Attention Media Companies: Aggregate Deals!

Despite some players leaving the market, almost every media company is still looking into leveraging the Daily Deals industry. They are trying to figure out how to drive revenue from the massive amounts of audience they already have.

 

 

Strategy number 1 is to launch their own deals service and supply the market with merchant offers. Essentially what Torstar has chosen to do with Wagjag and Jaunt.

Advantages:

  • Control the deals you want to offer the market
  • Profitable with the right mix of merchant margins, operational costs and low customer acquisition costs
  • Media companies already have large audience and therefore customer acquisitions costs should remain low. A significant advantage over other deal sites that have to invest in marketing to acquire an audience.

Disadvantages:

  • Deals inventory is now the main responsibility
  • This means they must source all deals, hire sales reps, manage the process, find merchants, manage payments, refunds, etc.
  • Mismanaged operational expenditures erode margins, especially for a media company not used to selling in this manner
  • The monthly sales machine can never take a break. Most media companies sell ad space and ad packages. Having sales teams sell promotional deal packages on commission is very different and can be burdensome

 

Strategy number 2 is to ignore the nonsense and utter pain of developing a deals business of their own and instead simply aggregate all deals on the market. Essentially what Microsoft Bing has done in their “shopping” tab with bing deals

Advantages:

  • No responsibility in acquiring deal inventory your self. Thus no sales reps
  • The media company already has very large audiences to market to. These audiences do not care where they get their deals from, as long as they get great offers. AS such, if audiences are already coming to the media company, then simply offering them another reason to come back or stick around makes business and advertising sense. Offering all deals in one place makes sense…
  • Also drive traffic to other media properties
  • Revenues are straightforward; the portal would earn affiliate commissions.

Disadvantages:

  • No control over the deals delivered
  • The media company earns less margin and revenues are truly dependent on how many people click through the aggregator portal.

So which strategy is best? Which would I recommend for media companies in Canada? My answer is a simple one: If your organization already has a sales team in place, is already selling to local merchants and already has the operational capacity and marketing know how to run a deals business, then go right ahead.

If, however, you do not have the operations already in place or a coordinated effort or the stomach or budget to source inventory from merchants, to manage sales reps, provide customer service, manage the technical aspect of deals, then it is highly recommended that you launch an aggregator service. In fact, we recommend  launching an aggregator service regardless. Some of these media companies have such huge audiences that providing deals content through aggregation will actually provide consumers with a better choice of deals. They are doing consumers a favour.

There are many large media companies in Canada that we recommend take a look at the Deal Aggregator model. It has worked for content sites like HuffingtonPost, Alltop and thousands of other content aggregtaor sites.

Examples:

rDeals from Rogers. They finally launched their deals service in the fall of 2011. Their audiences are massive and they should certainly be able to be a leader in the deals market in Canada…shouldn’t they? From what we have seen their deals have been slow in picking up steam. No doubt that over time, given their database, they should start to make an impact. However, it has taken Dealfind, Wagjag, Teambuy, Tuango and others over 18 months to train the market to seek them out, rdeals will have a tough time driving the kinds of revenues they would expect from their audience right away. This will take time. Especially because they are promoting a limited amount of deals to a limited part of their audience, some of which don’t even want the deals they are running. If, however, Rogers launched an aggregator service, they would be able to reach their entire audience much faster and start training their audience to come to THEM for deals day after day, week by week, month by month. Once their audience has formed the habit of seeking them out for deals (even if those deals are from other deal sites) Rogers can THEN decide to run some national deals of their own…..capturing a hell of a lot more of an audience as opposed to what they are accomplishing now. With all the online and magazine properties that Rogers has, providing a destination for these audiences to seek out ALL deals on the market in their respective niche will eventually bring more benefits to Rogers than to try and build a large deals service full of sales reps and operational “fat”.

Bell and Sympatico: They should launch an aggregator immediately.. especially in French where very few exist. NO MEDIA company has been able to capture the Quebec consumer as of yet in terms of the main place to locate deals. Bell or Sympatico are not built to run a deals site themselves. That is simply not their forte. However, driving audiences to the site to see all deals…well, that impacts page views, ad unites, affiliate commissions, etc, and it requires no sales reps. Why are they not doing this? I simply don’t think they know they could. Most are still feeling the Groupon and Daily Deal glow. Let me tell you that that glow has moved on. Running a large, successful and profitable deals site is F%*#(ing hard.

PostMedia: If there is one company that should launch an aggregator service immediately, it is Post Media. Sure, they own SwarmJam, but that deals site only does well in Vancouver. Their Toronto and Montreal efforts are not bearing very good fruit. Being the size that they are, adding ALL deals to their online portals would drive traffic for them, increase audience retention and probably make them more money than what they are making now on Swarmjam in cities like Montreal or Toronto.

Transcontinental Media: Although they own The Mega Price deals site, it is simply not growing as much as what a Transcontinental property should. Now, if they launched an aggregator service and embedded it and promoted it on all their online properties across the country, well, their return on investment in this deals space would significantly improve.

Glacier Media: They should close down their deals site Dealmate and open an aggregator. Period. Enough said.

Quebecor..They own Sun Media..which owns Stealthedeal. Whether that site is doing well or not, who knows. What I know is that they should launch an aggregator and keep their audience on their site.

 

Bottom line:

If you are a media company in Canada with large audiences or if you are a portal, be it a regional once or a specialized one such as spas or restaurants, then I highly recommend that you launch an aggregator service for the following reasons:

  1. Keep your audience from going elsewhere for deals….because right now they are.
  2. Train your audience on coming to you and staying with you so they can see all great deals in one place. You will capture more of an audience in a faster period of time this way than trying to sell them your own deals that most do not want,
  3. There are no sales team commitments and no deals inventory to worry about.
  4. Deals are like content. They bring in traffic, they keep traffic coming back and they will increase page views which will increase your ad revenue
  5. Some media companies will make more money on the 10-15% affiliate commissions they will make on the aggregator service than if they ran a deals site themselves.
  6. Operationally it is far easier to run an aggregator site. (especially when using whitelabel deal platforms like OneBigPlanet)

 

Microsoft finally got it right. They focused on delivering a deals experience to the audience. As such, bing’s shopping site has become a very popular deals aggregator service. They understand that audiences will go where the deals are….so they provided them with ALL deals from all sources. Consumers do not care where they get their deals from, as long as they can get them.

 

What are the options for launching an aggregator site:

  1. Build your own. Sure, but why bother managing the development and even worse the starting processes of setting up all those relationships with deal sites. Takes way too long and is expensive.
  2. By an existing one. A good option nowadays. There are a few on the market up for sale. However you must know what to look for. The code, admin panels, ease of adding sites and deals, affiliate program management ( a pain in the A%#), etc.  If you are an aggregator and have a decent platform and which to sell, contact us. There are always buyers.
  3. Use a whitelabel platform such as OneBigPlanet. We are big fans of whitelabel technology because this business, especially showing deals through aggregation, has nothing to do with technology and everything to do with marketing and distribution of deals. So if a platform can already manage all the deals, affiliate  relationships and product development, then that will allow you to focus on marketing your site and getting your audience to click through your site.

Building a large Deal site takes large investment. Sales teams need to be hired, marketing campaigns, customer acquisition, deal technology, product development, customer service, etc. This is a heavy burden for certain media companies to take on.

What happens when the economy shifts downwards again, or if Google decides to be cute and drop their merchant commissions in this industry to a very low amount (10-15%) ? Most Deal sites will then cease to being viable and that huge cost burden would need to be resolved. The last thing media companies need is that kind of cost structure (burden). A deals aggregator strategy enables them to play in the industry without the risks and gets them to focus on what they already do best, and that is reach a huge audience.

We fully expect the distribution of deals through aggregators to be a bigger component of this industry over the upcoming year.

Looking forward to your comments and please share this post with your own audience.