Many of you probably saw the announcement yesterday that Groupon had partnered with McClatchy to distribute unique daily deals through McClatchy sites nationwide According to the release:
Groupon announced today it has signed a national agreement with The McClatchy Company to distribute exclusive content to McClatchy’s websites located in 28 U.S. markets . . .
Visitors to McClatchy websites will see exclusive Groupon deals not available on Groupon.com. Groupon will broker each deal with its customary quality, editorial style and high standards of service. Daily Groupon deals will launch first in the Sacramento and Kansas City regions with other sites following over the next few months.
It will take a few months to roll out on the initial sites apparently and, if all goes well, to the entirety of the McClatchy newspaper network. Characterized as a “win win,” I’m not quite convinced. (McClatchy’s Sacramento Bee offers its own relatively basic coverage of the partnership here.)
Some newspapers have begun to offer daily deals with white label partners such as Analog Analytics. LivingSocial has a deal with the WashingtonPost company and, in my area, the lesser-known TownHog is the partner for daily deals from the Hearst-owned SF Chronicle/SF Gate.
Eventually, it’s safe to say, that all major dailies will be compelled to offer some version of this daily deal functionality. Consumers, so far, love the deals and SMBs seem to report high satisfaction levels with group buying to date. The question is: who is the right partner and how is the service presented and branded?
Groupon has the advantage of the in-market sales presence and a backlog of offers in the pipeline. McClatchy would have trouble matching that potentially if it were to sell the deals themselves.Then there’s the conflict with its other ad models. The “pay for customers not clicks” proposition of Groupon and its rivals conflicts with other forms of marketing that McClatchy is selling to SMBs in local markets, including SEM.
In the relationship Groupon will apparently “own” the advertiser, while McClatchy will have the relationship with the reader-consumer. Collectively US newspaper sites reach almost 60% of the online audience according to comScore. Groupon will get additional reach in McClatchy markets and presumably some additional branding and visibility. In a short period of time, however, Groupon won’t need newspapers.
According to McClatchy’s Chris Hendricks from the podium of the last Borrell show in the Fall, 16% of the company’s revenues are from “interactive.” This Groupon relationship will provide some additional revenue — though how much is unclear — to the publisher.
I was told by Groupon President Rob Solomon that the deal provider would do between $300 and $400 million this year in gross revenue. Groupon takes half or nearly half of the aggressive discount it negotiates with the SMB. Presumably McClatchy gets a slice of Groupon’s take.
Working with Groupon directly offers more revenue than working with an aggregator perhaps. And, ironically, the deal will help “defend” the site against Groupon itself and rivals to some degree. It’s a little bit of the “keep your friends close and your enemies closer” way of thinking.
The deal “makes sense” for both parties. In my mind it’s a kind of a smart “stop-gap” in the near term. However it’s doubtful that McClatchy is building any long-term value here for itself.
Do you disagree?