Groupon & LivingSocial: Old School Concept, New Body Social Media Marketing | December 12, 2010 | By Aaron Schoenberger

Now that Social Media is the life of the party, everyone is flocking to social channels like white on rice. Friendships are born and maintained online, marketers are doing the digital dance, and retailers are dropping cheesy in-store displays and conventional marketing efforts in favor of brand-exposure-inducing group sales.

The concept of banning together as a group to achieve awesome pricing, however innovative it may seem, has actually been around the social world for many years.

Originally, Internet group deals were formed on message boards (forums) and sponsors/advertisers, or forum members, would create a “thread” mentioning a deal to be had. Vendors typically offer a set price for X amount of sales, and if a minimum is met, participating forum members benefit from the transaction.

When I was in the automotive industry we would sponsor a variety of forums to communicate with past, present and potential customers in a transparent, instantaneous manner. Every now and then we’d launch a “Group Buy” for a particular part, let’s say Mercedes E55 performance software, and would establish a purchase minimum. If 10 orders were locked in, the original price of $1,490 would be discounted (often to $1,190). Group purchases would typically run for 1-2 weeks with hopes of meeting the minimum number of orders to justify a discount.

The result? Customers want the discounted price, are aware a minimum must be met, and end up marketing the deal to friends/associates.

Now, with websites like Groupon and LivingSocial offering daily deals, customers are left with less time to make a decision — if they snooze they lose. This is excellent for retailers as it creates a need for customers to act immediately and, as we’ve all experienced at one point or another, somewhat irrationally. This sense of urgency generates sales today; not tomorrow, next week or next month.

All in all, I’m excited about the future of e-commerce and believe websites like Groupon and LivingSocial will continue to flourish.

Aaron Schoenberger
(310) 876-0874 x1
The Brainchild Group

Aaron Schoenberger is Founder of The Brainchild Group — a Search Engine Optimization (SEO) and Social Media Marketing company in Los Angeles, California. He’s known for his work with celebrity clients, top restaurants, automotive manufacturers, professional athletes and Fortune 500 companies.



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