We basically are working with third-party publishers that have a whole bunch of Web traffic and all kinds of ways to monetize their site -- and one of the ways is by becoming an affiliate. In the case of Groupon, they promote Groupon deals and when they do that, they put a link to Groupon in their post -- and if it’s an ad, they can throw an ad in their regular ad inventory. People click on that and then they go to Groupon and if they actually purchase something, because we can track the link and where it came from, we would give a [revenue] share back to the affiliate.
What we’re doing with Groupon Partner Network is offering publishers an alternative way to monetize their Web traffic. That can be real big media companies, ad networks, a mobile app developer, somebody with a big Facebook group. It really doesn’t matter. If you see a deal you think is great and think somebody would be interested on your website and your app, if you direct people over to Groupon and they buy, you’ll get a rev share out of it.
How many publishers are you working with and how do you foresee growing it?
We have more than 10,000 publishers working with us and I’d love to drop a zero on there. Not talking about tens of thousands, but hundreds of thousands of affiliates and I think that should be realistic.
We worked with some existing partners to help debut this and to make sure the system was working and serving their needs, so that’s where we deliberately went to partners like Ebates.com and Slickdeals, and we said, ‘We have this initiative we’re working on, can you guys partner with us on this?’ I’d say we’ve been testing this for the past six months and we’re not only going back to our existing base of affiliates, but use this as a tool to get new, incremental affiliates to our system.
How are you moving away from the flash sales model, and how is GPN serving your monetization efforts to move from a push-to-pull model? In your Q2 earnings, the company saw less than 40% of transactions occur through direct email offers.
This sits on a couple of strategic themes that Groupon has today. One is “pull,” so creating a marketplace with a whole bunch of different deals. Having a distribution network married to that makes a ton of sense. The second theme is this one playbook theme, rolling out technologies and processes globally. Before, we had individual country affiliate programs and now we’re consolidating them in to one platform so as we build a new tool or new way of doing something, we can roll that out globally in one fell swoop as opposed to individually.
The win-win that happens is, first off, for the publisher – by working with GPN, and working directly with Groupon, we are giving them better access to our existing deal inventory and that’s through a bunch of open APIs. We’re adding tools so that they can target things better, whether that’s a bookmarklet or smart widgets that have retargeting or geolocation as part of it. Then, we’ve added real-time reporting, so there’s no lag and we basically are giving publishers like AAA a better way to look at our inventory and promote our inventory to their user base. It should monetize better than, certainly, what you could do before we had GPN and ultimately better than other forms of Internet advertising.
The win goes to the local merchant who gets far better distribution than just through Groupon.com or through a Groupon email list. Now, they’re going to have third parties promoting their deals and businesses. Most local businesses didn’t have the opportunity to have that level of reach. Sure, they could buy some ads on Google or maybe they could have a Facebook fan page, but we want to provide unique content that these third-party publishers will promote and have an incentive to promote it because we’re going to give them a piece of revenue from the deal.
Some parallels have been drawn between Groupon Partner Network and the Google AdWords product. Are you interested in ad-tech?
If it all works out the right way, it should be a win-win for the local merchant, the publisher and the consumer. I mean, how can you make it where you see the right deal at the right time? Sometimes, it’s because you’re checking out a foodie blogger in Chicago and you want to know what restaurants are great and it just so happens that one of those restaurants is running a deal, so it’s all about connecting the consumer and thinking about Groupon anytime they’re thinking about buying something.