DataSphere’s Cowan: Still A Big Opportunity In Coupons For SMBs

Until recently, you could think of DataSphere as local-media-as-a-service (LMaaS?). In addition to helping mostly-TV stations, including big legacy media names like Gannett, manage and promote editorial for news sites, the company, which has raised over $28 million since 2010, sells a range of marketing products to the 20,000 small businesses it counts as clients. It also recently added a local coupon network, a service that allows clients to create and publish discounts to 42 partners that reach 36 million unique visitors a month. And in June, the company got even bigger in the coupon space, aiming to control both sides of the table by launching its own destination site, LocalSaver, which allows consumers to browse all of these coupons in one place.

Street Fight recently caught up with Gary Cowan, SVP of product and marketing at DataSphere (who previously told a Street Fight audience that working with Groupon is “like giving a gun to a three-year-old“), to discuss the opportunities in a busy coupon market, how technology can be used to simplify the content creation process, and the outlook for an “agency” model in local media.

Between Groupon and RetailMeNot, which recently went public, as well as a host of legacy players, the discount business seems pretty hectic these days. Why enter such a busy market?
The space of local business, what I call “show and save” coupons, is really not that crowded. The user experience and coupon quality does vary considerably, and we had the opportunity to come in and deliver a much better overall consumer experience and combine that with our unique collection of local business coupons. So we see an opportunity to become, in effect, the RetailMeNot of local business coupons.

DataSphere works with a number of other coupon partners. Do you see LocalSaver as a competitor?
We see ourselves as complementary. For example, clearly Coupons.com is primarily focused on grocery coupons, and in fact we provide them with the local business coupons for their site. If you think of it from our perspective, we’re saying, “Those guys have a focus on grocery, and we supplement that with the local business side.” We flip that around and our focus is on the local business side of things, and over time we may add some of those other things as a secondary concept. But our focus will always be on the local coupons.

Over the past year, we’ve seen a big trend in local media companies expanding well beyond their own advertising business. Why should local media sell coupons?
There are many different forms of advertising that can work, and often times they work well in conjunction with each other, and that’s what we’re trying to do. The benefit of coupons is that it really is a call to action, and something that encourages people to take the next step. So that can be used in conjunction with other forms of advertising. You’ll find that in the ads we create that are posted on our partners’ sites: When the advertiser has a coupon, we incorporate that into the banner ad as well.

Put yourself in the shoes of the advertiser, who at the end of the day, are looking for opportunities to make the cash register ring. Coupons have the benefit of being further down the purchase funnel; they’re a more tangible indication of an opportunity to drive consumers to that advertiser. I think that’s definitely a class of advertising that media companies should be looking to, not exclusively, but in conjunction with the other things that they’re doing.

You’ve added additional media like photos and videos to coupon deals because you said it boosts conversions and sales. What’s the process been for producing this content for these businesses?
When we make a sale to a local advertiser, we go through a process that generally takes about two weeks or so. We work with the advertiser to create a custom banner; we make sure the coupons they’ve created are the most compelling for that category; and about 80% of advertisers get their own video as part of their package. We have different scripts for different business categories, different templates of videos, and we customize those based on individual preferences and images for the advertiser. We build those in-house, upload them to their account, publish them on their profile page, and send it to them so they can use it on their own website or other marketing efforts. And we have seen a marketing increase in the level of engagement from their consumers.

You said LocalSaver’s role in the coupon ecosystem is more complementary to other coupon sites. Do you feel this role could change in the future?
Nobody knows the future, of course. It’s not something we see happening anytime soon, and we see a lot of opportunities here that are different specialties. You make certain data trade-offs and so forth to specialize in serving different types of visitors looking for different types of things. I really see LocalSaver as more of a different focus for different types of consumers, looking for different types of things.

What trends do you see emerging within the deluge of companies looking to sell marketing tools to small businesses?
I think you’ll find that there’ll be a lot of providers, including us, that are trying to simplify the process. What you’ll find is that there’s an explosion of different channels that are available to these businesses, but they don’t have marketing directors who are dedicating their lives to understanding the latest online marketing technologies. This is something that they really have to try to fit in between their hundreds of other daily tasks. So the combination of an increasingly complex marketplace and a fixed amount of bandwidth available to the business owner to make use of it creates an opportunity for companies to consolidate all of that complexity and come up with simpler solutions that work better.

Max Antonucci is an intern at Street Fight.