Bemoan the disappearing Chinese wall all you want–editorial and sales are cozier than ever. The blurred line between commerce and content is apparent in early successes of editorial-like commerce companies like Fab.com. It’s also apparent in the increasing willingness of media companies from the New York Times to “stuff porn” blogs like Daily Candy to turn themselves into vendors. Group Commerce, a white label startup that powers such deal services, is here to facilitate the shift.
The company counts the Times, Meredith properties like Better Homes & Gardens, Parents and More, Boston.com and Thrillist among its clients. The Times’ deals service, called TimesLimited, is almost a year old. It’s angle is “more caviar than bikini wax,” but the jury’s out on how much money its made. In some ways the jury is out on whether the entire daily deal industry is a fad.
Some of the biggest players in new media have been quick to experiment with and kill the whole white label daily deals thing. Yelp drastically scaled back its daily deal service after a year. Facebook killed Facebook Deals after just four months in five cities. But Group Commerce, and daily deals in general, carries appeal for smaller online publishers who need to earn revenue beyond crappy display rates or old media companies trying to replace diminished classified ad money, and unafraid to leverage their brand name and reader trust to do it.
One old media category the Group Commerce hasn’t entered–but should–is radio. Cumulus Media, the country’s number two radio player, already has the DJs at its 570 stations pimping daily deals for local vendors via it’s own daily deals brand, SweetJack. Cumulus recently partnered with the other radio giant, Clear Channel, to sell SweetJack deals across its 850 stations. So SweetJack pretty much has monopoly on radio’s daily deals offering, and from what I understand, the service has been pretty successful. Group Commerce could benefit from a big category win like that, and considering Bob Pittman, Clear Channel’s CEO, is on Group Commerce’s board and an investor, it’s a little surprising the company isn’t a client.
Aside from old media properties, Group Commerce has its sights on the long tail. And then, the long, long tail. The company’s CTO Andrew Glenn was a lead engineer in the development of Doubleclick’s Ad Exchange, so the capacity to build a marketplace is there. The idea is that unsold deals from bigger vendors like TimesLimited or Boston.com could be thrown to the marketplace where smaller publishers, all the way down to blog networks, to select from the leftovers and offer them to readers.
The white label company makes money via revenue share with its publisher clients, which I suppose makes sense since the company takes a risk that each client it spends money setting up could lose interest in the project. Group Commerce wants its clients to be successful, so it invests in resources like customer service and sourcing offers said, Ceo Jonty Kelt. Sixty percent of the revenue goes to the merchant and the publisher and Group Commerce split the rest. “We invest a lot of getting publishers up and running and would like to share in reward,” said Kelt. “If (the publishers) don’t promote it well and leverage their voice then its not going to work.”
Group Commerce has a lighter product for smaller publishers that will be a subscription model. That one is in beta testing and will be available in the second quarter. For publishers, the investment in customer service and sourcing offers is important. It’s an experimental new revenue stream for them and most of Group Commerce’s clients don’t have the infrastructure in place to connect with local merchants and source their own deals.
Like with the display buying and selling market in the early 2000s, publishers need a little guidance from the facilitators. But, as the display market has evolved to an efficient marketplace (or total clusterf*ck). Group Commerce won’t have to hold their hands through the process. Aside from Pittman, Group Commerce’s investors include Spark Capital, Caremel Ventures and Lerer Media Ventures, which ave pumped a total over $18 million into the company across two rounds of funding, most recently a Series B in May last year.