The daily deals space isn’t seeing as much action today as it did circa 2008. To wit, a May 2013 Social Media Examiner study found that 80 percent of marketers have no plans to use daily deals sites in the near future.
Barry Judge, CMO of LivingSocial, one of the biggest players in the deals space (led by Groupon), said the study’s findings are accurate. But he’s not worried because few of LivingSocial’s deals are daily anymore.
Judge joined LivingSocial in January 2013, after having spent about five years as the CMO of Best Buy.
In this interview with CMO.com, Judge explained why LivingSocial evolved its strategy and the effect doing so has had on the business (think: record 2013 holiday sales). He also shared LivingSocial’s digital marketing priorities for 2014, how the company uses big data, and plans for mobile and social.
CMO.com: Many headlines suggest the heydey for the daily deals space has past. Is selling to marketers a challenge?
Judge: One thing that’s important to note about our business model, as well as Groupon’s, is that we have evolved from being a daily deals site to quite a broader offering. . .We have moved from one deal every day that expires at the end of the day to deals that last quite a bit longer. On average, a deal lasts for about 40 days. The question the [Social Media Examiner] study got into—that daily deals aren’t doing all that well—is accurate. And there are not a lot of daily deals sites left for that reason. They have morphed into something else. I think it’s interesting that [as of this past summer] we’ve gone from 3,000 to 12,000 deals. We’ve quadrupled the number of merchants that are participating with us.
Another point to make: When this business launched four years ago, it was very focused on local: the spa across the street, the cleaners, and the restaurant in the next town over. We still do all of that. But we also launched a national deal business. So we work with all the big names that you know, marketing their deals on our site, and we also market their coupon offers on our site. So is the daily deals space dead? The answer is that, in a way, it is because so much evolution has occurred and will continue to occur as this becomes a more accepted form of media across both local and big brand marketing teams.
CMO.com: We’ve just started a new year. What are you most excited about?
Judge: I am pretty excited about marketing this year. The company, in the past 12 months, is more focused on our consumer target and more focused on our business model. We’ve focused our operations on a smaller set of countries. Following the [November 2013] sale of our South Korean business Ticket Monster, there is quite a bit of opportunity to spend money to drive the business this year. As we look at the year ahead, I am excited about some of the enhancements we’ve got planned. We’re making adjustments to the business that I think are going to help drive performance. We expect to communicate our message much more aggressively in 2014 than we did last year.
CMO.com: That said, what are your digital marketing priorities going into 2014?
Judge: Some of the things that we’re focused on include providing consumers more assurance around the merchants and deals they are buying from us. A specific example is in November we launched the Good Deal Guarantee. We made our refund policy more lenient so today when you buy a deal from us, if you determine that you can’t use it before expiration, we give you the option of letting us know, and we will give you your money back in the form of Deal Bucks that you can use to buy from another merchant. In the next several months we will be launching more of these types of things that provide more assurance. For example, we’re currently thinking through ratings and reviews and a Merchant Seal of Approval.
Another priority going into 2014 is better customer service. We have improved a lot over the past 18 months, and we’ll be continuing on that path. Another priority is improving our gifting experience. Specifically, we’re trying to figure out a more elegant way for the gifter to deliver the voucher.
In terms of digital marketing priorities, we will increase focus on women who make up the majority of our customer base. We’ll focus our efforts on communicating more efficiently with this top-tier demographic and make LivingSocial easily accessible where she is. All our marketing is digital; everything we’ve done to date has been digital because we are digital. We will continue to focus on both traffic to the site as well as new member acquisitions. Our big buckets of spend are in search (Google), Facebook, and affiliate channels. This is where a lot of these deal-seeking affluent women are. That’s a very strong area of growth for us right now. One last priority is improving our discovery on the Web using tactics like SEO, linking, and technical architecture on the site.
CMO.com: Which advertising technology are you keeping your eye on over the next 12 to 18 months?
Judge: I think we are, like a lot of marketing people, very fixated on mobile. Marketing people are struggling a bit with how to generate ROI on that small screen. We know we have to keep at it because there’s so much time being spent on it. One of the points around our business is that we are very mobile. In fact, more than 30 percent of our business is done on mobile devices. During the shopping period from Black Friday through Cyber Monday, our mobile revenue was up over 100 percent. So we know it is important. Our communication effectiveness on that channel needs to improve. So we are eying vendors, people, agencies, etc., who can help us do better from a communication perspective on mobile.
CMO.com: Big data has been the buzzword of the past year. I imagine LivingSocial has tons of data. What do you do with it? How do you use data to inform marketing and other business functions? Can you give me a couple of examples?
Judge: Big data is a buzzword, and everyone talks about it. There are a lot of opportunities to utilize data. One example of how we’re using it is behavioral segmentation. Over the past four months we have been working on a behavioral segmentation of our entire user database. We have worked with Digitas on a study of what people click on and what they buy, and we created a segmentation scheme that is behaviorally based. It’s exciting for the business and marketing. We can action it. We can see when the cookies for these specific people are showing up on the Web site, and we have developed segment-specific strategies to get people more engaged and interested in what we are doing. Currently, we have nine different segmentations, and underneath we have 43 subsegmentations. With all of this, we are able to develop strategies that go beyond marketing.
For the past month or so, we have been working on a concept of how we drive urgency in our business again. Before it was about the deal [being] there for 24 hours; if you did not buy it that day, you missed it. The urgency isn’t there anymore. We are working on tests right now for the person who is indecisive around a deal. So you’re on the site, looking at a deal, but haven’t taken action for a minute. Up comes an ad, offering you an additional 10 percent off. We’re using A/B testing methodology to see if it drives incremental lift.
CMO.com: The Internet has made marketing more measureable. Marketers know the click-through rates on their banner ads, their engagement on social media, and whether their emails are being read. But can you put it all together? Do you know what your marketing is doing?
Judge: Yes, we know. We measure it all. We know our ROI for everything that we do. We know the value of every email we send out. We know Facebook, Google, and untargeted banner ad returns. . .The area we are working on to understand better is attribution. Right now folks in the industry focus on last-click attribution: The thing you clicked on last gets the credit for the sale. But people are convinced of purchasing something all the way through the purchase funnel. And so we recently instituted an attribution software methodology into our business. The next evolution of marketing is giving credit to all the different parts of the purchase funnel, which is what we’re currently trying to do.
CMO.com: I imagine social is an important channel for LivingSocial. Is your social media strategy all about the deals? What other type of content do you share via social?
Judge: Our main value proposition is that we provide great deals on great products. Many times it is a deal or discount. Sometimes it is a value add, like a T-shirt or a free dessert. So there is value in terms of what we do. As we do that, we need to think about some other ways to merchandise and engage consumers over time. Right now content doesn’t play a big role in our business model. That will change as this year evolves. Content can be very engaging for our target. So that has not been something, but it will be something.
I do want to mention that, regardless, our brand is very social. One of our most powerful sales mechanisms we have right now is the Me Plus Three promotion. It’s evergreen and available for most deals. It works like this: If you buy a deal, at the confirmation of your payment you get a communication that tells you to recommend this deal to your friends. If three of them purchase, then yours is free. Currently, we are seeing that 7 percent of sales come from people sharing deals they have purchased. That ends up being part of our content strategy.
CMO.com: How important is the holiday season for LivingSocial?
Judge: I have been a retail person for a long time. And I know the importance of the retail holidays, not just Christmas time. All of them: Valentine’s Day, Mother’s Day, Father’s Day, Back-to-School, all of it. One opportunity that exists for us is that we can do well around these retail holidays. We can be a big participant because everyone likes a deal. When the business started, the holidays weren’t a focus. We took a holiday during the holidays. During this holiday time period, we realized how important that time of the year is to our new business model. Black Friday through Cyber Monday 2013 was the biggest net revenue week in the company’s history. It reinforces the opportunity we have around holidays. Holidays are going to be a big focus for us this year.