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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.

Patricio Robles

Published 18 May, 2010 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2392 more posts from this author

Comments (5)

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Joseph

I would go so far as to say that Groupon and LivingSocial are some of the biggest individual spenders out there on AdWords, Facebook and other Ad networks.

Or maybe I just can't seem to opt out of their retargeting...

over 6 years ago

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lucvy

However one of the things we have found is that without a framework to these techniques it is often difficult to sustain the engagement as defined here:

over 6 years ago

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Geena

Just ask esp..small business owners about how damaging Groupon can be.

  Lots of online discussions about just another non producing .com style company parasiting on small biz.

  The businesses are often overwhelemed when 50 people arrive with GROUPONS.

 The low profit factor degrades you business structure. Not worth it,

   These are NOT return customers. Believe me as a food industry professional

for 30 years and I urge business to avoid this mess.

   Quite honestly they are usually not customers you would court either.

   When you are good they will find you.

over 6 years ago

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choppernoble

Yes, I absolutely love shopping on member-only sites for saving money online. I have been finding the best deals at Rue La La and Gilt as of late. However, you have to get to the sale fairly early when it opens because these deals are selling out so fast. I’ve hesitated on buying an item I wanted and then a few hours later it was already sold out. Such is life. Just so you know... Here are a few choice invitation codes to Members-Only shopping websites so you can check them out for yourself. Happy Shopping and Saving. Gilt Groupe Invite Code: http://www.giltgroupe.com/invite/savemoneynow RueLaLa Invite Code: http://www.ruelala.com/invite/u2nqvqzi Ideeli Invite Code: www.ideeli.com/invite/savemoneynow HauteLook Invite Code: http://www.hautelook.com/invite/savemoneynow

about 6 years ago

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Dave Fuentes

I've seen these invite only websites and was wondering how to optimize them for organic searches.

I mean they maintain an "exclusivity", members only process, which also means that content is hidden behind a registration / login access of members.

For the experts here - any thoughts as to how you would optimize these exclusive websites?

almost 6 years ago

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