Friday, August 24, 2012

5 Reasons Behind LivingSocial Failure in Middle East

On 13/8, the UAE-based newspaper reported that LivingSocial is planning to pull out of the Middle East just one year after entering the market through the acquisition of a homegrown player. One week later, the newspaper reported that German daily deals company is bidding for LivingSocial's Middle East assets in what it described as a "fire sale" by the loss-making business.

LivingSocial operates in small markets such as the UAE and Lebanon, whose online populations approach 3.5 million and 1.5 million respectively, and Egypt, where perhaps only around 3 million people use e-commerce sites of its near 22 million internet users (Source).

The good news for online media industry is that database of email addresses (750,000) were considered as company asset. However, the number -that is less than 10% of region's online shoppers- had grabbed my attention to 5 reasons behind LivingSocial failure in the middle east region:

1- Not using traditional 'offline' marketing:
It seems that LivingSocial and other group buying providers had decided to focus solely on the digital marketing alone, which is a fatal mistake. Although LivingSocial may target a segment that is usually surfing the web 24/7, it is always important to address traditional mass media channels (i.e. TV, newspapers, etc) taking into consideration that the decision maker (i.e. buyer) in the daily deals may not have much time and energy to investigate what LivingSocial is about (especially non-IT savvy folks).

I had explained here how media over-estimated the role of social media and internet tools toward amplifying the 25 January revolution in Egypt. It is always important to integrate both online and offline marketing activities.

2- Ignoring mobile SMS marketing:
Digital marketing is not about email campaigns only. Utilizing mobile SMS campaigns would support widely LivingSocial operations in terms of discount visibility, and brand awareness.
While having mobile-compatible website is essential for any leading service provider, utilizing database of users including SMS is important since it yields better response rate.

Offering the option of adding mobile phone number (with ceiling limit of let's say 2 SMS messages per week) would truly add value to all stakeholders: LivingSocial itself, the consumers, and the retailers.

3- Not utilizing social media:

Well, it might be shock since LivingSocial is all about social media (its name at least). For example, Twitter was not utilized as a powerful marketing tool to attract thousands of potential consumers (Twitter marketing hints here are applicable for any business company).

A video clip explaining briefly a specific discount offer to consumers would be a great online promotion tool if utilized by LivingSocial. I seen many email campaigns where video links (i.e. YouTube URLs) are enjoying higher click rates compared to other links (i.e. link to a website).

Although paid internet advertising would be useful as well (more online advertising hints here), E-Marketing is not about YouTube and Twitter.
Internet forums should be considered as well (Here is list of 7 famous Arabic internet forums). Internet forums attract audience groups that are looking for a specialized tips and hints regarding specific product or service (i.e. fashion -related products within Fatakat female forum).

4- Not offering multiple payment options:
From our point of view, key barrier for LivingSocial was limitations of payment options available - only via credit card. However, OneCard could be an effective solution to overcome this.

5- Not integrating LivingSocial offers:
Many of companies that used LivingSocial are already having their own social media presence. I noticed that some companies were not promoting their own LivingSocial offers on their own social media accounts (or were doing this as a self-initiative rather than something that should be required by LivingSocial).

While interacting online, it is essential to integrate your advertising and marketing activities in a professional and productive way to maximize your spending ROI (Read 5 Website Success Measures for Businesses).

However, integration should include ensuring offer compliance with what had been advertised within LivingSocial email and/or website. In some cases, no direct feedback channel was available to consumers who are complaining against an offer that was not matching what is actually has been advertised.

Now, LivingSocial website displays message that announce closure and advise consumers who want to complaint (for redeeming vouchers) to contact consumer protection governmental authorities!

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