@earlybird didn’t get the worm

If you’ve been to a conference and gone to a session, chances are you have had this complaint, that the person didn’t share enough useful information. The second complaint is related, and it has to do with information being wonderfully descriptive but not prescriptive. Properly framing and explaining a situation adds value, but it isn’t the same as saying here’s what you need to do if you want to make money. In the case of the reticent bunch, there is one universal reason why they won’t share. It’s the same reason that has people not get up on stage in the first place. They have little to no reason to draw attention to their business. It’s like an affiliate manager getting up on stage and saying who their biggest affiliates are and what campaigns they run. Were it to promote a technology platform, though, this person would get up in a heartbeat to try and get more clients. It’s why you’ll see people exhibit who wouldn’t speak.

The situation works similarly for writers. Sometimes it’s easier to write about the things that you don’t like than the things you do like. If you judged what we liked by what we wrote about it, you would easily miss one of the sectors that has us more obsessed than any other. The problem is that we just don’t know what the hell to call it. Currently, it goes by many names – daily deals, private sales, flash commerce, group commerce, group buying, group coupons, and every iteration in between. Those in this space are some of the hottest businesses. Customer acquisition junkies will have no problems telling you the name of the company that was the quickest to go from start to a billion dollar valuation. It came from “this” space. Why we like the space so much is that is has everything to do with direct marketing. The companies may have started out organically, but the biggest and the best do things the old fashioned way – by paying for them.

Chances are those in the performance space have heard of several of the larger players. They have been the ones paying out ridiculously high amounts for a single email address. Try to find a zip submit that thinks $3 for a new email is such a good deal. You can’t. Unlike zip submits, though, the true power of these daily offers is a real lifetime value. Instead of getting people to try and monetize on signup, they look to make their money back over months. They operated more like a mobile subscription business in this respect than a lead generation offer. Why they can do it is that instead of being ad driven, the businesses are transaction driven. They also get the best of both worlds. They market to users with a compelling call to action – to save money, and they get paid immediately when users transact.

Great economics. Great offer. And, run of network. It’s no wonder that the playing field in the group coupon space alone has gone from 1 to almost 100 in less than a year. And, it’s no wonder why it has become a monetization vehicle of choice for already established companies such as Yelp and Opentable. If you have an audience and you have access to inventory, you can negotiate these flash sale deals and make big money. Or, so it seems. I had always thought that foursquare would be the first hot tech startup to latch on to the advance sale model, but it was twitter who did instead. In July, they made news by creating a special account @earlybird that was to deliver offers to users of a similar fashion. They temporarily paused that account just two days ago. Shutting down their daily deal offering doesn’t diminish the power of the deal model; nor, does it make Twitter any less effective of a platform. It just means that Twitter’s goal of getting credit cards from users will have to wait until another iteration.

Why Twitter failed shows why others succeed. The first piece of the puzzle is the deal itself. Private / flash sale offerings leverage known brands that anyone can buy; they are not location specific. The advance purchase coupon model currently relies almost exclusively on location specific deals. Local service providers were a key to the ingredient, although, we are seeing more nationwide deals. Twitter did just that – focusing on offers available to anyone based on geo, a majority being discounts instead of advance purchase coupons. That was part one. We see people reacting much better to spend $25 to get $50 than save 25%. The second is format. Twitter is not a direct marketing vehicle. They can’t push content to users. The real issue with Twitter is that, unless it’s a sponsored Tweet, a tweet’s lifespan is often available for just minutes before it falls off the screen. This means that people will have to remember to look up the @earlybird user instead of seeing the offer in their inbox. The third is almost format related. Reading the @earlybird is messy, hard to read, and the condensed format doesn’t allow for that emotional connection. The fourth is demographic. The shoppers aren’t yet on Twitter. The direct response audience is an email audience. All of which explains why email as a vehicle is seeing a rebirth and why it’s a vital component to the new era of direct response businesses.