Deal of the Day

Newspapers and city magazines ought to be kicking themselves (yet again). Several start-ups have emerged in the last 12 months rolling out dazzling deals of the day for savvy bargainistas. GroupOn and LivingSocial have been the front runners, with TownHog nipping at their heals. All three are out canvassing merchants around various cities for compelling wares and services to dangle before audiences looking for "such a deal!"

I first bumped into GroupOn several months ago when searching for play tickets in Toronto. LivingSocial I read via HuffingtonPost -- and while researching this article I tripped over TownHog. All three have a similar model that advertisers love: pay nothing upfront to have someone else market your product. There is only a charge to the advertiser if the product sells. And what could be a better deal for retailers trying to drum up business than a risk-free promotion! Further, for a deal to go through, a certain threshold of takers needs to be met, if not, there is no deal. This incents consumers to virally promote the deal among their network.

Of course there are drawbacks: Retailers need to know that they can handle the demand if the deal is truly a great one. (I had a meeting with one national brand -- whose IT department found out that the company would be offering 50% off from Web site sales -- just 7 days before the offer went live. They were terrified that the servers would crash. They didn't.)

And, I have heard rumblings that some of the deal-meisters pay retailers at a slightly slower rate than others (can't confirm that). My brother-in-law has been trying to get a GroupOn rep to call him for a few months -- so perhaps there are some growing pains.

There are some newspapers like Media General & McClatchey that are catching the tiger by the tail and partnering and sharing revenue with these daily dealers. In Media General's case, Groupon is selling and developing the clever creative for offers -- while Media General markets the offering. (In some cases this creative is the ONLY web presence the retailer may have.) No word on the revenue split.

Here's the deal though: Media General like all newspapers OWNED the local market when it came to sales and fulfilling creative in print. How in the world could they let some outside organization get close to their customers -- and offer the marketing platform?? At least be the sales arm for the venture! It certainly seems that this is short-sighted at best -- and yet another lost opportunity for local news organizations to find a model that makes them relevant and solidify their reason for being.