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Summary:

How do you compete with an 800-pound gorilla like Groupon? If you’re Tippr, you don’t. Instead, you arm websites with the weapons to do that themselves. The Seattle-based startup today launched a white-label platform that gives companies the tools to run their own group-buying campaigns.

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When it comes to group-buying, Groupon is clearly the market’s Goliath, with 20 million subscribers, over $160-million in venture financing and a market value of more than $1 billion. So how do you compete with that kind of presence? If you’re Tippr, you don’t; you arm websites and publishers with the weapons to do that themselves. The Seattle-based startup today launched a white-label group-buying platform that it says does exactly that: gives companies an alternative to signing up with Groupon, by providing them with both the software and the support to run their own online group-buying campaigns.

Tippr founder Martin Tobias — who’s also a venture partner at Ignition Partners in Seattle, and founded a streaming-media company called Loudeye in 1999 — says the company began as a spinoff from another company he started called Kashless, which offered local businesses a local classified-advertising solution. (Kashless is in 130 cities and has 700,000 users, he says.) When Tobias talked to his clients about an advertising offering, some mentioned that they were looking at offering deals through Groupon and LivingSocial. “They said it was just like advertising, except they didn’t have to put any money up front and it got people to walk in the door,” Tobias recalls.

So Tobias set up Tippr.com, but says the idea was always to use it as a proof-of-concept for an eventual white-label offering, which has been in beta testing with several large publishers for the past few months. “We thought of Tippr as a kind of owned-and-operated version of our service, as a way to show clients our ability to provide a white-label group offering,” he says. Despite the fact that Kashless wasn’t really focusing on the site itself, Tobias says that Tippr.com is the number three group-buying service in many major markets, behind Groupon and LivingSocial. (It’s in 13 markets in total, and the site gets about 700,000 unique visitors a month). Like its competitors, it gets a share of the revenue that merchants bring in when they offer a group-buying discount.

Tippr’s pitch to publishers is that deals with Groupon and its traditional competitors, which a number of newspapers have signed recently — including a deal with McClatchy, publisher of the Miami Herald and other papers — effectively sign over control of the relationship between a reader and an advertiser to Groupon, and cut the publisher out (although they get a share of the revenue). Tobias says, in talking with potential clients for the white-label version of Tippr, many companies said they didn’t want to do this. “When that McClatchy deal was announced, my phones started ringing off the hook,” he says. “I’ve talked to a number of publishers who see Groupon and LivingSocial as fundamentally being in competition for marketing dollars that they feel they should be getting.”

The white-label solution, the Tippr founder says, gives publishers and other sites full control over the relationship with both advertisers and customers, and anything that happens remains within their brand. “We even do customer service as well,” says Tobias, “so that when a user calls they think they are dealing with the publisher, but it’s our people helping them print a coupon or whatever.” One media company in Baton Rouge, La. he says, heard that LivingSocial was coming to town and decided to do its own promotion using Tippr, “and their weekly deals outsell LivingSocial’s by a factor of 10 to 15 times, every time.”

While some publishers like McClatchy might see partnering with Groupon or LivingSocial as a shortcut to riches in the group-buying game, others may see things differently, and resent giving someone else control over the advertising relationship. Tippr’s white-label offering seems like a reasonable compromise — and as big as Groupon gets, there are likely to always be companies that prefer the other option.

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  1. I think this is a brilliant idea. Firstly, because it is inevitable that businesses will eventually want control over their group promotions, as group-buying is shifting from a novelty available at a few websites to a real industry practice. Secondly, because Tippr is a first mover.

    While Groupon’s business is being the liaison of the deals, I think they should consider developing a white-label solution of their own to launch somewhere down the road.

    What may eventually happen is what we saw in the blogosphere: one or two innovators, and then hundreds of paid and open-source alternatives. I think that a competitive advantage that Groupon can create for itself is a “distribution network” for its clients. That is, marketers can utilize it’s white-label solution, and in doing so, also have access to its main site for a number of promotions a year.

    This is one thing that Groupon has going for them.

    Victor

    1. I agree with your standpoint. However, Tippr isn’t really a first mover. Check ChompOn.com, NimbleCommerce, AtCost, DealCurrent. They will be facing many competitors.

      1. I stand corrected!

  2. Tippr is not an innovator, not anything. Martin Tobias got 5 million bucks from his friend at RRE ventures and is spending that money on tippr. Um, he bought Fanforce, he pays employees, and he bought some silly patents. What first mover things is he doing? Oh, did I mention paying for this article. Martin is just a “rich kid” on the block buying things and showing off. Most people don’t like those kids…

  3. I agree with Bob, Martin is just buying this stuff. It’s funny to see him act like a “good” person trying to help business…I’m sure he’s not giving away this service. Also, after what he did at Imporium, not many people here in the Seattle area trust him. Good luck the his team, as i hope they get smart and start looking for another CEO as Martin is either going to leave or get sued for some sort of wrong doing…get out team, get out.

  4. Every time I read about Tippr’s strategy to move into the white label space I laugh and wonder if it’s a joke. Come on, does the market really take you serious? Do publishers really think you’re their white night? You got $5M in funding, tried to run your own daily deal program, failed (or are failing), and now re-purposed your failed offering to publishers as an answer to the big boys. Does that sell? Dear prospective client of Tippr, do you see a conflict of interest in working with Tippr? They still run their own program.

  5. The truth about tippr. The truth about Martin’s idea of good business practice.http://short-space.blogspot.com/2010/12/tippr-it-gets-worse.html

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    [...] another company that has the deep pockets and the reach to compete with Groupon — and Tippr, which has a white-label platform that allows merchants and website publishers to run their own Groupon offers, with Tippr handling [...]

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