Market: Bay Area, California
Platforms: Offerpop, Facebook
Outcome: 7,885 Facebook fans
Bottom Line: Social marketing tools like Offerpop make it easy for businesses to host giveaways and contests without breaking Facebook’s strict promotions guidelines.
When Matt Toomey set out to launch a daily deals site in California’s Bay Area in September 2011, he knew he’d be challenged with competing against industry giants like Groupon and LivingSocial. He forged ahead anyway, holding the belief that global deals companies could never serve the needs of community merchants in the same way a local site could. “At that point, the daily deal landscape was quite different,” said Toomey.
What Toomey has learned in the 20 months since his company’s launch is that it takes more than just a great idea and close relationships with local businesses to make a deal site profitable — it also takes subscribers.
Searching for subscribers
In the early days after LocalGruv’s launch, Toomey and his business partners would canvas local festivals and community events looking for people to subscribe to their daily deal site: “We put up a booth … not really having a clue what we were doing at that point. We struggled through about six months of doing as many festivals and Christmas boutiques and every arena that we could do. It was just weekends and nights, [and it] was killing us.”
Finally, in a moment of clarity nearly 14 months ago, Toomey got the idea to start using Facebook as a means of subscriber acquisition. “The deal [we were running] had been dead in the water for two days. I hadn’t sold one in the last two days … I made a post [on Facebook], and within four hours we sold 10 more. The light went off right then,” said Toomey.
What Toomey quickly learned, however, was that Facebook’s strict promotions guidelines make it difficult for companies to use the social networking platform as a means of subscriber acquisition. “It’s against Facebook’s policy to say, ‘like this post’ or ‘comment on this post for a chance to win.’ Facebook has shut down a number of brand pages recently [for] doing that,” said Toomey. “Any brand that gives away things on Facebook, most of them are doing it illegally.”
Toomey quickly started researching ways to get around Facebook’s limitations on giveaways and contests, and stumbled on Offerpop’s referral-based platform. “Using Offerpop as a third-party platform is totally legit, and [it comes] with all the bells and whistles,” said Toomey.
Toomey runs one to two subscriber acquisition campaigns on Facebook each month, giving away more than $15,000 worth of prizes and vouchers over the last year. “Anyone can go out and get ‘likes’ through Facebook advertising campaigns or buying ‘likes,’” said Toomey, “but unless they’re really targeted for your demographic, they’re useless.”
LocalGruv currently has nearly 8,000 Facebook fans — up from between 500 and 600, before Toomey started working with Offerpop. “We keep them engaged [by] running great promotions and great giveaways,” said Toomey.
Toomey keeps a close eye on his “cost-per-subscriber,” and says he’s heard rumors that larger deal companies are paying upwards of $30 per subscriber as the market gets more saturated. Offerpop’s flat monthly fee allows Toomey to look at how many new subscribers he gained through each campaign and determine his own cost-per-subscriber metrics with some quick back-of-the-envelope math. “I can’t give you an overall [figure] of what each step costs us, but it’s significantly less,” said Toomey.
That same data is useful to Toomey in determining how he can improve the campaigns he’s running to increase referrals in the future, as well. “There’s valuable data there that helps you run better promotions the next time. You can build upon each promotion,” said Toomey.
Despite recent headlines touting the demise of national deal sites, Toomey remains optimistic about his own company’s future. “What’s becoming more and more apparent to us is that hyperlocal is hard to do, unless you’re truly hyperlocal. You see large corporations trying to do hyperlocal, and it’s just not scalable,” said Toomey. “With us, we truly are hyperlocal … we have built-in relationships locally. We’re here in our community. Hyperlocal for us is the only thing we’ve ever known, and that works to our advantage as far as building relationships with merchants, and also subscribers.”
Daily deal companies need more than just great offers from local merchants. In order to be truly successful, they need to be distributing their offers to a large database of engaged consumers in their markets. By hosting periodic giveaways and promotions through his company’s Facebook page, Toomey has been able to re-engage subscribers and re-energize his brand. Offerpop’s tools help Toomey manage these promotional campaigns while still being in compliance with Facebook’s strict promotions guidelines. The platform’s reporting features also make it easy for Toomey to measure his cost-per-subscriber, which is an important metric for any business owner.
Stephanie Miles is an associate editor at Street Fight.