I have been tinkering around in mobile marketing space for awhile. Really more at the intersection of mobile, flash marketing, location-based services, and social spaces. It's a big intersection. What got me going on it was a mom named Anne that came up with a rather simple solution to a couple of the problems facing flash marketing deal of the day companies like GroupOn.

GroupOn is killing it. Forbes called Chicago based GroupOn the fastest growing company ever. The way a GroupOn deal works is they offer a deal per day in a host of cities via email. It's typically 50% off. The consumer pays for the deal up front. GroupOn keeps 50% of that payment and distributes the other 50% to the retailer over a period of time. Boom, instasales. But the GroupOn concept has some problems.  

If you spend anytime talking to merchants these problems come up pretty quick. Retailers don't really like the economics of the deal, they are only getting 25% of their normal retail price. And while GroupOn sells the deal as a customer acquisition method, most retailers feel that the customers don't come back. As one merchant put it to me "people that use coupons are people that use coupons." They even have a derogatory term for them, groupies. Here is a nice little merchant horror story.

If you spend some time on these deal of the day services as a consumer you also notice a few issues. One is certain types of services companies can not keep up with demand when they run a deal. As an example I purchased $175 car detail for $59 from Atlanta based Half Off Depot on April 29. Shortly thereafter I contacted the establishment to arrange an appointment. When I called the number on the coupon I was told that I could not make an appointment via phone though that was the only contact method on the coupon. So I asked for the email address and wrote a note. When I emailed I received an auto reply saying it would be 7 – 10 days before someone got back with me. When they finally did the appointment was set on September 12. Four months after I purchased the deal. When they came out to do the job they were only there for about 45 minutes. I am not alone. These types of stories abound. And worse. Yesterday TechCrunch reported how a fraudulent GroupOn deal in Atlanta really brought the service drawbacks to light.

Anne had the solution to these problems and a couple of other issues that I will keep in my pocket for now. Regardless somebody is going to figure this out and make a lot of money. It could very well be GroupOn, they have some smart people and raised $135 million. That somebody could also be another little Atlanta deal of the day company called ScoutMob. ScoutMob is more of a mobile app than email service. They push virtual coupons to Androids and iPhones. ScoutMob's business model is a bit different. Instead of having consumers paying up front they pay when the redeem the coupon. And without reveling how the business works the economics to the retailer are much more attractive. ScoutMob has solved the issues with flash marketing outlined above. There are about a dozen other startups in Atlanta tackling the space. Currently of note beyond Half Off Depot and ScoutMob are ClipZone, Extrafeet, iCouponBook, OfficeArrow, PlacePunch, SparkSpree, and Thanks Again. There is one in stealth that could get really interesting.

It's a big busy intersection.