Google: Coupons in Adwords

@Webmanagementus of Web Management pointed out this Tracfone Adwords ad that includes a Coupon attached to the ad. I had not seen this previously although Greg Sterling had reported on seeing them in the wild on SEL last week. It clearly indicates Google’s desire to expand the roll of coupons as a revenue generator. It is an obvious fit for local for both Boost and Adwords with location extensions although this current test is obviously neither:


 


 
Coupons have had a long a tortuous life at Google. They were introduced in late 2006 and but left to languish for a number of years before seeing some activity in late 2009 and through 2010 with the Tags Beta. 2010 culminated with the failed effort to purchase Groupon.

2011 on the other hand has seen lots of other activity on the coupon front for Google. Besides the new Adwords coupon test first seen last week, rumors of Google Offers, their Groupon competitor, first surfaced in January, with a full blown Offers beta rolling out June 1 in Portland. Google also first rolled out Latitude Check-In Offers at SXSW in March with a limited national test in April. They cancelled the Tags product in April as well. Roll out early, iterate often and shit can anything that doesn’t generate enough profit seems to be the coupon approach.

Here is a chart of Google’s current free, paid and cancelled products…

Type Coupon First Seen In Wild
Places – Free Places Offers 07/2006
7-Pack Tags Coupon Tags Test Cancelled 2/2010 – 4/2011
Latitude -Location Based Check In Offers – Test 3/2011
Adwords -Ad Based Pay Per Coupon – Test 6/13/2011
Daily Deal Deal Offers – Portland Beta 6/1/2011

Much like the trend on Places for links on Google to head off to other Google properties, this new product takes you to a Google page.

When the View Offer button is selected in the newest Adwords coupon test, it takes you to Google.com/Coupons that either prints or saves the coupon for later use to your My Offers area, the same UI used to save Google daily deal Offers and (I assume ) for Latitude Check-Ins.

Updates in Google Offers Beta

Google Offer’s Beta in Portland started on June 1 and there have been 5 deals in total to this point. Here is a summary of the deals to date:
Date Co./URL Deal % off Purchase

Window

 Avail. Sold
6/1 Floyd’s Coffee $3 for $10 work of food 70% 15 hrs 2000 1709
6/2 Uptown Billiards $10 for $200 worth of Pool 50% 15 hrs 500 95
6/3 Karam Lebansese $8 for $16 of Lebanese Food 50% 15 hrs 500 0
6/4 Celebrity Tan $10 for $39 Spray Tan 74% 39 hrs NA 157
6/5 Portland Pedicab $45 for a $90 3 brewery pub tour 50% 23 hrs 700 15 but still open

 


 
Other than the first deal at Floyd’s the volume has been very low to moderate. On the ground anecdotal evidence indicated that Floyd’s was not that busy so it is not unlikely that being the first deal, that many of the offers purchased were by those in the industry assessing Google’s product. I guess Floyd’s won’t mind. Rocky Agrawal also noted that “the early ones get benefit of local press. All 4 tv stations and newspapers covered the story.”

In a conversation with one of the participants they shared with some interesting factoids:

– They were paying Google 50% of the proceeds. “Same as Groupon”

– The rep servicing the account did visit but is stationed in Los Angeles NOT in Portland

Replicating Groupon’s success will not be quick and it will not be easy for Google. Not only do you need a sales force but you need a great list of subscribers and popular businesses willing to give incredible discounts. Clearly Google is not anywhere near there yet if you take the sales number as an indicator. How long it will take will be interesting to see.

Google Confirms Testing a Groupon Like Product – Google Offers

Update: Matt of Yelo.us, a local search marketing firm in NY, notes in his comments below that Google is already actively marketing this product in NY. He points to the Offers landing page where the program is described very briefly and there is a contact form to participate in the beta programs for Google Offers. On the page Google notes: Google Offers makes it easy for you to attract new customers and bring back old ones by enabling you to instantly post discounts and other types of special offers across Google properties.

Google has confirmed a Mashable report that they are testing a Groupon like product. Greg is also reporting on this at SEL.

Google’s statment:

Google is communicating with small businesses to enlist their support and  participation in a test of a pre-paid offers/vouchers program. This  initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with  customers in new ways. We do not have more details to share at this time, but will keep you posted.

Mashable is reporting that “that Google will pay out 80% of a business’ revenue share three days after its deal runs. Google will hold the remaining 20% for 60 days to cover refunds before sending the rest” and that it will be powered by Google Checkout.

Google renamed their coupon product to Offers on November 15th, just a mere two weeks prior to their discussions with Groupon becoming public. The purchase of Groupon made sense to me at the time and the development of a deal product now does as well.

Here is a slightly revised chart from that time frame of Google’s free and paid products for Local that shows how a Groupon like Offers product would fit in the mix…

—

Type Location Ad Coupon
Free Places Offers
Good Tags Tagged Offers
Better Boost An automated product to compete with the newly announced Groupon Stores
Best Adwords Groupon Like Product with Direct Sales Force

The development of an automated or semi automated deal product at level 3 in the chart above is a no brainer for Google. Developing a deal product for national brands is also within their current institutional knowledge. Where they could very well have trouble is the “feet on the street” in the local markets. And that will be the true test of their ability to compete in the space.

As I noted in early December, unlike Tags and Boost that had restrained upper limits on income, a Deal product could have a virtually unlimited upside for Google if adopted nationally. The market, while starting to get crowded, has two market leaders and there is certainly room at the moment for a third. Whether they will successfully execute and be able to achieve a market leading position is ultimately the question.