Wednesday, May 11, 2011

Mail: Filling the Gap in Web-based Local Advertising

Advertising Age has reported that Living Social and Groupon's expansion has focused on metropolitan areas.  Nielson Data indicates that users of Groupon and Living Social user, in fact, are at least 10% more likely to live in metropolitan areas greater than 400,000 people.

Areas such as Washington, D.C., Kansas and Illinois (home to Groupon's headquarters) top the state list of above-average Groupon users, while D.C. (home to Living Social headquarters), Nevada and Maryland rank highest in people more likely to use Living Social than the average online adult. West Virginia, Iowa and Kentucky index as the lowest users of Living Social, while West Virginia, Arkansas and Delaware skew less likely to use Groupon, according to the Nielsen data.

These sites favor urban areas because the economics of selling advertising profitably is better when there are many customers for a particular offer.  This is the same reason that Living Social has a great success with national advertisers.  Living Social's $20 Amazon card for $10 in January was a best-ever seller, with 1.4 million cards, or $14 million in sales, topping Groupon's estimated $11 million swift sale of $50 Gap cards sold for $25 last August. A recent Fandango deal of two movie tickets for $9 raked in $1 million in sales.

The business model of Groupon and Living Social provides lessons on the current limits of web-based advertising for local businesses.   The smaller the market, the more difficult it is to find sufficient local and national advertisers to make marketing the service profitable.  In addition in smaller markets selling enough ads to make the website attractive to potential customers on a daily basis is more difficult.  That is why they are just now experimenting in markets of 250,000 plus.

The challenge that Groupon and Living Social have in less-populated markets most likely exist on the fringes of metropolitan areas and in small geographic markets.  This is where mail comes in.   Mail can target both sparsely populated rural markets and micro-markets in urban, suburban, exurban, and rural areas. 

The use of mail has little to do with how the sale will be made as mail can just as easily encourage a phone, in-person., mobile or online sale. With the use of QR codes, mail can get a customer right to product information or checkout as fast if not faster than services like Groupon and Living Social. 

Mailers and the Postal Service have a real challenge complementing new web-based marketing options and ensuring that mail can compete effectively in micro-markets that demand high levels of service and reliability that Standard Mail's old name "Third Class Mail" never implied.  This is the reason why the Center for the Study of the Postal Market has joined with others to create Postal Vision 2020, a symposium on the future of the Postal Service in a digital and social media age. 

Postal Vision 2020 will bring those that are working to develop the future including Jeff Jarvis, author of What Would Google Do and Larry Webber, author of Everywhere: Comprehensive Digital Business Strategy for the Social Media Era are both bringing their expertise on the changing nature of communications to provide ideas for those in both the digital and print communications world about how the changing world of communications affects the options that the Postal Service has to ensure a self-sufficient future.

Postal Vision 2020 will be held June 15, 2011 and the Marriott Chrystal Gateway Hotel in Arlington, VA. To learn more click on Postal Vision 2020 logo.

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