Profiting from the fundamentals of Group Buying: Part 4… Group Think

Posted on by Billy Tucker

Group Think is a very effective mechanic used in Group Buying that is perfectly suited for use elsewhere, other than where exclusivity is important of course!

By publishing the number of items that have been sold, consumers are comforted at the prospect of being part of a crowd and are more willing to buy, assured that many others have thought long and hard before deciding to make the purchase negating the need for protracted consideration!

The effectiveness of this this mechanic will peter out when availability concerns emerge, but until that point the strategy is sound.

Where access to specific purchase data is problematic, manually updating the Offer to state “more than 1,000 sold to date” works well…

As well as “number sold”, “people who bought X, bought Y” is an example of Group Think. Again these can be manually programmed where automation is not an option.

Google, a lot like a corrupt SatNav!

Posted on by Billy Tucker

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Google commands tens of millions of dollars each year (probably hundreds) through knowingly selling brand terms through AdWords (such as “cudo” for our business). Yet, users are increasingly using Google for everyday web navigation, so they knew where they wanted to go, they just wanted Google to help them get there.

This is a lot like punching a restaurant’s address into your satnav, but being taken to the highest bidding restaurant instead!

And as businesses grow their sophistication in SEO and they establish their listing at the top of the Organic pile for free. Allowing competitors to purchase a business’s brand term means the target business also has to buy their own
brand term else there is a fair chance an unsuspecting user will click on the competitor’s link, commanding unnecessary dollars from at least two businesses! This has lead to a Mexican Standoff between Group Buying sites, including the seven or so competitors currently spending their dollars on the term “Cudo” today.

In itself this is not necessarily evil of Google, it is opportunistic though.

However, once a business has been granted a trade mark they can then protect their brand from being bought on Google by law, yet Google seems to be oddly slow at applying any kind of block to AdWords, milking yet more dollars from a potentially struggling business over the 3 to 6 months it takes to limit the term in AdWords (Google may not block the term altogether!).

Why is it so hard to protect my mark on the world’s most sophisticated Search platform? Yahoo! and Bing seem to behave much less like a Corrupt SatNav with a clear policy on Trade Marks.

At Cudo we are spending over $50k each month buying our brand term on Google, that’s one expensive Mexican Standoff!

See below for an excerpt from a Trademark Case Study, found here

“Trademark Case Study

A Google Adwords client, who is a leader in the very competitive Network Marketing field, recently noticed a surge of infringements against their trademark which was being used in competitor ad copy on the Google Network.  Competition within the Network Marketing industry is extremely competitive and aggressive. The client became aware that their competitors were bidding on their trademarked search terms. This caused the cost to secure top positions for their ads to skyrocket from an initial $2.00 per click to $15.00 per click. Monthly expenditures increased from $1,200 to nearly $30,000. The estimated budget increased to $500,000+ for the year. Control of the top ad space in Google was their primary objective in order to dominate the ad-space for their branded trademarked term.

Given the level of aggression by the competitors and the extortionate cost been borne by the client, there was only one solution and that was to stop all advertisers from bidding on the terms.  Is it right that a business owner has to spend $500,000+ to buy their own branded name – a name that has already cost them millions of dollars to build?  This is $500,000+ the trademark owner has to spend because of a policy that disavows elementary business ethics.  Yahoo and MSN have recognized the injustice of such a slippery-slope policy and have taken steps to change it.  We filed trademark infringements with all three search egnines.  Yahoo and MSN results were clear within days.”

Group Buying enters the Trough of Disillusionment, will it recover?

Posted on by Billy Tucker

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Gartner describes the adoption of Technology (where there has been clear market Hype) using the Hype Cycle diagram. The same diagram can be usefully adapted to describe the current challenges facing the Group Buying industry given it was built on a platform of extraordinary hype and has since suffered its own decline. Also, much like how the Technology Hype Cycle describes the organic adoption of the technology over time once the Hype has dissipated and the useful nature of the innovation emerges, Collective Buying does add real value to Merchants and Consumers, and beyond the hype and the noise of Group Buying, that value add still exists – which then begs an interesting question, what is required to ensure an enduring future for Group Buying?

The key phases of the Gartner Hype Cycle are on the left of the table, an equivalent stage in the Group Buying evolution is on the right:

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I believe that to get through the Trough of Disillusionment and onto the Slope of Enlightenment, the players in the industry need to follow the 4 tenets of Effective Group Buying:

  1. Provide genuinely useful marketing services for Merchants, including valuable insights on their new customers and mechanisms to drive upsell and loyalty
  2. Minimise the promotion of irrelevant offers through investments in targeting technology
  3. Add Value to their members through genuine discounts on products and services
  4. Underwrite their offers with a suitable customer support policy and helpdesk