The Big Deal: How Alts Are Responding to the Online Coupon Trend

A new day, a new daily deal site; Groupon, LivingSocial, BuyWithMe, Woot — and probably 15 more since the start of this sentence.

Gannett Co. has even cut in on the action with DealChicken, a site offering location specific discounts that the company plans to have available on its news sites in more than 50 cities by the end of the year.

With major media outlets such as Gannett and the Tribune Company creating digital coupon sites, the alts have begun entertaining the idea, as well.

In fact, at the annual AAN convention last month, during the “Coupon Deal Trends: Friend or Foe?” session, there was standing room only.

Chris Rohland, sales director of deals site, Boston Deals, was a one of the session’s panelists. He said it’s not a question of if alt papers should start and operate deals sites, but rather how they will manage it.

The trend of local-based digital deals is indicative of a bigger movement, he said, and it’s important people “get into it sooner or later.”

“It’s new, it takes effort,” he said. “People that are in ‘wait and see’ mode, but the ‘wait and see’ [mindset] is definitely losing money.”

Alt papers are at a bigger advantage than other, generic deal sites because they have an authority those sites do not. The papers already have established a following in their community, he said, and a deals site helps to expand that relationship by giving readers things to discover.

In lending some of their credibility to merchants by collaborating with them, papers will see “success by association.” “In the future, that’s what deals are about,” he said. “People working together to co-brand.”

Alt papers are in a particularly good position to help smaller businesses instead of the large chains Groupon favors, said Rob Crocker, publisher of The Portland Mercury. “A well-tailored program can be beneficial to merchants,” he said.

For more than two years, the Mercury has operated its own deals site,, which has proven consistently successful and profitable, despite increased competition.

“When Groupon appeared, we didn’t see it as competition, but a good idea,” Crocker said.
However, it was an idea that needed tweaking. Instead of trying to promote and attract businesses, he said their approach was to offer better deals that consumers would want.

The site has a mix of merchants, such as tattoo parlors, small restaurants and retailers, that appeal to an audience other than the “educated, high-income demographic” to which Groupon caters.

Rather than a rotating deal of the day, the site acts as a storefront, hosting multiple offers from small, locally-owned businesses that have a longer shelf life. With a broader array of deals to choose from, readers are likely to purchase five or six deals at a time.

The paper and its merchants decide an average price for deals — at least a 50 percent discount — and for every sell, the merchant earns 50 percent of the revenue, which they can keep or put toward credit for ad space, online or in print.

Crocker said most merchants prefer the ad trade, seeing it as prepaid advertising. Through the site, merchants have been able to settle debts they may have had with the paper, while the paper has also been able to monetize web content.

“Merchants are seeing the power of it,” he said. “A few publishers think it’s too volatile and that there’s too much competition, but that’s not the right view. Publishers that are not stepping into this space allow competitors to move in. It’s a space you have to defend.”

Merchants haven’t expressed any issues with the site; though some choose not to renew, others replace them. As far as the offered deals, he said it is very rare for one to go stale, but “if they don’t sell, they don’t sell;” there hasn’t been a problem, yet.

It can, however, be problematic for a paper to build its own deals site without the proper resources. “We’re lucky because we have big web development team that has experience doing programs,” he said. “Just being able to afford to build your own system can be a struggle.”

There are options available to papers looking for help creating a deals site. For example, they can partner with existing sites. Charleston City Paper was one of first alts to collaborate with deals site Forkfly to create a new deals experience for readers.

Advertising Director Blair Barna first found out about the site at the AAN web conference earlier this year, where the company was a sponsor. The appeal of the site for him was its tech savvy and usability. “I think that they’re constantly improving the user experience,” he said.

Before the partnership, the paper did work with a daily deals company on a site and while it made some money, Barna said there were “mixed experiences” with the platform. The paper decided to go in a different direction and try something new with Forkfly.

The site uses GPS technology through a user’s computer or phone to show them nearby deals in real time. There is not an upfront cost for coupons offered; payment comes at the time of the actual product or service purchase.

Barna said it fits in with the free model of the paper. “We like things that are free, whether they’re events or incentives like that,” he said.

Papers can also work with a white label company, which provides site hosting and customization.

The Mercury developed a white label platform specifically for alts, Eight other papers use the system, including The Stranger and JH Weekly.

Another white label platform available for alts is Kostizi, created by Salt Lake City Weekly founder John P. Saltas. Along with his paper, Chico News and Review, Missoula Independent and City Pulse are clients. Like, the site is more of a storefront.

Shoutback Concepts LLC also creates programming for news sites, blogs, TV stations and other sources to suit their personality. The company’s director of operations, Jodi Brooks, was also a panelist for the coupon deal trends session.

Along with website design and hosting, her company offers up to six hours of training for sales teams, since selling digital deals is different from selling ads the way they are used to doing it.

“Groupon can’t compete with your sales force,” she said. “They already have a reputation and local contacts. There is not a huge amount of things to worry about, as long as you have good contacts and solid businesses in your area.”

Training is important, as digital deals should be looked at as a “new ad unit,” Rohland said, similar to the classifieds section.

“Overall, the media industry has changed due to online,” he said. “It’s all about evolving. At one time, newspaper ads were black and white, then they were color, then color to online, then email marketing versus direct mail — there’s always something new to sell.”

One problem sales teams might have is persuading merchants to participate after they’ve been jaded by the new kids on the block that are “chasing the dollar” and “not customer oriented,” Rohland said.

“The biggest challenge is getting people to look at them differently,” he said. While some merchants aren’t going to change their minds, strong media brands have a good opportunity at a chance for a different conversation.

In Charleston City Paper‘s case, because Forkfly is relatively new, there tends to be brand confusion, due to the oversaturation of deals sites. Some potential merchants aren’t really sure of how the site works.

The merchants that are using it, Barna said, seem to like it, as well as most consumers. “It’s starting to pick up steam,” he said. “We hope by end of year, people will have gotten used to using it.”

As far as concerns of potential ‘advertorial’ content from cross-promotion, “there’s always going to be more and more of a gray area,” Rohland said. He advises the same discretion as when compiling Best Of editions.

With her clients, Brooks said she hasn’t seen much interference between the deals site and other online sections. What she has noticed, however, is deal sites drawing readers back to original content. “You’ll start to get new people and a different audience,” she said.

Digital deal sites have also created a new industry and a lot of jobs, she said, with papers adding staff to deal with sales. She sees digital deals expanding to mobile technology, as in apps and voucher redemption through smartphones.

Rohland said that whatever comes next, people need to be nimble and willing to try new things. “That’s the advantage of being a publication like an alt,” he said.

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