The Groupon Model VS Radio

Everyone in radio likes to rip apart Groupon. It’s kind of funny. The only reason they get so upset is because it’s eating into our client bases. I’m not saying it’s a perfect model, but it does have its place. It definitely brings in new local customers to businesses that are thirsty for new impressionable people. There are a few very important things to remember though.

  • You may be attracting the wrong crowd. By offering your services at a deeply discounted rate, you’re really only bringing in “price vultures.” These are the people that only buy things that are on sale. They probably are never going to become your core audience. They’re usually just visiting you because you’re half price. Rarely will they return to shop again. But, that isn’t always the case, and that’s why...
  • You gotta be good! It’s the same with any advertising. Whether you use radio, Groupon, print, or outdoor, if you aren’t great when the client walks through your doors your advertising will be useless. Notice I didn’t say your advertising won’t work. That’s because it has. Advertising is successful once the client walks through your doors or clicks on your website. The rest is up to you. Don’t drop the ball!
  • Accounting must be good. I hear this one a lot, but it’s put in a different way. When someone signs up with Groupon they sell “X” amount of discount packages throughout the day. Those packages have no expiration. So, they’re out there ready to be cashed in. Most people won’t show up right away. That’s where business owners with poor asset management skills get into trouble. They lose track of the free merchandise they have outstanding. If you run a Groupon campaign, make sure you know how much you have pending. Don’t lose track. Manage your funds to expect it. Chances are, not everyone will come in. But, it’s best to stay ahead of the curve.
  • No control – This is a tough one. You don’t know how many packages will be purchased. But, that’s something you need to expect heading in. I would advise you to base your numbers 15% higher than your wildest expectations. It’s better to aim high and be prepared.

By this point It must seem like I’m just another “Groupon Detractor.” Not true. I don’t really think it’s the best use of your advertising dollar, but I understand that it does hold some merit. Not every small business can afford a big advertising campaign on radio. Radio stations will tell you that you can, but it’s not always true. That’s what makes the Groupon model so interesting. Ok, it’s time for my twist.

I was arguing about this with a friend of mine. He hates Groupon. But, he had a fantastic point. Why do radio sales people spend so much time trying to slam Groupon when radio can follow the exact some formula? You don’t need to stray from radio to achieve the same results. How’s that you say? Well, here’s the deal.

The Groupon model is essentially a sale. It offers you half off a product so you’ll try it. So, what makes that exclusive to Groupon? Nothing really. You can do that in any medium. In radio, it’s as simple as making a piece of creative that offers your services at 50% off if you mention that you heard the ad. That achieves the exact same thing. Plus, you can choose how much you’d like to run it.

One of the scariest things for a business using Groupon is the lack of control. Your offer is available for 24 hours. If 10000 packages are sold, you’re responsible to accommodate them. Using the same model in radio, you can dip your toe in to test the waters. Try running your spot for a week on minimal rotation. If your offer is good, you won’t need to play it a lot. When you’re satisfied, end your radio buy. Essentially, you’ll just turn the faucet off. Also, if you like you can add an end date to the offer so you won’t have to worry about your future books.

Hell, even companies following the Groupon model are starting to realize the value of radio. There’s no reason the two concepts can’t work together. Here’s two articles featuring recent deals between radio giants and Groupon clones.

Clearchannel & Sweetjack

Clearchannel & Living Social

We’re already in bed together. Let’s stop fighting each other and realize that both are valid businesses. Also, the two concepts can be used together.

My point is, if you’re interested in Groupon, make sure you understand the pitfalls. There are benefits. But, those benefits can be duplicated elsewhere as well. Decide which medium works for you! Also remember, when you need help strategizing your next campaign, drop me a line!