Patch Rolls Out Coupons: Is It Setting Its Sights on Groupon?
But I'd bet more than $5 that Patch has a Groupon-clone waiting in the wings, and that could be a very interesting combination indeed. Here's why: Groupon is tapping a Netflix-personalization expert to design algorithms that track its offers down to user zip codes and map them back to interest levels. But as we learned last week with Groupon's photography deal fraud problem, there are some limits to a call center-driven sales strategy -- namely, it makes quality control difficult at best.
Turning on the Groupon juice could be just what Patch needs to fuel serious revenues. It's "$1,000 per year for a video on Patch" model seems hollow in light of the intense competition for local directory listings -- after all, this is a directory play, right? And as the feed replaces the browser and commerce increasingly goes social, the static advertising attack model looks increasingly tenuous compared to something that can go wildly viral -- and, like Groupon, can be wildly lucrative on an upfront basis. Of course, Patch could also serve up both regional and national impressions to its user base, something Groupon is now tapping into more strongly than other group commerce services.
Naturally, Patch has carefully chosen to start in communities with attractive demographics and relatively wealthy residents, a nice position for the startup. And Patch hasn't rolled out a group-buying operation yet, so this is all speculation. But it's the logical next move for a hyper-local news company that is rapidly building an email newsletter database of interested parties tracking community events and, increasingly, shopping opportunities.