Group Buying Startups Find New Avenue to Customers Through Social Games

Group buying startups, which let consumers get deals with local businesses en masse, are finding a new route to customers beyond the e-mail newsletter and prolific online advertising campaign.

They’re tapping into social games, in a marriage of two of the most lucrative revenue models to emerge off Facebook’s platform. Social gamers earn additional virtual currency by buying Groupon or LivingSocial deals while they’re playing.

“Farmville’s been called the new daytime TV,” said Terry Angelos, a co-founder and chief product officer of TrialPay. “Rather than spending time watching ‘Days of Our Lives,’ people are playing Farmville and seeing ads for local restaurants.” Indeed, many of TrialPay’s supported titles attract women aged 35 to 50 — a prime demographic for online shopping.

TrialPay, which started partnering with Facebook earlier this year to serve offers in exchange for the social network’s virtual currency Credits, has been working with group buying companies including Tippr, Mertado, LivingSocial and Groupon for the past six months. These companies have flourished over the past year, scoring valuations north of $1 billion. Groupon alone has sold 9.8 million coupons, with about $420 million in savings, in a mere 21 months of existence.

TrialPay gone from serving one deal a day to gamers in each city to providing up to 20 different deals per metro area. The consumers who follow through on the deals TrialPay serves in games like  Happy Aquarium, Sorority Life and Mobsters buy one about every two months, according to data the company analyzed over the last 60 days. (TrialPay wouldn’t say exactly how many transactions the company has facilitated over the last two months, except to say that its sample size was in the thousands.)

Some players are coming back to games every day to look at deals; one even purchased a deal every day for an entire month. TrialPay keeps a cut of the overall deal value or gets a fee for every customer they drive, depending on the partner. Angelos says the company’s commissions are “much better” than standard affiliate fees, which range from 4 to 20 percent.

“Urgency is a strong motivating factor,” Angelos said. “You have to make a decision on the spot since these offers do expire or get refreshed with new ones.” He added that the company is also looking to bring other similar flash sales businesses like Gilt Groupe on board.

TrialPay also unearthed several key pieces of data that shed light on the social buying phenomenon altogether:

Geography

The big cities tend to favor more leisurely deals like food and spa offers, while smaller cities are more practical, buying deals for oil changes, house cleaners and child care. Businesses in these mid-size and smaller cities also tend to offer deeper discounts.

Chicago’s at the top for deals completed, but that may also be because it’s social buying giant Groupon’s home turf. Angelenos spend more, but they also tend to save more in raw dollars.

Top five metro areas by deals completed:
1. Chicago
2. Los Angeles
3. Atlanta
4. New York
5. Toronto
13. San Francisco

Top five metro areas by spend
1. Los Angeles
2. Chicago
3. San Diego
4. Phoenix
5. New York
15. San Francisco

Top five metro areas by value garnered
1. Los Angeles
2. San Diego
3. Chicago
4. Pittsburgh
5. Oklahoma City
13. San Jose

Top five metro areas by dollars saved vs. original value
1. Los Angeles
2. Oklahoma City
3. San Diego
4. Pittsburgh
5. Phoenix
14. San Jose

Top five metro areas by % savings overall
1. Oklahoma City
2. North Jersey
3. Hampton Roads
4. Columbus
5. Fort Worth
15. San Jose

Deal Categories

Restaurant and food deals are by far the most popular, but spas tend to give the biggest discounts in terms of raw dollars. Utility deals, which are practical offers for services like dry cleaning or pet grooming, offer the biggest discounts in terms of percentage.

Type of deal ranked by most completed
1. Restaurants, Gourmet
2. Entertainment
3. Spa, Salon
4. Shopping
5. Activity, Sports
6. Utility
7. Activity, Lessons
8. Travel

Type of deal ranked by user dollars spent
1. Restaurants, Gourmet
2. Spa, Salon
3. Entertainment
4. Utility
5. Shopping
6. Activity, Sports
7. Activity, Lessons
8. Travel

Type of deal ranked by best value and largest dollar savings
1. Spa, Salon
2. Restaurants, Gourmet
3. Utility
4. Entertainment
5. Shopping
6. Activity, Sports
7. Activity, Lessons
8. Travel

Type of deal ranked by the largest percentage in savings vs. original value
1. Utility
2. Spa, Salon
3. Activity, Sports
4. Activity, Lessons
5. Shopping
6. Entertainment
7. Travel
8. Restaurants, Gourmet

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6 Responses to “Group Buying Startups Find New Avenue to Customers Through Social Games”

  1. Group Buying Startups Find Customers through Social Games says:

    [...] Continue reading on Inside Facebook. To dig deeper into the social gaming market, check out our new report: Inside Virtual Goods: [...]

  2. The future of in-game advertising in social games | ryanchartrand.com says:

    [...] even now seeing Groupon-style deals pop up in social games like Happy Aquarium, Sorority Life and Mobsters (all popular titles), where a [...]

  3. Some New Deographics for Group Buying Sites | Deal By Day Update says:

    [...] of buyers are women, most are educated, and they all make a decent wage.  However, new data from insidefacebook.com, unveils some new information.  Below the top cities in terms of group buying, as well as the best [...]

  4. This Week’s Headlines on Inside Facebook says:

    [...] Group Buying Startups Find New Avenue to Customers Through Social Games [...]

  5. Angele roof says:

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  6. Angele roof says:

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