November 30, 2010

Dear Catalog CEOs: Groupon / Google / Co-Ops / List Rental

First of all, if Google gets Groupon for $5 billion or $6 billion, I'd offer kudos to Groupon.  They are the smartest marketers in the room, you cannot deny that. 

Talk about monetization.  At 13,000,000 subscribers and a $6 billion dollar sale price, you're looking at $461 per e-mail address.  You are able to milk your e-mail subscriber list for, what, $0.15 per e-mail message, at 100 message per year, $15 per year, total?

Talk about monetization.  How does a start-up convince established businesses to give a $50 item to the customer for $25, and then convince the established business to give half of what's left (though I'm told that big brands cut better deals than this) to Groupon for access to their list of discount-craving fans?  How does a start-up convince an established business to accept $12.50 instead of $50.00?

Do you ever think about this?


Let's pretend that you, the Catalog CEO, took this idea to Abacus, or Experian, or Millard, or ALC, Merit Direct, Belardi/Ostroy, or any other catalog vendor.  Let's pretend that you told them to start a new division ... one where they recruit e-mail addresses, then they partner with catalog brands to offer fabulous discounts and promotions that are made available only to those on the e-mail list.

What would Executive leadership at Abacus, Experian, Millard, ALC, Merit Direct, Belardi/Ostroy, or any other catalog vendor say to you?

"You're nuts."

"E-mail addresses don't work as well as a physical name/address, we all know that."

"Who in their right mind would go for that type of revenue split when we sell you viable names for just $0.06 or $0.13 each?"

"We've got this new model for business names where the second name at a business works 14% better than a new name at a new business, and you can take that to the bank!"

"Your target customer won't sign up for those type of e-mail promotions, she wants a physical catalog in the mail."

"We tried e-mail list building back in 2001 and it didn't work."

And that would be that.

We need some encouragement!


Abacus/Experian/Millard/ALC/Merit Direct/Belardi-Ostroy/Other Co-Ops ... you are list organizations, right?  You work with my Catalog CEO clients, you sell them access to your lists, right?

Groupon sells my Catalog CEO clients access to their list, right?


So how is Groupon any different than you? They are your number one competitor, they are you!  They figured out a different way to monetize a list, to the tune of a potential sale price of $6,000,000,000.


Abacus/Experian/Millard/ALC/Merit Direct/Belardi-Ostroy/Other Co-Ops, would Google buy your business for $6,000,000,000?

Remember, Groupon does the same thing you do, they sell access to a list.

In other words, the key to success is out there, just waiting to be implemented.  Any one of our catalog vendors could have attempted the Groupon model before Groupon attempted it, and would have had an enormous head start, having already built a list of a hundred million names and addresses.  And the idea is completely congruent with the mission of a list rental organization like Millard, or a co-op like Abacus ... it's the same thing, with a different monetization structure.


This brings me to you, the Catalog CEO.  The future is out there, just waiting for us to capitalize on it.  All of the good ideas are out there already.  We have the ability to make magical things happen.  Our ability to make magical things happen decreases when we look within the same box of toys for our answers.  We have to be willing to take risks, measured risks.  Sometimes, we have to be willing to set aside our pre-conceived notions of "what will work".  Sometimes, we have to trust the 29 year old marketing analyst, giving her a chance to implement something that we strongly believe won't work.  When her idea doesn't work, we mentor her with compassion.  When her idea does work, we give her more responsibility.

Do not let some rogue startup take something that you invented, put a modern twist on it, monetize it differently, then run you out of business with a mashup of your business model and their idea.

2 comments:

  1. Nice stuff. I'll certainly be visiting this place again in few days and thanks for publishing that.

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  2. All too true and new companies are already cashing in. For example, LivingSocial.com cloned Groupon and earns around a mil a day.
    Another new company http://offers.thecustomeradvantage.com goes one better. They get the half price offers to distribute but pay the customers for referring both new customers and new vendors.

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