What Google & Facebook doesn’t solve that Groupon does [Local Ads]


You might already have run a Google’s CPC or CPM campaign to promote your business. World of advertising is changing faster than ever and now we’ve an additional option of Daily Deal Sites for nearly every product you can think of. Let’s first take a look at major ways to advertise online.

Google’s CPC and CPM

Google is not only World’s number one Search Engine but also world’s largest Ad Engine as well.

It serves billions of Ad impressions and generates billions of dollars in revenues every quarter -  More than 97% of Google’s revenue come from Google Ads alone.

Sometimes, It is difficult to identify Google as an advertising company or Search company! There is no doubt about their algorithmic prowess and vast collection of their advertisers.

Apart from all the algorithms that Google has, there is something that prevents competitors like Microsoft to come close in Ad Revenues – the vast collection of direct Advertisers that they’ve collected over a period of time. Even with the best algorithms Microsoft (or anyone else) can’t  beat google on Ads game.

Let me explain this with an example. Say Google has around 100k advertisers and say Microsoft has around 10k advertisers. When a web page is displayed it is important to display a highly relevant Ad to generate a click. Even with the best algorithm MS has to chose from only 10k advertiser’s pool, in contrast to Google’s 100k advertisers.

The probability of Google’s Ad being relevant is very high as MS might not have the advertiser who relates to the current web page!

Over a period of time, It becomes more and more difficult to collect vast pool of advertisers that Google is amassing. This explains Microsoft’s bloodbath on TechCrunch.

Facebook’s Hyper Targeting

Facebook has come up with a whole new way to address relevance.
You must have liked people, pages or things on Facebook and Facebook keeps track of what you like! All this data is very useful when it comes to selling you something relevant to what you like.

Now, let’s take a look at Facebook’s Advertising console.

Facebook Ads Targeting Dashboard

Hyper targeting matters because:

  • It helps narrowing the audience and keep the advertising costs down.
  • Helps reach only the perfect audience.
  • Advertiser has the highest control over their Ads and Viewers!

Groupon’s Deals – Pay Per Acquisition

All Google and Facebook stuff is really Cool and Geeky but our restaurant next door doesn’t have time to create campaigns, monitor conversions and Deal with his customers in the process. He needed a way to get the customers and a definitive one. i.e. all these CPC/CPM gets the visitor to the site but can’t ‘Close’.

Those in the Sales will have clear idea about importance of closing a sale.

Groupon does that best and puts money in the small business owner’s pocket while offering cool deals to their visitors!

CPC/CPM campaigns are like getting the horse to the pool and Groupon’s CPA is make the horse to drink. It means help business close deals not just bring the visitors. It’s an extra mile that Daily Deal Sites go.

None the less, there are more retail business than anything else in the world. It alone may count for over 100 Billion USD market in US retail advertising.

What’s next?

I think future belongs to Pay Per Performance types of Ads at least from majority of small and medium advertisers. The ones with higher budgets will always prefer CPC / CPA campaigns which may come cheap with expertise of using them. Daily Deal Sites are growing to address a huge market at the bottom of Pyramid.

May be future belongs to the most savvy advertising decision – pay per performance.

Feel free to express your thoughts and ideas on Future of Advertising!

  1. Rajan Chandi says

    They are mostly directory services and doesn't operate on CPA model where the advertising company gets paid only if the deal is done. e.g. A daily deal site won't be paid if they can't bring the customers. Directories have free or paid listing services. They certainly have pay per lead model but it is different from pay per closure model of daily deal sites.

    Pay per lead model will persist for sure. Pay per acquisition is hard to apply at all the places.
    I think PPL is relatively better than CPC or CPM models.

  2. Pradeep Chaudhary says

    very well written. Would love to know about the Justdial or Sulekha or asklaila, where they get you guaranteed inquiries or you may call it Pay Per Lead approach?

    What do you think about Pay Per Lead Model?

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