In late May, Boston.com launched Boston Deals, becoming the latest in a long line of online publishers venturing into the white-hot daily deals space. The site is powered by Group Commerce, which builds group-buying platforms for a range of publishers, from the New York Times to Thrillist.
Street Fight caught up with Boston.com’s executive director of digital advertising, Mike Wallace, to discuss his company’s decision to launch a deals product, how publishers can build their brands through ecommerce, and the implications of these kinds of projects for the future of digital advertising.
Boston Deals is a month old. What has surprised you the most since launch?
This is the first foray into an ecommerce platform for Boston.com – so that’s exciting. If you think about our business model, we have about 200 million page views a month and we drive a majority of our revenue through display advertising. We felt that the size of our audience, especially in our DMA — since consumers who live within 25 miles make up the majority of the people who purchase from local business — and given our long standing relationship with advertisers, that we could really succeed in the market. I’m not too surprised that we could transact thousands of consumers to buy actual vouchers for the brands, which we have posted in the first month. The most important thing that we wanted to execute out of the gate was to build business with other trusted brands; we see ourself as the most trusted media brand online in the [Boston] DMA. We really wanted to work with local trusted brands because we think that is really the secret sauce [for deals].
Which types of local businesses have had the most success with the deals?
When you’re dealing with a local brand, not every brand is created equal. We all know that food, as a category, generally dominates the number of vouchers sold across all the daily deals sites, so it’s no surprise that dining is doing very well for us. But it also varies based upon location. For example, we thought Boston would dominate, but we’re finding pockets like Gloucester, Mass., which is a seaside community, doing extremely well. It is really about working with the best brand in a particular community.
Street Fight has covered some of the white-label platform providers which support Boston Deals and others. Why did you all pick Group Commerce and are they still involved with the product?
They have been very involved on a daily basis. I picked [Group Commerce] for the pedigree of the senior staff starting with [Group Commerce CEO] Jonty Kelt. But when you start to peel back the onion, the number of people in their organizational staff with ecommerce experience has been extremely vital. And when you combine those assets with Jonty [Kelt] and the guys on the display side from Double Click, their team understands and has the know-how to scale an enterprise that can have 100 percent uptime. Not to give any of their secrets away but they are very aggressive on producing new features and functionality on a monthly basis.
“Retention” is a big buzzword in the deals space these days. What metrics and methods are you developing to more accurately measure ROI for your merchants?
We are still in the early stages. Today, we need to build — and I think the industry needs to build — a better and more traceable loyalty program for merchants. At this point, we’re able to convert a consumer to buy a voucher and then track the redemption of that voucher. For example, we’re coming out with a new merchant UI on our platform through which merchants can track redemption. At some point however, this needs to be a closed-loop process. We need to understand not only that a consumer converted the voucher and that they had an excellent time, but also how we can track that user when they return, or develop systems for the merchant to promote to that user moving forward with additional programs. The mechanisms for merchants to facilitate this level of functionality simply do not exist today.
We need to understand not only that a consumer converted the voucher and that they had an excellent time, but also how we can track that user when they return.
Do you have plans to integrate deals into other advertising products?
We actually have already started. For example, we were able to create, through the Group Commerce API, a real-time banner advertisement for each of the deals that we launched on a particular day and run that particular banner advertisement throughout Boston.com. The next phase is to then target audiences who have bought in the past, who have an affinity and loyalty for Boston Deals, and show them other deals moving forward.
How do you see the relationship between ecommerce and advertising playing out in the future deals space?
I think there are some exciting opportunities. On the one hand, we want to be able to deploy our deals platform via syndication — we hope to integrate our deals on sites like Deal Map or Yipit in the future — but we also want to generate those deals into real-time display advertisements, which we can host not only on Boston.com but syndicate throughout the web via real-time bidding. The bottom line is that there is tremendous amount of opportunity to serve a real-time banner ad to an audience based on their demographics and behavior; we want to hit the right audience at the right time. That’s our objective.
Where does the industry need to improve in order for deals to play a major role in the future of digital advertising?
It already is playing a huge role. Consider this: we are able to tell a merchant exactly how much was bought from their business, who bought from their business, and what the profile of that individual looks like. That’s powerful — that is like true generation that you’re used to see on the B2B side. We can walk into a merchant today, and say: “Ok, we want to associate our brand with your brand, there’s no upfront cost, and you will pay us based upon performance.” That is a no-brainer on the part of many merchants.
I think where we need to improve, obviously, is with improving the “loyalty factor” because a majority of merchants are using the platform for lead generation of new customers but they need to be able to retain and track those customers in order to derive value. So if they’re looking to the industry to do that, we need to improve our product on that front as well.
This interview has been edited for length and clarity.