Business owners seem enthusiastic about the response they’ve received to their use of Groupon and Living Social to advertise “deal of the day” discount vouchers.
The businesses, which include restaurants, retailers and services, say using the sites is cheaper than traditional advertising and delivers results. But it’s unclear just yet whether customers who use the coupons come back later and pay full price. It’s also too early to say whether the sites are cutting into sales of more traditional advertising venues, such as TV, print, direct mail and radio.
Cheeburger Cheeburger was featured last month on Groupon, advertising a $7 coupon for $15 worth of food at their Midothian, Glen Allen and Henrico locations. They sold 1,029 vouchers.
“This was the first time we used it, and you can definitely tell. When the Groupons are used, days are much busier,” said Colin Schoenhaut, general manager for the Midlothian Cheeburger location.
James River Massage Therapy sold 681 coupons for a massage in one day when it was the recent featured daily deal on LivingSocial. The deal was for a one-hour massage for $35, which normally costs $70.
“We were able to get a lot of exposure up front at no cost to us,” said owner Jennifer Vaughan. “We’ve already seen a surprising number of re-bookings.”
Both sites feature a different business and deal each day. The coupons can only be purchased during that 24-hour period. (You can read about how both added the Richmond market in an RBS story here.)
The concept seems to be a quick and easy way for small businesses to advertise, especially if they can’t afford or are unsure about other forms of advertising.
“We don’t do a lot of direct advertising,” said Cheeburger’s Schoenhaut. “With the times being the way they are, this helps people who can’t afford to spend a lot of money.”
Xtra’s Café in Carytown hasn’t been open long but on Monday offered a coupon for $10 on LivingSocial that’s good for $20 on food or non-alcoholic drinks.
“We’ve only been open for three weeks and haven’t had a chance to advertise in print yet,” owner Xtra Moore said. As of Monday evening, Xtra had sold 153 vouchers.
There was another sign this week that such services are catching the attention of the more traditional sources of advertising around town. Media General, which owns the Times-Dispatch, announced Monday that it is teaming up with Groupon this week in hopes of increasing website views and getting a second source for revenue. The publishing company offered Groupon deals on the Richmond Times-Dispatch website called the “Richmond Daily Deal” where people can sign up for email alerts about the deals. They plan to expand to six other markets by next year.
And Virginia Living, a Richmond-based glossy magazine, also came out with their own daily deal this week, Virginia Living Daily Deals. Similar to Groupon, readers can sign up for e-mail updates through the site as well as via Facebook and Twitter. A $25 voucher from Chadwick & Son Orchids for $50 worth of orchids is the opening offer.
LivingSocial.com was founded in 2007 by Tim O’Shaughnessy and has grown to more than 80 million users.
Groupon launched in November 2008 in Chicago and now serves more than 90 cities. They have over 13.7 million subscribers and have sold 12.9 Groupons.