Online Advertising Strategies

Some business owners skeptical if the long-term payoffs are worth the cost

You’ve seen the emails and heard the radio ads. Internet-based “daily deal” coupons are becoming a large part of the online advertising industry. But are such offers worth the cost for an auto repair shop or other small to medium-sized business? Some say no, while other business owners report they are gaining new customers–and profits–from the venture.

A June 2011 survey of small businesses by MerchantCircle finds that the leading reason companies like daily deals is customer acquisition (58%). At the same time, the top reason for not offering a daily deal again (42.4%) was their failure to attract new customers. Hmmm, perhaps more data will help answer our question.

Two surveys back up the belief that daily deals attract new customers. The first, a survey conducted by Utpal M. Dholakia at Rice University, found that new customers made up more than 77% of deal buyers. All of them spent over the value of the deal offer and, on average, about 20% became repeat customers. The second study, done by ConsumerSearch.com and The About Group, discovered that an overwhelming majority of those who had used a daily deal returned– even without another discount. Fifty-three percent of redeemers went on to become regular customers.

Businesses who were skeptical about the value of daily deals expressed concern about giving discounts to consumers who would have patronized the establishment anyway. According to a ForeSee Results survey, there is some basis for this concern. The largest share of daily deal users – thirty-eight percent—said they were already loyal to the business offering a deal. However, nearly a third of those taking advantage of a daily deal special were new customers, and the same percentage were customers who had either visited only occasionally or had stopped patronizing the establishment altogether.

So what’s the answer? Are daily deals worth it? Looks like the jury is still out. But one thing is certain. As this graphic demonstrates, an on-going search engine advertising campaign will put in front of people who are ready to buy, when they’re ready to buy – not when your “daily deal” happens to hit their email box. This is especially important in the auto industry, where people who need services or products typically need them right now.

WebVisible has more than 10 years of experience helping local businesses establish an effective online marketing presence through fully-managed online search advertising programs that generate predictable results. Contact WebVisible today for more information on how search advertising can help grow your auto-related business.