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If you have not heard of Groupon or Living Social, you are likely in a demographic that does not get into the gadgets of today, and more likely than not, your extent of Internet use is relegated to checking email. So what exactly is Groupon and Living Social?

Groupon and Living Social are Internet based services that deliver shopping deals to consumer via email, smartphone app, and their respective Internet websites. Essentially, these sites offer fantastic "deals of the day". Users register with the service, specify their locality, and determine whenthey would like to see the latest Groupon or Living Social deals each day. Deals of the day has gone viral, and you may be surprised by who uses these services! The deals are quite good, and consumers seem quick to jump on them. From 50% off at a restaurant, to special pricing on golf tees, or great deals on a haircut, Groupon is heavily used and is quickly becoming a great way for local businesses to connect with consumers.

Last week I wrote about how Sirius XM could take Groupon to the next level, but the fact is that virtually any radio medium-- be it satellite, Internet, or terrestrial-- can be an effective partner for the Internet discount king. Before jumping into how the likes of Sirius XM (NASDAQ:SIRI), Pandora (NYSE:P), or even Clear Channel, it is probably best to explore exactly who uses Groupon.

As one might imagine, both Groupon's and Living Social's users tend to be a younger demographic. It has been reported that 68% of Groupon users fit in the age group of 18-34. A smaller 18% are between the ages of 35 and 44, and 14% are over 45. This dynamic alone can tell you how a deal with Groupon or Living Social can help each distinct radio type.

While age demographics are important, it always boils down to dollars. It may seem shocking, but these deal of the day websites have some very impressive income demographics. Getting rich is not easy. Staying rich requires not only making money, but saving it as well. Living Social, according to a Nielsen study, boasts 50% of their users make an impressive $150,000 per year. Groupon has 30% of their users in that income range. No matter which service, the income levels are impressive.

Now that we understand the age and income level, it is a good idea to grasp whether these services are used by men or women. The fact is that these deal of the day sites are dominated by women. A full 66% of the users of these sites are female.

So what can Living Social and Groupon and radio do for each other? The answer to that depends on the radio medium.

Sirius XM Satellite Radio

Sirius XM Radio has about 35.5 million listeners, and almost 17 million self paying subscribers. Sirius XM tends to attract a mostly male audience over the age of 35. The weak points for satellite radio are female subscribers and people under 35. Ironically, these are two demographics that are quite strong with both Groupon and Living Social. As it happens, the users of these "deal of the day" sites also have the income levels that are attractive for satellite radio.

It would seem like a match made in heaven. Sirius XM can give Groupon and Living Social exposure to demographics they are weak on, and the Internet coupon sites can provide an audience that satellite radio needs help with. This is a classic case of companies scratching each others' backs. The problem is that Sirius XM does not advertise on music channels. Traffic channels will bring in a local angle, but the potential is much more far reaching.

Sirius XM has a very popular website. It can begin to embed Groupon or Living Social advertising on various pages of the site. Such advertising does not have to be invasive, and likely the company would get very little push-back from consumers.

Another interesting potential is with a bi-annual program conducted by Sirius XM. About twice per year Sirius XM turns on all satellite radios for about two weeks. In theory this gives the company a chance to take another chance at getting unactivated radios activated by showing consumers the breadth of content available from Sirius XM. The problem is that Sirius XM has not really been able to let people know about the two week freebie.

Now consider what Groupon and Living Social do. What better a way to get the word out than on a service where consumers are actually seeking out deals? Imagine if Sirius XM announced two weeks free, and 6 months for the price of 3. Certainly the level of response would be far greater than the company is currently experiencing.

Pandora, Slacker, Etc.

The demographics of Groupon and Living Social match up closely with Pandora (P) and Slacker in a few ways. Internet Radio has more females that listen, and the age demographic skews younger than with satellite radio. An Internet radio deal with Groupon or Living Social would let Pandora or Slacker bolster and further cement the demographics they already dominate.

These services also advertise on music channels-- and more likely than not, given their audience-- the consumers would be more attracted to these types of ads than what they are currently being exposed to.

Pandora has allowed Slacker to cut a deal with AARP and become the music source for AOL Music. Can the now public Internet Radio provider allow direct competition to work out a deal with Groupon or Living Social first? The answer is that Pandora likely needs to strike a deal sooner rather than later. If others get there first, it will be the third time Pandora has been beaten to a punch since going public.

Terrestrial Radio


Terrestrial radio may or may not want to work out a deal with the likes of Groupon and Living Social. The most likely situation is that only the bigger terrestrial radio players have something to offer.

On its face it would seem that Groupon and Living Social are direct competitors for the local advertising dollars that are the bread and butter for terrestrial radio. This is indeed the case. Terrestrial radio has two choices-- compete against these companies, or embrace them and help deliver them to the next level. The smart companies will embrace Groupon and Living Social.

Sure, your local rock station could advertise a 50% off deal to a restaurant and get a big response. The problem is that terrestrial radio has no way to track the deal, and Groupon and Living Social have already grown to a level that a local station can not match. What makes a restaurant turn to the likes of Groupon? The fact is that all they need to do is conduct their business the way they always have. They do not need to take a waitress and have her processing orders or manning the phone. They simply serve up meals.

What terrestrail radio, and in fact any radio can do is offer audio reminders of the deals of the day.

Does Partnering With Radio Make Sense for Groupon and Living Social?

These companies already have highly successful business models. Why should they get into partnering with radio? The answer is simple. Radio can take their businesses to an all new level. Audio reminders of potential deals are successful. There are days when I simply never get to look at Groupon. If the top five great deals were mentioned on radio, it would compel me to check them out.

In addition to this, I can see a high potential that either Groupon or Living Social will go public at some point. The company that can boost its bottom line with the help of radio will have a leg up on the other.

What we have here is the morphing of how radio interacts with consumers from an advertising standpoint. Pandora and Slacker already grasp this, but have barely tapped into the real potential. Will we see a deal happen with one of these companies soon? I would bet it will happen sooner rather than later.



Disclosure: I am long SIRI.

Additional disclosure: I have no position in Pandora

Source: What Radio Can Do for Groupon and Living Social