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What carriers can learn from Groupon and LivingSocial

By Lara Albert

It is only March and there have already been a number of announcements this month about big players getting in on the deal-of-the-day phenomenon.

Facebook announced it will test a new service for its advertisers to reach its 550 million users.
Bing said it is getting into the aggregation of daily deals with a service called Live Deals.

Google Offers is coming soon, and now AT&T will be getting into the game on two fronts: ShopAlerts, an opt-in service sending SMS discounts from a set of paying retailers in a given geo-location, and AT&T Interactive will roll out a service this spring that takes advantage of the – formerly known as Yellow Pages – workforce to set up deals.

Jump on
With online services such as Groupon and LivingSocial, merchants – mostly small and medium local businesses – contract to offer time-sensitive, deep discounts to a specified number of people on a given day.

The audience is local and has opted in by signing up to subscribe for deal-of-the-day emails.

The scenario is simple: targeting is based on subscription and location, and the small business benefits include raising awareness, generating upfront revenue and, hopefully, gaining new, repeat customers.

It seems that wireless carriers are missing a big opportunity here. They already have existing relationships with the two key parties: businesses looking to promote offers to acquire new customers, and consumers looking for great deals.

Acting as a filter for the best deals, the carrier can rapidly establish a viable market that connects consumers and merchants in relevant ways.

Groupon boasts more than 50 million subscribers and LivingSocial claims 24 million, while established top-tier operators such as Verizon Wireless and AT&T each have upwards of 75 million subscribers – a readily available potential market for SMBs looking to gain an entree into mobile marketing.

The deal-of-the-day model is an opportunity for carriers to drive new revenues at a time when a major focus has turned to monetizing the customer base and increasing revenues.

What is unique for carriers about the deal-of-the-day model is that customers buy the offers directly from them.

Charges automatically appear on the customer’s bill or they are debited from their prepaid account, with merchants then realizing a revenue share for each purchase.

Also motivating is the fact that only one time-sensitive offer is presented to each customer per day, so customers are not only more engaged but also more likely to transact.

The result can mean higher purchase rates, which brings a benefit to the consumer and the merchant, while carriers realize real revenues from third-party mobile commerce.

Another key advantage for SMBs placing daily deals with carriers is that they can leverage contextual marketing capabilities to ensure more precise, personalized targeting of their offers.

By applying machine learning, carriers can automatically determine which offers have the highest likelihood of success for each customer.

Filter kilter
The reason I refer to carriers as the filter is that they ensure over time that more compelling offers are presented more frequently, while less compelling offers are filtered out.

SMBs that do not see their offers being presented would naturally be encouraged to sweeten their deal to make it more attractive.

Sometimes scale does matter, especially when the benefits can be rapidly realized.

Daily deals advance the opportunity for mobile marketers to deliver truly compelling offers to consumers while providing carriers with the ability to derive real revenues from mobile commerce.

And with their established relationships with SMBs and consumers, carriers are ideally positioned to hit the road running.

The boat is still in port for carriers on the daily deal model.

If money could be made on the first day it launches, is it not time for the carriers to get on board and offer this compelling value-add to their customers – both consumer and business?

Lara Albert is senior director of global marketing at Globys, a Seattle-based provider of contextual marketing services for telecommunications. Reach her at [email protected].