Hyperlocal ad targeting and local deals

by: Dick OHare, on Nov 7, 2011 in Hyperlocal Advertising, Market Musings

A couple weeks ago, I attended the Street Fight Hyperlocal Conference in Manhattan.  Street Fight (@StreetFightMag) is doing a great job covering the burgeoning hyperlocal segment of the digital media industry.

Yipit’s Founder and CEO, Vin Vacanti gave a compelling overview of the daily deals market.  As the daily deals market has become so competitive, many of the previous email acquisition channels (ie., PR) for the larger daily deals companies (eg., Groupon) have closed down.  Vin quoted the cost of acquiring an email name for a daily deal company is between $8.00-$10.00.  And, only about 25% of acquired email addresses participate in daily deals.  So, the real cost for an active email address is closer to $40.00.

Back when Groupon was spending $180MM+ per quarter on online marketing to drive customer acquisition, I was seeing daily deal display ads on the homepages of the major portals — offering deals for merchants over 40 miles from my home.  That is incredibly inefficient and flies in the face of what is truly “local” about a local deal offering.

What I propose could be much more efficient for a local daily deals company would be “geo-contextually” relevant hyperlocal display ad messaging for daily deals that are truly local for a customer.  Meaning, the merchant is no more than, say, five miles from the consumer of that ad message.  If you do the math on display ad pricing for hyperlocally targeted ads (let’s use $10.00 CPM’s to make the math easy), it only requires one conversion of an email address submission for every 1000 ad impressions.  Based on the effectiveness of hyperlocally targeted ads (along with a compelling call-to-action message) that we are seeing at Local Yokel Media, hyperlocally targeted local daily deal ad messages could outperform the acquisition metrics the local daily deals companies are seeing through other channels…most notably broadly targeted display ads.

We think this is achievable.  And, we’d like to put our money where our mouth is for any local daily deals company who may be reading this.  I invite anyone working in marketing at a daily local deals company to contact me to discuss how we would go about executing this.

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