Big brands test daily deals

01 November 2011

NEW YORK: Brand owners such as Microsoft, Whole Foods and American Apparel are experimenting with daily deals sites like LivingSocial and Groupon, seeking to drive sales and engagement.

Microsoft, the IT group, allied with Living Social to run a scheme aimed at affluent, educated female customers, giving them $5 in credits for the site in return for watching a video about Windows 7.

"We wanted to see how we could use Groupon and LivingSocial to extend our existing marketing efforts," Marty Collins, Microsoft's director of emerging media, told the Financial Times. "It was a very successful campaign for us, compared to other campaigns in more traditional channels."

Last month, Whole Foods, the natural and organic grocery chain, offered $20 worth of products for $10 via a tie-up with LivingSocial, a promotion capped at 1m vouchers overall.

At the start of 2011, LivingSocial also sold 1.3m gift cards for Amazon, the web retailer, promising $20 of goods for an expenditure of $10. "The secret about us is that we say 'no' more than we say 'yes,'" said Mitch Spolan, LivingSocial's head of national sales.

Unilever, the FMCG firm, has worked with Groupon and Incentive Targeting, the marketing services firm, providing a 40% discount when shoppers in Chicago bought $15 of selected ice cream brands at Jewel-Osco stores, part of Supervalu.

"We've evolved our conversation with national partners from education and awareness to really tactical execution to how we can best leverage this platform," said Lee Brown, head of national sales for Groupon, which now has 142m users.

In November 2010, American Apparel, the retailer, formed a tie-up with Groupon meaning US consumers purchasing a $25 voucher received another $25 to spend in its branches.

According to reports, some 133,000 coupons were sold, with participants actually splashing out $70 in stores, and 25% of people redeeming the offer signing up to its email list.

"We're very happy with the preliminary results from Groupon, which have not only shown larger than average orders ... but introduced us to verifiably new customers," Tom Casey, American Apparel's president, said at the time.

Elsewhere, Visa, the financial services company, has held "Deal Days" giving LivingSocial users paying with one of its cards a free voucher to pass on to a friend or family member.

BIA/Kelsey, the consultancy, believes US spending on daily deal sites will rise from $873m in 2010 to $4.2bn in 2015, although while marketers' interest may harden, the providers they use could change.

"Whether it's Groupon delivering that in five years or not, that's an aside to what group buying has done to move customers to the cash register," said Jed Williams, a BIA/Kelsey analyst. "Brands understand there's nothing faddish about that."

Data sourced from Financial Times, Mashable, Reuters San Francisco Chronicle; additional content by Warc staff