A term increasingly buzzing throughout the local media space is “closing the loop.” This culminates the past two years of mobile advancements, recent excitement around local deals, and finally the emergence of mobile payments.
In June, this column examined the steps Google is taking in this direction, through its Wallet and Offers products. Together these will close the loop on search and other advertising where Google hangs its hat, by tracking “post click” offline purchases.
Since the Wallet/Offers combo punch, we’ve seen a few other examples of mobile, deals and payments coming together to close that local loop. It’s the holy grail of local (and of search), and it’s only just beginning to take form.
Among payment providers embracing local deals, American Express so far has been the most aggressive. In the last month alone, it’s launched mobile deal and payment products with Foursquare and Facebook.
During BIA/Kelsey’s recent Deals3D conference, Facebook announced “Link, Like, Love,” allowing users to link their Facebook and AMEX accounts. Deals sourced by AMEX are liked and shared within one’s social graph, but more importantly saved to their AMEX account.
Facebook will use network data such as items liked, in order to target deals for specific users. But the real magic happens when deals are automatically applied and tracked through the offline transaction (when the associated AMEX card is used).
Going back further, AMEX last month launched its partnership with Foursquare first trialed at SxSW. Similar to Facebook, users connect their Foursquare and AMEX accounts, then redeem deals discovered on Foursquare by transacting offline with AMEX.
To target deals, Foursquare uses social activity within its network (kind of like Facebook) in addition to other signals like check-in history. Deals are also delivered using the same targeting methods in its Explore Tab – just as it suggests local places you might like.
Foursquare Biz Dev lead Tristan Walker told me during a featured interview at Deals3D that it examines 750,000 daily check-ins to draw out three main factors: recency, frequency and value. These signals govern which deals and specials are pushed, and to whom.
It’s All About the Data
All of the above strategies are developing differently but a common thread is reliance on data. This is key as the deals space moves from deep discounting (a la groupon), to deals whose performance relies instead on relevance and targeted delivery.
“If you don’t have the insight to target customers based on purchase history, you’re operating in the dark,” said Gary Kearns, MasterCard group executive for information services, during Deals 3D.
As MasterCard pushes further into local deals (with partners like Google Wallet), 37 million merchants and 63 billion annual transactions puts it in a good spot to collect purchase behavior and target deals accordingly. That goes for itself and its partners.
“Purchase behavior is the new demographic,” said Kearns, meaning that demographic targeting – highly valued by marketers for decades – pales in comparison to actual purchase data. The former is just a shadow or approximation of the latter.
Empowerment to predict future purchase behavior, he argued, comes directly from knowing what’s been sold, redeemed, and how often. And for local merchants, richer consumer profiles come from analyzing purchases in totality - not just what they buy from you.
You Are What You Eat
All of this data collection and crunching is also important for another reason. The continued convergence of social, local and mobile media (SoLoMo) opens lots of opportunities, but equal challenges in reconciling disparate data sources.
Purchase behavior could be one way to bring it all together as argued by Kearns. For one, it can be a closer approximation of user intent than the targeting variables used for years, such as demographics, geotargeting, contextual targeting, and even search terms.
“I am what I buy," argues Kearns, “not what I search for.”