April 20, 2011
There are three reasons why General Mills just became the first major consumer packaged goods company to offer a deal through Groupon.
Cereal. Yogurt. And refrigerated dough.
Those three items are the most popular categories for coupon use in the United States — and they’re all categories in which our home-state food giant holds a dominant position. So last month, General Mills offered a deal through Groupon, the online coupon site.
For those who don’t know, Groupon is couponing with a twist. The site negotiates discounts with retailers and manufacturers, then offers one deal per day to more than 50 million members in nearly 200 U.S. cities and 500 markets worldwide. For example, you might be able to buy a round of golf and a cart rental, normally a $100 value, for $50. The catch is, you only get the deal if a minimum number of people in your city participate. That encourages people to spread the word to their friends through social networks like Facebook and Twitter.
Groupon keeps half the money you pay for the deal — so in the golf example, Groupon would get $25 and the golf course would get the other $25. That business model is one reason Groupon turned down a $6 billion buyout offer from Google last year and is preparing to go public in a deal that would value the company in the $20 billion range.
On April 21, General Mills offered a $20 deal that netted consumers $40 worth of products — shipped to their homes — plus a $15 coupon book. The number of consumers buying the deal isn’t available, but it sold out by 11 a.m. in both the Twin Cities and San Francisco, the two markets where it was offered.
The General Mills deal was a hit, according to the web-tracking service Experian Hitwise. Groupon’s web traffic and its share of visits among coupon websites both jumped about 20 percent on the day of the General Mills deal. That kind of result surely will encourage other consumer packaged goods companies to take a look at Groupon, and encourage General Mills to use it again.
Online couponing represents one more battle in the never-ending Internet war on the newspaper business. News and opinion sites are luring away subscribers, and sites like Cars.com, Realtor.com and Monster.com have eaten away their key advertising categories of automotive, real estate and employment.
One continued area of strength has been coupons, especially those in the Sunday paper. How many times have you heard someone say they only buy the Sunday paper for the coupons? And indeed, about 88 percent of all coupons used in the United States still are distributed through free-standing inserts, such as those in the newspaper or the value packs that come in the mail.
But just as digital advertising is growing faster than print, the growth of online coupons is outpacing that of traditional free-standing inserts. Insert use grew 7 percent in 2010, not surprising given that people turn to coupons in times of economic distress. But online couponing grew 37 percent, according to research from Coupons.com.
And online coupon users have great demographics, with an average household income of $105,000 — about 26 percent above the national average. Meanwhile, more than a third of online couponers have a college degree — again, well above the national average of 27 percent.
Online couponing, and its adoption by companies like General Mills, is one more milestone on our road to becoming a digital society.
This is John Reinan’s weekly marketing column for MinnPost.com.