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Wednesday, September 7, 2011
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Stepping into a Daily Deal Quagmire

Not sure if you've been following the news on how daily deals seem to be losing favor with consumers. Of comments coming from advertisers who've tried the Groupon (and other companies') approach to placing coupon deals in a daily email blast, I'll give an estimate that most are running on the negative side. After reading what follows, it's only fair to ask whether the radio industry is chasing a lost cause by trying to establish its own "daily deal" offers for advertisers.

In March 2011, the New York Times ran an artile titled "Doing the Math on a Groupon Deal." I'd been following Groupon closely, and had already come to the conclusion that this craze was to be short-lived. At the time, I wrote two radio execs that "Once again, the radio industry is diving into something that's going to fizzle quickly."

"By the time the radio industry ramps it up, couponing will be on the off-ramp." Fast forward to the past few weeks and there appears to be a retreat from consumers in how "daily deals" are being woven into spending patterns. The companies producing these one-a-day saving offers also appear on the ropes. Groupon is postponing its IPO due to the shifting market. Just recently, USA Today ran an article titled "Websites selling daily deals lose luster."

To think that a radio station, or group, is going to send account execs out to local advertisers now and end up with anything more than raised eyebrows when offering a "daily deal" is wishful thinking. I suggest there are other forms of interactive - new media style - offers that the radio industry should be focusing on because small business owners are certainly reading how couponing results in little positive feedback.

Of the monster companies getting involved with supplying daily deals, only Google is moving forward; Facebook is dumping the concept, and Yelp will cut back its efforts by 50%. According to its CEO, this comes after hearing "...consistently from certain categories of businesses (very popular ones I'm [he's] afraid) that daily deals are uneconomic for them...."

I know that radio industry execs view radio's relationship with advertisers and radio's ability to "get the word out" as plusses in the "daily deal" category. But I'll also throw out that the amount of back-end accounting code and email management work has not been properly inspected. I'm not sure that the radio industry has attained the needed level of expertise in either field to pull it off.

Let's use this as an example of how far radio needs to come. Visit, the radio industry web site for radio sales. Wait a few seconds as this ad for next week's "Radio Show" shows... then click on it.

When you end up on a search page because the ad's forwarding URL is incorrect ( as opposed to the correct, ask yourself if this industry leader is ready to tackle the more difficult tasks of educating the building out of complicated MYSQL data bases. If it has trouble placing an ad on its own web site with the correct URL attached, and then runs that ad (it's anyone's guess how long it's been running) without anyone at RAB catching the error, do you walk away with confidence that the radio industry is ready for digital prime time?

Couponing online is a fast-fizzle fad that will end up making money for only a few select companies. If radio station account execs try selling this concept, and it shows the same level of negative feedback as we've seen in the first go-around with companies who are are adept at digital, do you sincerely believe that radio will make this market grow?

On September 14, RadioShow is holding a session titled "What’s the Real Deal With Daily Deals?" I'm sure it'll carry the message that couponing is radio's next big opportunity. On September 15, there's another panel discussing "Creating A Successful Deal Space." (See complete agenda here.)

For the sake of your station and the radio industry, please ask tough questions during these sessions. Here are three to start: What percentage of merchants come back to do a "daily deal offer" a second time? What percentage of businesses have shown post-daily deal revenue gains? Of the consumers who participate, what percentage revisit a "daily deals" merchant during normal pricing times?

The radio industry has plenty of opportunity to benefit from the masses moving into digital. Couponing is not one of those opportunities.

I equate this to the ringtone craze of a few years ago. A few companies made a lot of money the first few months that ringtones were taking off. After that, many companies become involved offering ringtones in an affiliate package on their web sites. But the market bottomed out and has now, literally, disappeared.

By the time the radio industry ramps it up, couponing will be on the off-ramp.

The radio industry needs to get a better grasp of how digital works before jumping into this type of business. A good place to start would be to get the RDS system working at all stations. Then radio needs to quantify ads-served and response attained. Finally, for anyone involved in the sales of radio advertising, or the building of radio audiences, there needs to be a weekly online course outlining just how difficult moving into digital is; nearly everything at radio industry conventions is presented in a way which suggests it's much easier to pull off.

RAB needs to do simple things, like placing the proper URL under an ad that's running on its web site. If it can't get something as minor as this correct, RAB is going to have a very difficult time tackling that MYSQL data base and the email expertise needed to lead the industry into a coupon craze - especially before the market disappears.

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