Delivering Local Deals: It’s All About the Data
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It’s become clear that the two hottest areas of digital media — deals and mobile — are colliding. Mobile payments (i.e. Google Wallet) are meanwhile closing the loop on decades-old deal redemption and tracking challenges.
This has led to another important variable: Data. More specifically, mobile payment technologies open the door for more comprehensive consumer purchase data, which can fold back into the equation for more targeted deal delivery.
“If you don’t have the insight to target customers based on purchase history, you’re operating in the dark,” said MasterCard group executive for information services Gary Kearns, during his keynote at BIA/Kelsey’s recent Deals 3D conference.
As MasterCard pushes further into local deals with partners like Google, 37 million merchants and 63 billion annual transactions puts it in a unique position to evaluate purchase behavior and target deals accordingly.
“Purchase behavior is the new demographic,” said Kearns, meaning that demographic targeting — held sacred by marketers for years — doesn’t hold a candle to actual purchase data. The former is essentially a proxy for the latter.
Knowing what’s been sold, redeemed, and how often, is vital to predict future purchase behavior he argued. And any local merchant should be looking at purchases in totality for richer consumer profiles — not just what is bought.
Mastercard isn’t the only one thinking in these terms and barreling into the local deals space. American Express so far has been the most aggressive, forming partnerships to power transactions for Foursquare and Facebook deals, among others.
Mobile payment technologies open the door for more comprehensive consumer purchase data, which can fold back into the equation for more targeted deal delivery.
During the Deals3D show, Facebook announced its latest deals product “Link, Like, Love”. This allows users to connect their Facebook and AMEX accounts to save and share deals, which are automatically applied when a physical purchase is made using AMEX.
In this case, the purchase behavior that Kearns espoused is utilized, while social behavior is thrown in as an additional data source. This includes communication within Facebook such as deals shared, liked, and purchased within one’s social graph.
Going back further, AMEX last month launched its partnership with Foursquare, first trialed at South by Southwest. Similar to Facebook, users connect their Foursquare and AMEX accounts, then redeem deals discovered on Foursquare by transacting offline using AMEX.
To target deals, Foursquare uses social activity within its network (comparable to Facebook) in addition to signals like check-in history. Deals are also delivered using the targeting methods in its Explore Tab – the same way it already suggests local places you might like.
Foursquare Biz Dev lead Tristan Walker told me during an on-stage interview that its algorithms examine 750,000 daily check-ins to deduce 3 main factors: recency, frequency and value. These help govern which deals and specials are pushed to whom.
All of the above strategies are developing differently but a common thread is reliance on data. He who best utilizes it, gains an edge. This is key as the deals space moves from deep discounting (a la groupon), to deals whose performance relies instead on relevance.
Effective data utilization will also be important, given the continued convergence of social, local and mobile media (SoLoMo). This convergence opens lots of interesting opportunities, as we’ve argued, but also present challenges in reconciling disparate data sources.
Purchase behavior could be one way to bring it all together as argued by Gary Kearns. This offers signals that are more telling than the targeting proxies used for years, such as demographics, geotargeting, contextual targeting, or even explicit search.
“I am what I buy, says Kearns, “not what I search for.”
Mike Boland is senior analyst at BIA/Kelsey, where he heads up the firm’s mobile local coverage. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0 and others.