Hearst's media services company LocalEdge will adopt Analog Analytic's Bigger Better Deal platform, a white-label daily deal service aimed at supporting local media companies and advertisers. The companies plan to announce the partnership Monday. The deals are tracked and optimized using an analytics platform and other technology.
Hearst is one of many publishers signing on, according to Analog Analytics CEO Ken Kalb, who once ran a paid-search optimization company. He views daily deals through tech-tinted glasses, integrating best practices and analytics technology to run deals for Newsday, Newsweek, and soon one of the three top cable companies in the United States.
The deals are not limited to the U.S. Analog also supports offerings worldwide in China, Greece, Japan and England. In fact, Kalb says the company will launch a platform for Thompson Yellow Pages in India this week.
The phenomenon of the daily deal has nothing to do with group buying. "It's about an advertising medium for small businesses," Kalb says. "They no longer have to spend thousands of dollars to create the ad and thousands more to run it. Plus, the advertiser gets paid before they deliver a service to market."
The traditional deal gives merchants that advertise about 50% of the gross profit from the daily deal, the publisher gets 40%, Analog takes 7% and the remainder goes to the credit card company.
Perks are built into partnerships between Analog and publishers. The idea centers on a consumer-based revenue model, supported by traffic, analytics and optimization tool. And if publishers don't have a local daily deal, they can source one from other local properties in the area. If one publisher has access to a great deal, it can push it to the network and generate additional ad revenue.
The OC Register, which launched in beta recently, ran a deal last week for a boat ride from Newport Beach, Calif. to Catalina Island, off the coast of California. The publisher sold 5,400 tickets for $34 each in one day -- nearly generating $188,000 from the deal, and additional syndication brought in more than $30,000, according to Doug Bennett, president of interactive at Freedom Communications, which owns the OC Register. Bennett runs Daily Deals for the company.
The OC Register daily deal promoted a two-hour Duffy boat ride in Newport Beach harbor that by midday Friday generated 57 sales for $69. "At the end of the day we will have probably sold about 200," Bennett says. "It's almost performance advertising because advertisers see exactly what they get for the amount they spend."
Bennett says that since the smaller properties don't have enough subscribers or readership to run a daily deal, the publisher will extend the duration -- for example, for the weekend or several days. Since smaller advertisers typically don't want to spend money to run a daily deal, traditional sales organizations don't know how to support them. So publishers need to adjust the thinking of sales staff to support these smaller deals -- and avoid running the same deal more than once monthly.
The deals are not limited to online or mobile. Some deals run on broadcast TV or radio that drive consumers to online. Bennett says Freedom Communications is tossing around the idea of using QR codes on television, along with near field communications (NFC) somewhere in the mix.
Bennett says "it's not as simple as it may look," but traditional publishers must catch on. Revenue and circulation counts are down and many publishers -- including Freedom Communications -- rely too heavily on traditional advertising, so figuring out how to generate money from the Web has become a priority. "We've had to adapt to the digital world," he said. "There will come a time when most of our business will come from online."