August 15th, 2006

Google Local Coupons: A Limited Offer for Consumers

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Google is allowing local businesses to offer coupons through Google Maps for free (some details from Google here), which is pretty good from the perspective of Google’s hallowed “user experience,” but far from revolutionary. Local searchers on Google Maps will be able to see which local businesses featured in the search results are offering a coupon. They will also be able to see relevant AdWords ads on Google search results from local businesses that are offering coupons but which might not have a web presence.

That’s certainly progress. But here’s a consumer need that isn’t being fulfilled: Which local businesses that offer the products/services I need are offering the BEST coupon deals?

Here’s the real problem: When local businesses use AdWords to promote their Google-hosted coupons, they will be taking some of the money that could have gone to consumers and instead paying Google to promote the coupons. Businesses will have to weigh how much they want to give to consumers through the coupons against how much they need to bid on AdWords keywords to drive traffic to the coupons.

So consumers are getting deals — but not the best deals. And businesses are competing — but on keyword bids, not on giving consumers the best deals.

Lending Tree’s tagline is: When Banks Compete, You Win

The tagline for Google Coupons should be: When Local Businesses Compete, Google Wins

Comments (9 Responses so far)

  1. t analyze the data to make bid adjustments and optimize performance. Google Coupons – Complimentary Lunch, 30% off any item Print this page and bring it to: Great Jones Spa (212) 505-3185 29 Great Jones Street New York NY 10012 Publishing 2.0 » Google Local Coupons: A Limited Offer for Consumers But here’s a consumer need that isn’t being fulfilled: Which local businesses that offer the products/services I need are offering the BEST coupon deals? Bokardo » Apple Making Huge Social Software Push?

  2. t analyze the data to make bid adjustments and optimize performance. Google Coupons – Complimentary Lunch, 30% off any item Print this page and bring it to: Great Jones Spa (212) 505-3185 29 Great Jones Street New York NY 10012 Publishing 2.0 » Google Local Coupons: A Limited Offer for Consumers But here’s a consumer need that isn’t being fulfilled: Which local businesses that offer the products/services I need are offering the BEST coupon deals? Bokardo » Apple Making Huge Social Software Push?

  3. Sure, it’s not the most efficient system, but it’s got massive scale out-of-the-box because they are able to integrate an entire existing infrastructure of coupons. And it’s a marketing concept that every local business understands.

    It may not be brilliant from an economic or technological perspective, but it’s brilliant from a marketing perspective.. and it’ll make a lot of money for Google and help local business too.

  4. Jim, agreed, it is definitely progress, as I acknowledged. And it is certainly a great move by Google.

    it’ll make a lot of money for Google and help local business too.

    My point is — what about helping consumers? They always seem to be left out of the analysis.

    At some point that’s going to start to matter.

  5. Heh, excellent use of the two taglines to drive home your point.

    But just to play Devil’s Advocate here, Google remains a for profit concern, not a charity.

    And all advertising buys have the same net effect — the cost is passed on to the consumer.

    So…. how do we circumvent Google’s massive reach to get the word out in such a way that merchant’s can pass the word on to customer’s without paying?

    You can’t really, but you can pay the customer and a bunch of bloggers through a split-incentive affiliate program like Jellyfish. That saves the customer more than the Google route.

    The problem with that is a lack of the killer app — search. People search for this stuff, and most people tend to Google (trademark misuse, I know).

    Looks like Google wins for now.

  6. Google is looking to do to coupons what Craigslist has done to classifieds; namely leverage free Internet-based distribution to disrupt and cannibalize the market. Valpak has provided Google the critical mass they need to establish themselves as a destination site for coupons and to jump-start their simple self-service coupon offering.

    This move really validates the market for online local coupons pioneered by ZiXXo. At this point, I believe that the heads of AOL, MSN, Yahoo, IAC, News Corp. et al are asking what their coupon strategy should be. Google is looking to build a silo of coupons on their site. ZiXXo differs in that we offer a syndication network of online coupons. We are in talks with most of the big guys about leveraging our solution for self-service and syndication, and I expect that this will accelerate those talks, since they too want to be the destination site of choice for the burgeoning local business.

    The offline coupons folks, Valpak, MoneyMailer, ADVO, etc. all need to figure out how they will respond to Google. Again I believe that ZiXXo provides a mechanism to respond to them. We provide the self-service, the API for integration of coupons into content, tracking and reporting, coupon management (e.g. pausing coupons) and more. I believe that Google’s coupon solution will be a shot across the bow of these folks.

  7. Brian,

    As you point out regarding Jellyfish, it’s not a choice of keeping all the money at one extreme or giving it all to consumers like a charity at the other extreme. Google, like all the other players, needs to make money — my point is that they are leaving consumers out of the economic value equation.

    Shopping search (like all search) is still in its early stages — it will get better over time. As with local search, consumers will start to realize there are better search apps for shopping that create more value for them than Google’s general search app. There are also opportunity to create category-specific shopping apps that could create even more value for consumers.

  8. >>As with local search, consumers will start to realize there are better search apps for shopping that create more value for them than Google’s general search app.

    One would hope so. I’m increasingly seeing Google through a Microsoft lens though, which perhaps is clouding my view.

    Using the obvious OS analogy, sure — there are excellent alternatives to Windows. But so far, only certain types of people make the move.

    Of course, the switching costs related to bailing out on a search engine are nil compared to switching operating systems. I guess that’s why Google releases a new tool every other week to simulate some kind of customer lock in.

    Interesting space to watch. Maximizing cash now at least gives Google the opportunity to gobble up the upstart challengers before they get too big.

  9. That’s like saying “if companies run contests, consumers don’t get that amount as savings”

    The rebate or contest amount are meaningless compared to the marketing effort around the said rebate. Efficiently measuring profitability and efficiency of marketing initiatives is what what allows companies to reduce prices. Coupon rebate amounts are absolutely meaningless and you’re missing the point, once again.

  10. Vlad,

    First, thank you for helpfully putting this in the context of my “missing the point, once again.”

    The rebate or contest amount are meaningless compared to the marketing effort around the said rebate. Efficiently measuring profitability and efficiency of marketing initiatives is what what allows companies to reduce prices.

    With all due respect, I think you are missing the point. Coupon amounts are relatively “meaningless” only because the marketing effort necessary to promote them is so wildly inefficient, and thus disproportionately expensive. If marketing were more efficient, that cost savings could be passed on to consumers in the form of coupons or other price reductions. The whole point of coupons is to market, i.e. make consumers aware of the price reduction. If there were a more efficient way to make consumers aware of lower prices, the prices could be lowered even more, i.e. companies would have more money available to lower prices and still achieve target profitability.

    In other words, my point is entirely about efficiency and profitability.

  11. All of us who watch the local media space are abuzz and atwitter about Google coupons.

    I’ve blogged about this a few times — a little fact nobody seems to pay attention to … local small businesses do not use AdWords. Most AdWords advertisers (except in real estate) are aggregators and online-only plays, not your typical locally owned small business … the kind who traditionally buy space in coupon packs.

    Small business owners are busy people with a lot of things to worry about. Learning how to manage an AdWords account just isn’t high on their priority list.

    That’s not to say that eventually small business owners won’t take the plunge and figure it out, but many of them still struggle with understanding how to download their e-mail (I was just in a small business owner’s office yesterday where he was complaining about how he didn’t understand all this Internet stuff).

    Of course, my basis for saying all of this is purely anecdotal, based on years of dealing with small business owners in various contexts, including selling advertising and consulting on Web projects. My other basis for my suppositions is actually going through various searches trying to find small business advertisers using AdWords. I’m putting the two observations together to reach my conclusions.

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