Private sales and group buying are two of the hottest trends in ecommerce today, and two of the hottest companies in these markets are Gilt Groupe and Groupon.
Yesterday, my colleague Meghan Keane wrote about how companies like Gilt Groupe and Groupon were largely avoiding SEO. Somewhat interestingly, however, they're not avoiding paid search.
A Google search for terms like 'designer fashion' and 'designer handbags' demonstrates that Gilt Group is buying targeting keywords through AdWords. And a Google search for terms like 'san francisco deals' and 'los angeles spas' will return AdWords ads promoting Groupon.
As Scott Rafer, who started the discussion about Gilt Groupe and Groupon's absence in the SERPs, wrote:
...efficient pricing is the antithesis of profit. Instant, free, ubiquitous, constant, direct comparisons to the competition drives prices towards marginal cost (i.e. profit = zero) quickly. To escape this race to the bottom, information inefficiency must exist. Before the internet became ubiquitous, information inefficiency was the natural state in which society existed. Now it must be manufactured.
Gilt Groupe and Groupon do manufacture this inefficiency, and as my colleague Meghan notes, there are a number of additional incentives for these sorts of companies to keep their pages out of the SERPs. There are also practical matters -- because the offers and deals typically only last for a short period of time, exposing them via Google might create frustrated users more often than it creates new customers.
But the fact that both companies, and most of their bigger competitors, are purchasing ads to promote themselves indicates that these are not companies that are shunning advertising altogether. They know that consumers are searching, and that these consumers are worth acquiring as users/customers. Rafer may be correct in his assessment of information inefficiency and how it relates to companies in the private sales and group buying spaces, but it's important not to get the impression that companies in these markets are simply not advertising themselves. They are. In addition to buying ads through AdWords, many of these companies are purchasing ads on Facebook, and buying traditional display inventory, in some cases even using retargeting networks.
So what's the takeaway? In my opinion, it's the simple fact that, as powerful as SEO is, SEO is just one way to market a business. It's easy to fall under SEO's spell. After all, some businesses make millions of dollars a year from top SERPs. But just because a top SERP may not require an apparent outlay of a significant amount of cash doesn't mean that SEO is always the right tool for the job. Companies like Gilt Groupe and Groupon simply remind us of that.
Ironically, however, it's my opinion that companies in these markets may want to rethink organic search. Already, the private sales and group buying markets are becoming saturated, creating fierce competition and eroding some of the exclusivity factor, in part because of the paid advertising efforts. There are forces pushing back against the information inefficiency Rafer wrote about, and finally it's worth considering that by shunning SEO, these businesses often throw away all of the linkjuice that is passed to them on a daily basis as their deals are linked to around the web.
Which begs a simple question: is there any reason that companies like Gilt Groupe and Groupon shouldn't think about cozying up to organic search? Put another way, is there not opportunity for these businesses to take advantage of organic search on their own terms? I can think of a few ways off the top of my head, and it's worth considering that Google isn't necessarily the foe of information inefficiency. After all, the information that appears on the pages of sites like Gilt Groupe and Groupon doesn't have to remain the same after a deal has expired.
In my opinion, artificial information inefficiency can co-exist with SEO and I think Rafer jumps to the wrong conclusion. The biggest opportunities are not in 're-obfuscating' other areas of Google's index. Rather, they're in getting clever with what consumers see when they get to your site.