered normal in the coupon and direct response trade. And because they were not coupon experts, they just didn't know what they didn't know. Because they didn't know or care about coupon conventional wisdom, they succeeded. Please permit me to guess again. They knew everything about the coupon business and having carefully studied it they boldly thought theirs was a different and better approach. No matter. Allow me to suggest that the single biggest difference between Groupon and their entrenched local competition is one of leadership. Team Groupon came to play.

Fresh. Creative. Fun.

Andrew and his team imagined the coupon as a way to offer people "cool things to do" and part of their mission was to "help people to rediscover their city." The Groupon team focuses on helping customers get great deals that can be shared and enjoyed with friends. The Groupon team also focuses on merchants helping them to better understand how to advertise in a way that produces results. The Groupon business model ensured Groupon made money on every single transaction. Most of all, the Groupon team is to be commended, no, make that celebrated, for bringing a fresh, creative attitude to what has been the tired game of coupon. Andrew Mason and his team have earned their successes and they've done it by having the courage to make their enterprise fun.

Bravos, team Groupon!

What innovations in advertising and marketing will 2011 bring? The best is yet to come. Andrew Mason is but one of the new entrepreneurs that will dramatically change the landscape of local media. Here's a safe bet. It will be courageous, creative leadership that will make the difference and win the day. Stay tuned.

Bonus: Groupon 2.0 By Frank Sennett via Time Out Chicago, here. Hat tip to Robert Feder.

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