Contact Us

Looking to start a beautiful new agency relationship?

If you would like to speak to us directly please call: 0161 786 8040, alternatively fill in the contact form and we will get back to you.

Where we are

  • 13-14 The Schoolhouse
  • Second Avenue, The Village
  • Manchester, M171DZ

Being local goes global

March 18th 2011

Jasper Ditton

Head of Digital at Marketecture, helping clients to achieve their business and marketing objectives using digital marketing channels. Starting as a developer, Jasper moved to strategic and operational client services roles 5 years ago and has worked with some of the UK's largest brands and a huge variety of public sector, B2B and B2C clients.

This week I secured my first Groupon voucher – a £45 go-karting voucher for the price of £15. I’ve been to the go-karting track in question before and it’s a relatively small but well-run business in Gorton, Greater Manchester, so it seemed like a good “deal”.

Looking at the completed page, 5019 vouchers were bought which translates into revenue of £75,285. Given Groupon takes between 30 and 50% commission, this translates into one day income of between £38,000 and £53,000 for the track – not bad for an advertising campaign with £0 outlay!

Given the voucher is time limited and that, I would imagine, not everyone will claim their voucher, the return on investment for what is essentially a one day Greater Manchester advertising campaign is far higher than you could expect from a similar one day campaign using billboards and newspaper advertising.

In many ways the advertising model behind Groupon is similar to Adwords, the price-per-click platform of Google:

  • Both Groupon and Google own the platform but don’t deliver the advertised products/services
  • Both allow the customer to manage risk:
    • Google allows the advertiser to set maximum daily cost and their maximum bid
    • Groupon allows the advertiser to set a minimum number before the “deal” is valid allowing them to precisely calculate the cost/volume model

However, the now 8 year old Adwords advertising platform misses a trick compared to the 2 year old new entry as Groupon has an in-built viral element:

  • You can recommend your deal via Facebook, Twitter or email and if the recipient also pays for the deal, you are credited with £6

Whilst Google routinely offers a free credit for new advertisers, there is no such incentive based around the Adwords advert itself that improves traffic to the advert and thus income for the platform.

With Google’s 2010 revenue for Adwords at $28 Billion, Groupon is not of the same scale yet and in addition, the onus is on Groupon to approve the one day deal it offers compared to Adwords’ more open model.

However, with Groupon turning down a $5.3 Billion offer from Google, and Google’s refinement of its local search offering (Places), I think the battle of the two “G”’s over the local advertising market has only just begun….