Let's Make A Deal: Ad Company Debuts Online Offer Exchange
Capitalizing on the rise of group buying online, Groupon competitor DealOn Media has launched an Internet-based exchange allowing deal suppliers to bid to get their offers displayed on third-party sites. The idea behind the new <a href="http://www.offerex.com">OfferEx platform</a> is to give deal providers like daily deal sites broader distribution of offers while providing publishers with a more efficient way to source and resell offers. DealOn Media plans to make money by taking a small share of transactions handled through the system.
"OfferEx distribution partners can immediately leverage the revenue potential around the billion-dollar daily deal and group buying space without the substantial effort and expense of building out a large sales force to secure merchant and business offers," said DealOn CEO Rich Razgaitis, in a statement. "By lowering the barrier to entry, OfferEx will make daily deal marketing mainstream."
Deal suppliers bid on how much commission they are willing to pay for each voucher, or offer. The higher the bid, the more publishers will presumably want to feature the deal and push it to their audiences.
So, for example, if a daily deal site or local publisher has a merchant deal with a local restaurant to sell a $50 voucher for $25, they might bid $5 as a commission for each voucher sold. When that deal is sold by a third-party site, the publisher keeps $5 as a commission and sends $20 to OfferEx, which then pays the supplier.
Rafael Cosentino, vice president of business development at DealOn Media, said the new platform draws on technology developed for its separate Adblade online ad network, focused on high-CPM, performance-based advertising for news and information sites.
Through OfferEx, "publishers and deal sites can take deals from the exchange to supplement their own deals in existing markets they serve or even open new markets that they had never served before because they didn't have a sales staff in those markets," he said.
Social shopping has taken off with the emergence of Groupon and other deal-of-the day sites including DealOn, where the more people that join in a deal, the lower the price drops. Underscoring the collective-buying craze, Groupon earlier this raised a venture funding round valuing the company at more than $1 billion.
Major social sites like Yelp and Twitter are getting in on the action, recently adding or testing their own versions of local daily deals and flash sales.
But with OfferEx, Somerville, N.J.-based DealOn aims to create a central business-to-business marketplace for the growing and increasingly fragmented daily deal business. To that end, the company provides publishers with an OfferEx API (application programming interface) to import deals into their content management for wide distribution. The system also provides reporting for both sides of transactions.
It also promises that unlike affiliate models, its technology allows publishers to handle transactions on their own sites and maintain control of consumer relationships. The company said OfferEx is currently working in private beta with several deal suppliers and resellers, but Cosentino declined to name any participants that are testing the platform.