Deal or no deal? Tech companies dive deeper through location, brands approach direct

I spent a great deal of my weekend catching up on stories from SXSW. There were a lot.

Particularly fascinating was the read on “deals” as this year’s buzzword. Check out this article from Advertising Age about Groupon influencing a whole host of other services – new deal-orientated projects from Google, Loopt and SCVNGR are all mentioned as well as upgrades to those belonging to Facebook and Foursquare.

It’s fair to say the paths of location networking and deals have truly collided (though it’s arguable whether they were ever actually distinguishable in the first place). What’s perhaps more interesting, is the further news of Groupon’s real-time mobile service.

Groupon Now, which will launch in April, will help people find deals nearby to them based on two different options: “I’m Hungry” and “I’m Bored”.

Or in other words, where location was going into deals, now deals are going into location.

Adding to the mix no less, is the fact it’s not just tech companies working out how to benefit in this world. Brands are bypassing these third party apps and reaching out to consumers directly too.

Last week, Gap, which hit the headlines with its sellout Groupon offer last summer, launched its own deals initiative.

Through gapmyprice.com, consumers could name how much they wanted to pay for a pair of men’s khakis. By clicking on “let’s make a deal”, they made an offer for one of 18 styles retailing for between $49.50 and $59.50. Gap then presented its deal in return which shoppers could either accept or counter before receiving a final price.

According to the site’s winners tab, offers tended towards $35-$45 for a $49.50 pair. All rather along the lines of TV game show Deal or No Deal (as pictured), albeit without the £1m prize balancing the other end. Of course, gaming is another area so intrinsic to this world, as I wrote about here.

Chris Donnelly, an executive partner in Accenture’s retail practice, told AdAge: “You get to this space we’re in right now where, even though the economy is picking up, consumers still expect things to be on sale. That leaves the retailer to come up with ways to give discounts without completely eroding margins.”

“[Gap’s deals initiative] is a better way of price discrimination, because you’re trying to tailor the price to each individual. A coupon is a very blunt tool. If I give everyone a 30% off coupon, some would have bought full price and some still won’t buy,” he said.

Does it have staying power? Potentially. But if you ask me, it’s sites like Groupon (it’s also worth checking out this chart documenting its rise to potential $25bn IPO) and Foursquare that are the ones to watch most closely.