N-R looks to reload gift certificate program
The news comes as a surprise to the N-R advertising department. For those who never used the system, it worked as follows: Local businesses paid for online and print advertising with gift certificates instead of cash. The N-R then sold those certificates for half the price on a Media Web Connect-hosted website.
N-R Advertising Director Christy Nielsen said the model has been very successful both for local businesses and consumers purchasing the gift certificates. Management and staff will look for alternate vendors that offer similar programs, as well as the possibility of creating an in-house system, she said.
Media Web Connect, created by The Communications Group, cited management health issues and a 2011 financial problem it was not able to overcome. The Half Crazy Deals concept is different from the daily deal model of Groupon and Living Social, both of which have also been facing hard times.
Recent reports paint a troubled picture of the two online coupon giants. BusinessInsider.com reported on the “recession in the daily deal business” in November, following the announcement of 1,000 jobs lost between the two. At the same time, Business Week, Time and others pondered if this was the beginning of the end for daily deals.
It’s all an example of how volatile the online coupon business is. Hot new applications and trending deals bring huge investments, but within a couple of years, companies struggle to maintain profits. Hamilton Nolen on Gawker.com predicted such a downturn in a 2011 article: “Not only is a steady cycle of repeat business hard to come by when businesses are forced to take significant financial hits every time they use your service; but you, the consumer, demand an ever-rotating cast of coupons to sate your relentless boredom. New, always new.”
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