Online collective buying platforms Groupon and Living Social have taken the Internet and local markets by storm. Each day both companies feature deals on a wide variety of products and services across the country that consumers can opt-in to purchase. These daily deals are exclusive to certain areas and are not available in some local markets. Since both companies publicize their daily discounts and offers via extensive email lists, loyal Twitter followers, mobile phone apps and Facebook pages, there is an unprecedented opportunity for local businesses to reach and engage new audiences. Groupon and Living Social have made quite an impact in the arts and cultural sector, as a wide array of organizations across the country have run online discount campaigns. Chicago’s prestigious Joffrey Ballet, Arlington Arts Center, the Carnegie Museum in Pittsburgh, Port Discovery Children’s Museum in Baltimore and the Pittsburgh CLO are only a few examples of such organizations.

The rising popularity of Groupon and Living Social among arts and cultural organizations raises a number of questions about incorporating these services into arts marketing strategies. While bloggers Chad Bauman and Drew McManus have both explored some of the benefits and drawbacks of using online discount services, I decided to pose a few questions to cultural organizations who have used these services.

Can this service be useful for reaching new audience members?
If so, how can organizations efficiently track these new customers?
What if current subscribers and regular audience members decide to take advantage of these lower ticket prices?
Or what if current subscribers resent that others purchased their subscriptions at a substantial discount?
Could online discounting actually backfire and decrease revenue?

Most of the arts and cultural organizations I approached with these questions evaluated their online discount campaigns to be successful. None reported a significant loss in revenue and most reported that the majority of their Groupon & Living Social customers were entirely new to their organizations. Those that had a positive outcome tended to carefully track customers by collecting their information during the ticket redemption process and entering this information into their database.

Mairin Petrone at the Pittsburgh Irish Festival reports that their recent Groupon campaign resulted in almost 700 people purchasing tickets for the festival.

The Pittsburgh Irish Festival initially decided to use Groupon because of the PR we would receive and because we love to get tickets sold before our festival even starts. When approached by Groupon, it seemed like we would be silly not to take advantage of an e-blast that would go out to almost 100,000 people in and around the city of Pittsburgh and cost us next to nothing. Our hope was that we would reach people who wouldn't have otherwise heard of the festival. I would evaluate our Groupon campaign as successful.

Similarly, Pittsburgh CLO's Cindy Opatick had positive feedback on using Groupon.

Since the CLO Cabaret only seats 250, it is hard to get word of mouth going on a new show and a title that may not be familiar in the marketplace. The Groupon offer has allowed us to get a larger audience in the first week of a show, which in turn helps with word of mouth for the run of the show.

Although most of the organizations I contacted reported using Groupon to run online discount campaigns, Living Social is proving more viable for organizations who want more flexibility in their marketing. Here is a quick comparison of both platforms:

Demographic Category

Groupon

Living Social

Gender

77% Female

60% Female

Age

68% 18-34

36% 18-34

Education

50% Bachelor’s Degree 30% Graduate Degree

44% Bachelor's Degree 15% Graduate Degree

Income

29% $100,000+ 19% $70K-$99K 21% $50K-$69K

32% $100,000+ 36% $60K-$100K

Groupon

Living Social

Exclusivity Clause

Can’t run any other deal on similar websites (Living Social) for 90 days

No exclusivity clause

Organizations are free to use other services while running a Living Social Campaign

Can’t change the fine print

Groupon employs a staff of 70 writers to create the text of all its group deals.

More Flexibility with ad content

Living Social is generally more flexible about what organizations can include in the fine print and ad content

Lower Revenue?

Since tickets are offered at a steep discount, it’s quite possible to lose money from people who might have paid full price.

Lower Revenue?

Generally the same drawbacks as using Groupon. Living Social typically only offers deals that are a minimum of 50% off the current price for a company’s services or products

Costly to Businesses?

Groupon takes a cut of all products or services sold although there are no upfront costs associated with running a campaign

Costly to Businesses?

Living Social also takes a percentage of all products or services sold. Also no upfront costs associated with running a campaign. Businesses receive a pre-paid check for all customers who bought 10 days after the promotion is finished

Even though both platforms have their drawbacks, there is overwhelming evidence to indicate both do a stellar job of reaching the ideal arts consumer demographic and compelling them to action. Jack Fishman, President and CEO at San Antonio Symphony, points out that traditional advertising channels like newspaper and radio are not nearly as effective as they once were in reaching and compelling arts consumers to action. In fact, 86% of Groupon's clients believe the service to be more effective than print advertising, while 94% evaluate it as more effective than broadcasting advertising.

Since online collective buying platforms are relative newcomers to the scene, it will be interesting to see if more arts and cultural organizations adopt these tools into their evolving marketing strategies and online mass discounts will contribute to sustainable audience growth over time.