AOL’s just revealed it’s launching its own clone of the Web shared discount service Groupon, dubbed “WOW!” (as in the megannoying TV ad with the yelling guy going, “WOW! That’s a low price!“) It’s definitely a technology trend at the moment, but will AOL risk falling into the same holes Groupon did? And why’s it even trying this experiment?
AOL announces that Wow “provided you and your family with savings at your favorite local and national locations each and every day!” and it’ll cover everything from “eating, shopping” to “weekend outings.” There’s talk of “things you want and things you need” and users with “on-the-go” lifestyles. WOW! will apparently listen to you if you “want a deal” and “offer up your bargain-of-choice on a silver platter at an astronomically discounted price.”
It’s PR waffle of the worst kind, spun with AOL’s slightly nauseating good-for-all-the-American-family angle, but essentially Wow is exactly the same mechanism inside as Groupon and all the other online coupon sites. The idea is that a group of people all want one thing (be it an object or service) and by the power of collective bargaining, mediated through the website, a retailer will offer a discount to these parties because it’ll bring in extra business in the future, and accounts for a boost in guaranteed sales right now.
There’s a huge danger in playing this game though. Groupon has been in and out of the news recently as numerous coupon schemes fell apart, mainly because over-excitable retailers weren’t prepared to deal with the flood of zealous bargain-seekers. There’ve been recriminations, accusations of foul play and terrible risks to some businesses who risked seeing their loss-leading Groupon scheme cause a business-loss situation. The feeling is that Groupon needs to exert a sterner guiding hand over its offerings, to ensure that its advertising partners don’t coupon themselves into oblivion, and the average consumer isn’t hoodwinked.
AOL’s WOW! will quite obviously be exposed to the same sort of risks, but with AOL’s massive reach it’s putting itself in danger of even more spectacular mistakes with many millions more patrons. If that happens, it’ll only take a moment or two before the government steps in with an enquiry to protect the consumer. That’s unless Wow has careful protocols built in to ensure consumer protection is right at the core of the plan. This is AOL, so we should expect as much…no?
If you’re wondering why AOL is trying this, then you’re not alone because we are too. It’s obvious why AOL is interested, since Groupon’s revenues alone are predicted to peak $350 million this year–AOL is probably sure it’s broad reach will result in a relatively decent revenue stream without much effort, and it can probably pull in coupon deals from its existing stable of ad partners built up from AOL’s other Web efforts. But exactly what is AOL for? How many strings to its bow does it want to have? Last week we learned it had bought TechCrunch to significantly boost its stable of blog publications, and earlier this year we learned it had plans to massively expand its “content farms” which push the definitions of online journalism toward online spam generation. With strange expansions like this is AOL risking one string breaking catastrophically, and unraveling the whole mess into an unrecoverable business knot?