The Value of Targeted Distribution – Brad Feld’s Amazing Deals
During our time at TechStars, we were fortunate enough to work with Brad Feld as one of our lead mentors. This typically involved a 30 minute weekly meeting, either in person or on Skype. Midway through the program, Brad concluded a meeting in typical fashion, asking “what can I do to help you guys?” We were looking for new customers that a) had a big audience, and b) knew a lot of merchants, so we asked Brad for any good contacts. “Well, I have a big audience and I know lots of merchants, why don’t you build me a deal store?”
And with that suggestion, Brad Feld’s Amazing Deals was born. A few weeks after the meeting we ran our first deal on Brad’s store. We didn’t have an email list of potential buyers, which is the most common way to spread the word about offers, but Brad agreed to promote the deal with a blog post on Feld.com and on Twitter. The first deal was a hit, even garnering coverage from TechCrunch. Since then, we’ve had fun running deals for Brad, and have gained several valuable insights about the daily deal industry. This blog post discusses some of the key takeaways.
To date, we’ve run 40 deals on Brad’s store. For the most part, we’ve tried to make them relevant to an audience interested in startups, finance, running… things Brad cares and writes about. Deals have included several online learning courses from Udemy, bow ties, excel training, touchscreen-friendly gloves, running sandals, and even a Makerbot. Here’s a list of the top 6, including gross revenue data, and profits (less Deal Co-op fees) to Brad’s store. All deals offered have included a revenue share back to the merchant of 60 to 80%.
In all, the 40 deals that have run on Brad’s site have grossed $56,907.
Deal Quality vs. Quantity
After the early success of deals like Agloves and Excel Everest, we were all encouraged to run “more deals!”, as Brad would say in his emails to us. We started stepping up the quantity of offers, putting out two or three a week during the middle of 2011. As the deal volume increased, it became obvious that deal quality and relevance to Brad’s audience decreased. We ran a deal for teeth whitening that sold three vouchers. Then a water bottle deal that also sold three. And who can forget the iPhone docking station that looked like a pig? Everyone except the only guy that bought one.
There was a clear difference between performance on deals that were specifically targeted towards Brad’s audience, and ones that weren’t. Brad blogged about 18 of the most targeted deals on feld.com, and those deals grossed $50,363, or $2,798 per deal. The 22 less targeted deals, even though still being emailed to a list of several thousand feld.com buyers, generated $6,544 in gross revenue, or roughly $300 per deal.
So was this a good thing?
There are a few ways to measure the success of this project. The first, and easiest way, is financially. The 18 targeted and blogged deals grossed over $50,000 with net revenue in the range of $10,000. That’s $555 of net revenue per blog post. Some of the deals were sourced through Deal Co-op’s Public Deals, which is a repository of deals available to bloggers that don’t want to personally source offers. Brad also donated some of his profits in a few instances. Sourcing and donations aside, Deal Co-op still wrote Brad’s company checks for over $7,000 (providing Foundry some needed funding). Is making $555 per blog post good if you are Brad? You’d have to ask him, but it certainly doesn’t seem bad.
This project isn’t just about the money though. Another important metric is whether this was viewed as a positive thing by Brad’s audience. This is also difficult to measure, but the answer seems to be yes. Blogged deals generated an average of 10 comments per post, a good number for a post on Brad’s blog. If you sift through those comments, you won’t find anything negative about the project – “I can’t believe you’d do daily deals” for instance. There are a lot of very positive comments, including “Those gloves are rad! Buying a pair asap” and “I need this,
The biggest thing we learned running Brad Feld’s Amazing Deals is that serving up relevant offers to an engaged audience is well received by both the audience and merchant alike. As soon as we started running less-targeted offers, we lost consumers’ attention and momentum. The deals were worse, the energy for the project went down, and there was a perception (by me at least) that if we kept ratcheting up the volume of generic deals, it might even hurt Brad’s brand.
Brad Feld’s Amazing Deals is a good model for the sustainable future of daily deals. If you have an audience, this case study shows that you can quickly create a store and monetize with group buying. In cases where you can take the time to pair up a merchant that is a great fit with your audience, there is a lot of money to be made, much more so than with traditional Google Ads, for instance. Plus, a targeted deal creates goodwill, and even stands on its own as blog content.
At Deal Co-op, we’re huge fans of empowering entrepreneurs to make money with daily deals and group buying, and we encourage store owners to take from some of the lessons learned with Brad Feld’s Amazing Deals. You don’t have to run deals every day. There’s absolutely nothing wrong with a “weekly” or even “twice-monthly” deal sites. If you take the time to find deals that are relevant to your audience, they will respond. Ironically, Brad Feld’s store taught us that, at least for a single blogger, you don’t win at daily deals by doing more, faster, you win at daily deals by doing less, better. A few great deals will make you more money than a lot of average ones!