Tippr’s Martin Tobias: Groupon Clones Done, ‘Arms Dealer’ Approach Paying Off

10/24/11Follow @curtwoodward

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traditional publishers have been tentative at best in embracing the online age (take it from someone who’s worked in media for almost a decade). But Tobias says that phase is passing, and publishers are now eager to hook up with partners that let them hold on to their own audience.

“Because the local media companies have gotten squashed by classifieds and a couple other things, frankly, their antennas are up. And a lot of them are saying, ‘Hey, we can’t get killed again.’ And that’s why we have over 100 publishers, that’s why the white-label daily-deal providers are getting decent traction and growing,” Tobias says. “Ten years ago, if I would have gone to the local newspaper, they would have told me to pound sand like they did to Craigslist. And they were wrong. But you go to them today, and they go ‘Please! Please stop my bleeding! Oh, you have a plugin that I don’t have to program anything? I put my name on it and I start to make money? Please, yes.’”

And unlike the consumer-branded side of daily deals, where Groupon and Living Social are the clear No. 1 and No. 2 companies, Tobias says the white-label sector is still scrappily competitive.

“We’re the biggest—we have 35 percent share. But there’s somebody that has 28 percent that’s right behind me. So I’m not as far ahead of all of my competitors as Groupon is of theirs,” Tobias says. He pegs Nimble Commerce as the No. 2 competitor on the white-label deals side of things, and says Shoutback Concepts, Second Street Media, and Group Commerce are “fighting it out” over the third and fourth spots.

A year from now, Tobias says, there will probably be only three serious competitors left on the white-label side: “And I guarantee you I will be one of them. I’ve got more money than anybody, I’ve got more patents, I’ve got more people, I’ve got more customers.”

Another way Tippr is hoping to outflank the daily deals market is by offering a source for daily deals, known as the PoweredbyTippr Marketplace, which allows publishers to fill out their inventory of discounts with offers generated by Tippr’s salespeople or other publishers in the network. That way, if a local publisher doesn’t have enough group deals to fill all the slots in their deals service, they can tap into the exchange to add new deals that apply to their area.

It’s a way of scaling up that doesn’t require the thousands of salespeople Groupon has on board—Tobias says there’s about 3,000 salespeople adding to the marketplace now, but only about 25 of them work for him. He likens the marketplace offering to Google’s AdSense network, which helps small publishers fill out their ad inventory—and has become a big revenue generator for the search and ad giant. [Updated the number of marketplace employees, now 25 instead of 50.]

“We’re the first and only company to be doing that in the deal space. Otherwise, everybody’s responsible for filling 100 percent of their inventory themselves,” Tobias says. “But if you look at what happened in display ads, you know this technology’s coming. You know it’s going to be important.”

And is that part patented too? “Oh yes,” Tobias says.

But here’s the big question: Will a product as specific as online coupons be a sustainable, long-term business? Tobias is betting that’s the case. He says daily deals have unlocked something that technology companies have been trying to do, unsuccessfully, since the dawn of the Internet: Tap into the huge base of small, local businesses that need better advertising.

“Small businesses don’t want to spend $1,000 on an ad campaign, they want to get 1,000 people in the door. And this group buying thing, this daily deal thing, is the only product that has gotten people out from in front of their computers, out from in front of their smartphones, and in local business, walking in the door, en masse—in in the millions,” Tobias says. “And consumers love it, because it’s not another ad. It’s something that they ask to be sent, that they want to see.”

“Advertising is a proxy for commerce. I do advertising because I’m trying to get my brand out there, I’m trying to get people to click on the site. But I pay for all of this stuff that doesn’t end up getting done what I actually want, which is somebody to buy my fucking product, walk in my freaking door,” he says with a laugh. “I do all that other shit to get somebody to buy my product or walk in the door. Group buying cuts out all that stuff and cuts right to the chase of what the merchant wants.”

But the pure “Groupon Clone” model of building a broad consumer deals brand, he says, is “done and stupid.”

“I’ve been doing this startup thing a long time, and the way most new technologies come along is: Phase One is somebody creates a consumer brand around the new technology, they get big fast, they get a lot of excitement and interest, there’s usually a blowup,” Tobias says. “Then, the guy who takes that technology and blows it out to everybody on a software basis, usually is the guy who makes most of the money over time and has the superior model. That’s why I’m doing it this way.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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