Forget Cudo or Spreets – we’re number one for social
In this guest posting from Jump On It and Living Social Australia CEO Colin Fabig, he responds to claims by rivals Cudo and Spreets over who is the number one group buying site
With all the attention given to the Yahoo!7/Spreets deal, followed by more buzz around Cudo’s claim to have the largest audience share, it’s easy to forget about the “social” part of social commerce sites.
Cudo has conveniently put out a press release that suits them and doesn’t look at the full picture of how the industry operates. This business is a social media and email driven model but the Nielsen NetView analysis did not investigate these avenues.
To not include Facebook fans and email subscribers in the evaluation of an industry that’s based on daily email alerts and sharing deals with friends via social networking shows a lack of understanding of the business.
this is like watching a pride of lions (only they aren’t lions, more like donkeys) establish the alpha of the pack
whose next?
Whilst I agree with the central premise of this piece, the chest beating in this space is becoming awfully tiresome.
No… I’m number 1.
No it’s me.
No wait it’s me.
Guys come on, it’s obviously me.
………..ME! ME! ME! ME! ME! ME! ME!
Yeah but these guys have a graph – so they must be the biggest. Graphs never lie.
ATTENTION GROUP-BUYING SITE OPERATORS:
Nobody cares
I look forward to 12 months from now when we’re all laughing our asses off at how we all thought frickin coupon websites were worth billions of dollars
C’mon…let’s give credit where credit is due….$0 to $40m in 10 months…well done Spreets (and the Pollenizer team!)
I think Colin and Dean should have a fight to the death with both of their dominant hands tied behind their respective backs. Then we decide who is the best company by default. Or they could have a head to head V8 super car race, winner takes the bragging rights…. I smell a promotional opportunity 🙂
@ Bob Loblaw – Why would coupon websites not be worth billions when they actually have the revenue and bottom line profit to prove up those valuations?
This is a very different scenario than the tech bubble when the valuations were based on ‘potential’ future revenues through advertising and traffic etc..
I’m looking forward to see what the remaining deal a day sites sell for when they can actually realize their true valuations (Scoopon still privately owned, Jump On It only sold a minority stake), we could see $100m+ sales
less chest beating, more cheap waxing offers please guys. focus on the big things.
Please, please, tell me this is paid for content. And no Colin, facebook fans do not count as real users.
@Jason
The valuations are absolutely based on “potential future revenues through advertising and traffic etc” because that is the service group-buying sites sell – advertising and traffic (footfall) for local businesses.
I’m deeply sceptical that many of these businesses will survive as I can’t see how they can maintain quality of offer to consumers and service to their business customers. At the end of the day group-buying is not magical – basically they aggregate loss-lead offers from local businesses.
The main concern is the satisfaction and level of repeat business from customers – there’s plenty of reports that suggest group-buying sites aren’t delivering much in the way of value. Loss leaders, by their nature, either make a loss or deliver a very thin margin and the friction costs for small businesses in a loss-leader campaign are such that I can see great swathes of businesses giving it a go once and never doing it again. And that’s when the sites die – when the range and variety and quality of deals heads south
Considering the number of Facebook fans without considering the quality per fan would in itself be a lack of understanding of the business.
I could build an internet business tomorrow and buy 1 million generic Facebook fans – this doesn’t mean anything.
Cudo’s 21,000 fans MAY still be more VALUABLE than JumpOnIt’s 500,000. They may not, but not looking into how the fans were acquired is foolish.
has this industry really got longevity. voucher holders get treated by venues as second class citizens and surely that will get tiresome eventually. if merchants dont get full paying repeat business they will get fed up and customers wont return to pay full price on principle, unless product or service was phenomenal.
or perhaps we’ll being by vouchers for everything in the future! lets get Coles and Woolies on board.
As long as i can get a facial for $32 which would normally cost $3,567 I’m saving thousands and don’t care.
LOL @Peter
Hilarious!
Next up is surely Catch of the Day & Scoopon’s combined leadership position in the daily deal space
No, I’m Spartacus…
Seriously Tim, there has to be more interesting news than this to report on…..it’s like a group of guys with their c**ks out seeing who has the biggest.
{YAWN}.
It’s always great to see companies try and outdo each other to show who is number one.
It’s definately proving that whoever survives would be the peoples choice of what is clear simple and effective, especially with publicity and strategy.
*YAWN*”
hmm… you sound like if you have an interesting bunch of friends? 😛
I’m pleased to see tall poppy is alive and well! FYI – our FBook fans have delivered over $2m revenue- i wonder if they are working? And I wouldn’t be so quick to predict any of our demises. I heard the same during the dotcom bust about online advertising – that it was dead. Yeah right. Our market should triple in the next two years as we take money away from local radio, print, yellow pages and local newspapers. No service based SME in their right mind will continue spending all that money ( in the billions they do right now ) on non-performing – unmeasurable media, when our industry now deliver thousands of guarranteed new customers annually at no risk or cash outlay to them. The world has changed again – get used to it.
Colin – no offense but you’re coming across as horribly arrogant. Leave the sales pitch to the field sales guys.
Colin’s arguement about validility of a facebook fan is right, there is some value there. Although whether it is the same as a perceived above the line media number is subjective. Also, what value are we putting on theses numbers? Are you selling brand awareness with the offer?
For example, I know as a Jump on it subscriber, that if the offer isnt relevant for me in the email title, i dont even open it. Therefore I recieve no awareness of the brand.
The practical problem with that is, even if I dont want the product, then the brand is not receiving my attention, which when I might need their services/product, ill be unaware of their business.
Which really changes the retail (driving sales) advertising method.
So yes you can claim value in subscribers, but is it the same quality to which your number representation means in above the line media?
Who are they trying to convince here – media buyers? You need to put your money where your mouth is, all of you, and go above the line because right now it’s a dick measurement contest and has no real value.
Colin, and anyone else from Living Social,
I recently purchased your $50 Elle MacPherson lingerie voucher to use online at CanCan Lingerie, and my order NEVER CAME. It has been 16 days, and no delivery. What’s more is, no one seems to be answering the phone at CanCan Lingerie…
Angry.
WTF – invest some of your future earnings in PR as you are all coming across as embarrassing five year olds
hi Fuming,
Sorry to hear that, we’ll contact them on your behalf and sort it out. Please speak to our Live chat service on our website or call 1800 JUMPON or send me an email at support@jumponit.com and we will help you.
Cheers
Colin
I’m getting confused here with the different buying services; Spreets, Cudo, JumpOnIt, Scoupon, the People’s Liberation Front of Judea, the Popular Liberation Front of Judea? Who’s on first?
I’d hate to be a hairdresser, restaurateur or personal trainer having to deal with all of the calls from the various groups’ sales teams.
As far as I can tell Spreets did a deal with Yahoo for around $40mii. As far as I can tell Jumponit did not. Looks like sour grapes to me.
But Jump on It are affiliated with the very successful LivingSocial – that ain’t nothing.
But it is pretty funny reading all these articles 🙂
Late to the party, but I’d still like to point out that size of potential audience doesn’t matter here, all that matters is how many consumers *purchase*.
Total audience size is a metric that only really matters to traditional media publishers who aren’t able to accurately track engagement and purchase driven by their media. TV networks, newspapers and magazines will all try to lure a bigger share of the advertiser dollar by claiming they have the bigger audience.
Online it really doesn’t matter unless you’re dumb enough to pay CPM. If you’re paying for performance, and you need 10,000 clicks, find out how much it’ll cost to deliver those clicks and choose the provider with the lowest cost.
Same with group-buying sites. Cudo’s huge Hotmail distribution almost certainly delivers extremely low CPC. JumpOnIt’s got more Facebook fans? Means nothing unless those people happen to see and act on the offer in their newsfeed.
Most important of all is churn — how often does the average consumer buy from each of these group buying sites? How long do they remain with a service before they unsubscribe or flag offers as spam? Because the pool of urban middle class AU internet users is far from infinite; this isn’t the US, hell, it’s not even Orange County.
It doesn’t matter who was first, who is ‘biggest’ and who got acquired for how much. The future belongs to whoever can set the lowest cost of acquiring new users, the highest offer response rate, and the lowest churn. At this stage in a brand new market all those metrics will be changing every month for each competitor. Come back in 18mths and you’ll know who’s number one and number two. The rest will be struggling or already gone.
Alan’s point is spot on.
That’s why we set up Dealsguide. As an aggregator the number of click throughs we provide are infinitely better than the impressions or even clicks these sites are getting through regular advertising, such as adwords. I’m sure you’ve seen the Cudo adverts everywhere, which must be costing a packet. But you see that advert and it doesn’t tell you anything. You might click on it out of curiosity but that will only lead to a sale a fraction of the time.
If people come to Dealsguide specifically to view deals and then see a deal that interests them, the likelihood that their click through will lead to a sale is comparitively high.
Once aggregators become the norm, the number of facebook friends that JumpOnIt has, or the advertising budget that Cudo has won’t be the deciding factor. It will simply come down who offers the best deals and the best customer experience…as it should, in my opinion.
Seems to me many of you are unfamiliar with how the process works and dont fully comprehend the benefits to a business.
1. The deals are not ‘loss leader’ items. It is not in the business best interest to do that. Sometimes they do (well known brands), but the majority of the time a business has to put their best foot forward with a special or it wont create interest (and hence sales, customers).
2. Revenue for the business is NOT the main goal here. Its foot traffic. If you look at who advertisers they are usually small service/product locations that dont have big advertising/marketing budgets. To drive 50 new, spending clients into their business is priceless. The fact that they make a little revenue on the side is just a bonus. Its not hard to work out with a business the ‘cost to acquire a new customer’. Once they do that the group buying option is a no brainer.
3. Group buying has no pre/post costs to any business other than the discount they offer. The revenue made is split between the GB and the business, but they now have ‘x’ amount of clients to woo and potentially convert for life (or even just one more time is enough!).
At the end of the day there are always going to be businesses who fit this model and those who are yet to be convinced. 500,000, 33,000, 5,000 it really doesnt matter to the business. All he wants is that 50 to walk in that door for him to convert for life.
@ Matt
1. A loss leader is a price-led marketing strategy where a product is offered at a low price (at or below cost) in order to stimulate more profitable sales and/or custom. I can’t see how group-buying does not fit this model
2. For the small business, the ‘goal’ is long-term profit. Not revenue, certainly not foot traffic. They want to know that the cost they incurred with their group-buying loss was recouped and more through increased sales and future custom.
“Its not hard to work out with a business the cost to acquire a new customer”
Yes it is. It’s incredibly complex. One customer driven to a store via sincere recommendation from a friend does not equal one customer driven via massive discount on group-buying site. Since group-buying is a new phenom we don’t yet know the true value of these customers, but I’m betting it’s a *hell* of a lot less than some people, including yourself, think it is
I see new group buying websites popping up all the time in the Aussie market.
There must be at least 15 (including aggregators). Someone has to lose here. A group buying business must constantly look for new deals either from new customers or go back to existing businesses.
The goal for the particpating business (supply side) is to generate repeat business at full price, to cross sell, and upsell products and services.
There will be losers amongst the group buying business and consolidation has to happen. Its probably not clear yet who is #1 or #2. Others will fold, be bought or focus on niches.
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