Social media's power to persuade is bringing the buy-to-save concept back into fashion.
A new breed of coupon service, Groupon, is thriving with its buy-in-bulk, pre-purchased consumer offers -- thanks to its digital fans, who are tweeting, blogging, and posting away to spread the word of its fantastic bargains.
One year since launch, the company has amassed 2 million subscribers to its site, has sold 1 million coupons, and has received $30 million in second-round financing, according to Advertising Age.
Groupon offers customers a chance to buy in to a big savings deal through its daily email service; for example, participants can opt to buy a $30 voucher for a $60 dinner package. Groupon takes a cut of the deal; the rest of the revenue goes to the marketer. The catch? The deal is only good if it attracts a pre-determined quota of participants (which can be as low as 50 people or as high as 500). If that threshold isn't reached, the deal for that day is canceled, and no one pays -- not even the advertiser.
According to Ad Age, the buy-in-bulk online concept isn't new, but social networks such as Facebook and Twitter are providing a means for consumers to incentivize each other to help them reach the quota for the deals they want.
And it's working. Small companies are using the site to attract new customers, drive trials of products, and cross-promote products. The service is also starting to catch on with larger marketers, including the NBA. Another client, Zipcar, reported that it has gained about 1,500 new members in seven cities since it began using Groupon.
