In an unusual move, Groupon has appointed a South African digital media agency to negotiate advertising on it’s behalf. Neo@Ogilvy, Ogilvy Cape Town’s digital media agency, has seen significant growth in 2011 and now boasts the digital media account for international group buying giant, Groupon.
The global leader of a new phenomenon in social marketing known as social commerce – a marriage between social media and e-commerce – Groupon has recently set up shop in South Africa. Implementing its hugely scalable and successful business model locally, Groupon negotiates considerable discounts from suppliers such as hotels and restaurants, based on the premise of a large buy in from the public. These deals are then offered online to Groupon’s users, and, if enough users buy in, the deal is on. Groupon has created a win-win situation where local businesses encourage new users to try their services, leading to a potential increase in sales and brand awareness. Consumers, in turn, benefit from great special offers that let them experience more of the cities they live in for less.
However, not all of Groupon’s business model is scalable. Its global approach to online media, which makes use of existing business relationships and buying power, is not yet feasible in the South African market due to insufficient web traffic which limits the opportunity for affiliate marketing activity. What this means is, in a highly unusual scenario for Groupon, it has employed a local digital media agency to negotiate online advertising on its behalf.
‘Winning the business of an international market leader is testament to our substantial progress in the digital media field,” comments Mia Scholtz, head of Neo. “Going up against media agencies both locally and internationally and coming out tops is another confirmation of this for me,” she adds.
Assisting Groupon to reach its sales targets, Neo will be building Groupon’s supplier network as well as handling the majority of its online advertising.