Coupon Wars

Today I received Google's newest strategy to fight the e-commerce wars with Amazon and Group-on - called "Google Offers".  In an unsolicited email, this evening, they had a limited time offer (14 hours are left) to spend $5 card to buy a  $10 egift card redeemable at any Starbucks location.  In addition Google said they would contribute $3/offer (up to $3million) to OFN (Opportunity Finance Network) for the Create Jobs for USA fund.  Last week Amazon got me to part with $5 for a $10 gift card (from ACI giftcards Inc.).  Group-on has sent me daily deals in an email everyday for the last month.

Both of these offers were the equivalent of giving me $5.  The offers had no conditions (no time limit, no purchase quantity, no new product offering, etc. - just spend the money (which I already would have) at their establishment.  So you could argue there were two possible (pro or con) outcomes for Starbucks:

(1) They have delighted the customer and created a viral marketing event (after all I am blogging about it).  Consequently they reinforce the brand loyalty and continue to "earn" my business.

Or

(2) They just cannibalized the margin of existing revenue that they were already assured of for their existing customer base - without the associated new customer acquisition.

And what are the two possible outcomes for Google:

(1) They continue to provide eyeballs (for advertising value) with demonstrated click through email performance for their merchants (with associated financial back office infrastructure).  And they demonstrate to the merchants the "google" customer power push through performance.

Or

(2) The merchants spend less Google generic advertising in favor of a coupon advertising model (e.g. Google cannibalizes their existing advertising revenue stream).

The key measure for both Google and Starbucks is how many new customers can they drive with this promotional event - and what is the life time value of that new customer (yet to be determined and/or measured).

Who is the winner in the coupon wars - is it the consumer, advertiser or retailer?

Answer -  There is a reason the combined market capitalization of Google, Amazon, and Group-on is $304 Billion.

PS -  There another winner I overlooked - the non-profit Create Jobs for USA.  Starbucks had already funded this non-profit with $5 Million which has leveraged to over $50 million in loans and created or retained 2300 jobs.   Maybe this is a better method of a stimulus package - donor driven vs government driven.