Thought Leaders in Mobile and Social: Interview with Kelly Passey, EVP of Business and Product Development at Access Development (Part 6)

Sramana Mitra: These are two different problems – the mobile wallet problem and mobile coupons delivered on branded applications on behalf of corporate brands.

Kelly Passey: I guess so. We are a totally white labeled B2B shop. Google Wallet is an example. They put up their wallet strategy. We could integrate that easily and be the silent partner, and it would still be the Google Wallet solution.

SM: How would your solution tie into Google Wallet? If you extrapolate what is happening in the Google Wallet world, how would you be interfacing with it?

KP: If you look at Google offers, they are very interested in digesting merchant offers and deals. In a Google Wallet world, we would be a content partner. Through a web service, for example, we would integrate 140,000 mobile offers into their Google Wallet to drive more consumer adoption.

SM: What do you expect the business model to be for those kinds of scenarios?

KP: We would have to figure that out. Google has a fairly substantial advertising revenue model with the merchant community. I think there are discussions that could be had there.

SM: You are bringing a large number of merchants and offers to the table. I guess it is a different kind of discussion, isn’t it?

KP: They are bringing to the table eyeballs and consumers through their Google search – whether it is mobile or web. Because of that, merchants are willing to pay for it. They want to continue to drive that stickiness and engagement for people who use Google Search. Mobile search is starting to get very close to web search. How are they going to monetize that as well as they have with the web in the past? To drive stickiness and engagement, mobile coupons and deals could be an element. I haven’t had in-depth conversations with Google about that model, but that is where I would see the potential fit being and the fact that we can be a content provider for their wallet technology.

SM: Switching topics – why do you think Groupon has had trouble with their small merchant business model?

KP: There are probably several reasons. I think it is hard to build a business model where literally 75% of the margin goes out the door. Early on a lot of the tracking, reporting, and required elements merchants needed weren’t there. That is why today you see Groupon goods and more of a discount on merchandise model than you see with merchants and small businesses. A merchant can only get burned so many times with dipping into the margin so heavily without the real closed loop reporting on the back end to sustain that model.

SM: Your model is also based on deep discounting. You said 36% to 50%.

KP: That is correct, but there is a huge difference there. We are going out on a B2B model to corporations, private networks, etc. It is not 300 million consumers. Public-facing models can potentially distort pricing models for merchants. Take pizza chains, for example. I don’t think they sell a pizza today without a coupon being used. They have overdone the utilization of coupons in their pricing models.

Groupon unfortunately, on the backs of their merchants, charged too much in that model and had too much liability and risk out there for the merchant community. Our model is this: we are consultative for the merchant, we do get deep and rich offers, but it is for a fine-eyed audience and that organization is going to market them, do the push emails, the endorsement that merchant wants and that merchant can manage that risk much more closely. We have been in business for 28 years working with the merchant community because of that. They are as much of a client to us as the corporate client, where our revenue comes from. They have to be. We treat them very well. I am not saying that Groupon didn’t try all that, but I think there were some flaws in that model.

This segment is part 6 in the series : Thought Leaders in Mobile and Social: Interview with Kelly Passey, EVP of Business and Product Development at Access Development
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