Last Wednesday a few of Utah’s advertising luminaries participated in a panel discussion at an AAF event. I quite enjoyed hearing their views of where this market, and advertising in general, is headed. That’s not to say I agreed with everything being said but it was one of AAF’s more interesting events.
At the end there was an audience Q&A which was going along all hunky-dory until someone asked the following (paraphrased):
“There are rumors Google is going to buy Groupon for $5 billion. That’s more than they paid for YouTube (a creative medium) and Doubleclick (online display ads – creative) combined. Groupon is a service that’s sole purpose is to get a deal – there is zero creativity involved. Why is Google willing to pay so much for that? And are you concerned about the lack of value they’re putting on creative advertising?”
The question was met with stunned silence.
Really. You could hear crickets.
Eventually there were a few answers given (our own CEO Dave Thomas jumped in) but in the end, the question seemed to linger. I’m going to take a stab at addressing the question here behind the safety of my computer and out of the literal spotlight.
Groupon 101
Groupon is the latest and greatest in local advertising, something highly sought-after by Google and others. You sign up for a deal-a-day in your city, emailed to you every morning. The coupon is usually good for about half off a regularly priced product or service – if and only if enough people agree to buy it at that price (a great social aspect). As was covered in the latest issue of Wired, it turns the tables and gives collective buying power to the consumer. It’s insanely popular.
Groupon makes its money, and it’s a lot of money – estimated $50 million in revenue each month, based on performance: Groupon gets half of what you make through their service. A steep percentage? Sure. But it requires very little effort and costs you nothing out of pocket.
A Creative Void
While it’s true that there is zero creative license/branding a business can do with a Groupon promotion (although they are usually very well written), that’s not the point. Groupon in and of itself isn’t a brand building tool, it’s a brand awareness tool. It gets results – people to your store or site – guaranteed.
But there’s another step to the process. One with enormous creative value and branding potential.
I’m here. Now what?
Groupon, the non-creative, no branding advertising channel just got 1,000 people to come to their location. Awesome for business. Bad for their ad agency. Right?
Wrong.
This is a golden creative opportunity for both the business and their agency. The platform for this creative opportunity is found in the two questions “What are they going to experience while they’re here?” and “What can we do to make that experience so stellar they want to come back?”
That is the power of Groupon – it creates the opportunity to build a relationship with a lot of people who now are interested in your product or service. By crafting an experience you can build a relationship. When you build relationships, you create advocates. And when you have advocates, you have a stronger brand.
Enter Google
As Google’s CEO Eric Schmidt said last year in a Wall Street Journal editorial* on whether or not Google was destroying newspapers (emphasis added):
With dwindling revenue and diminished resources, frustrated newspaper executives are looking for someone to blame. Much of their anger is currently directed at Google…The facts, I believe, suggest otherwise.
We send online news publishers [four] billion clicks a month from Google [services]. That is 100,000 opportunities a minute to win loyal readers and generate revenue—for free.
This is the same opportunity Groupon creates for its customers – our clients.
Case Study: The Music Industry
I recently watched an hour-long video of Steve Forbes interviewing Warren Buffet and Jay Z. When asked about how he’s adapted and thrived amidst the radical upheaval the music industry has undergone over the last decade, Jay Z talked about adopting a 360 degree model of music.
The music industry is now about more than selling records. It’s about selling the artist experience – concerts, venues, merchandise, image/PR, endorsements, etc. – all the aspects of an artist, not just the record. I’d even argue that everything else artists do besides creating an album influences their brand more than the album itself.
People are less and less willing to pay for music. But they are willing to pay $120 a seat to see U2 in concert. Why? Because of the experience.
A Shift in Creative Opportunity
The advertising industry is undergoing massive changes as well. And we, too, can shift our responsibilities from focusing on “selling records” to a 360 degree model of advertising. This is what ThomasArts has done – we can do everything for our clients under one roof from PR to printing to audio and video production. And part of this model needs to focus on brand building based on customer experience.
It’s not that we as an industry can’t do creative advertising to generate traffic to our clients. Those opportunities are still available and will continue to be – the 30 second TV spot is still alive and kicking, despite many reports of its demise. But moving forward I think we’ll see a shift in creativity move from the awareness/promotion side of things (hello Google AdWords, Groupon, etc.) to the experience that is created once those extremely trackable yet largely non-creative means are used get people in the door.
It’s then that we as advertisers have the ultimate creative opportunity.
I’d love to hear your thoughts on this. Let’s discuss in the comments.
* Rupert, thanks for letting me link to your article – you’re a champ.
