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RetailMeNot is Focused on the Beacon

Posted on Monday, Jun 8th 2015

An eMarketer report released in November 2014 estimated that Internet users of ages 18 and above who redeem a digital coupon or code via any device for online or offline shopping at least once per year accounted for 55% of all US Internet users in 2014. The number of adults redeeming coupons via mobile devices is estimated to grow from 78.69 million in 2014 to 104.11 million in 2016. The increased adoption of the digital coupons will also lead to higher couponing by marketers. The researcher predicts that marketers offering digital coupons will grow from 36.5% in 2014 to 44.5% in 2016.

RetailMeNot’s Financials

But online coupon site RetailMeNot (Nasdaq: SALE) is finding it difficult to translate the rapid coupon adoption to revenues. First quarter revenues for the company fell 1% to $60.4 million, although significantly ahead of the Street’s forecast of $58.6 million. EPS of $0.20 also surpassed market expectations of $0.13 for the quarter.

Among key metrics, mobile online transaction net revenues grew 137% to $5.6 million and accounted for 9% of total net revenues. Advertising and in-store net revenues grew 100% to $7.7 million while desktop online transaction net revenues fell 14%, to $47.1 million. Total visits to the site grew 16% to 179.9 million with monthly mobile unique visitors increasing 55% to 18.4 million. Despite impressive usage statistics, RetailMeNot’s failure to grow revenues stems from their difficulty in improving mobile monetization rates. The company claims that they lose significant revenue as customers purchase the products through desktop sites while scouting for coupons on their mobile devices.

For the current quarter, RetailMeNot forecast revenues of $55 million-$58 million. They expect to end the year with revenues of $$275 million-$285 million. The Street had forecast revenues of $58.9 million for the quarter.

RetailMeNot’s Beacon Allegiance

To ensure higher growth, RetailMeNot is focusing on highest growth areas – in-store and mobile-focused offers. According to a recent study by Business Insider Intelligence, by the year 2016, $44.5 billion US in-store retail sales will be influenced by beacon-triggered messages compared with a comparatively modest $4 billion impact in 2015. RetailMeNot is focusing on making their big moves within this segment through tie-ups with Beacon marketing providers.

Beacon marketing is fast becoming the marketing standard for brick and mortar retailers. The proximity marketing solution is based on setting up beacons, which are a low-cost and a small piece of hardware that can be attached to walls or countertops and uses Bluetooth connections to transmit messages or prompts with a smartphone or tablet. The technology came into bigger fashion as Apple included Beacons in their devices and also empowered iOS7 with the capabilities. While beacons can do much more than offering location-based deals, retailers are flocking to the idea to use the customer’s location within the store as a trigger for targeted offers.

Last month, RetailMeNot tied up with Swirl Networks, a provider of leading proximity-based indoor mobile marketing platforms, to bring in-store promotions using the Beacon marketing technology to RetailMeNot’s mobile app users. As part of the engagement, RetailMeNot’s retail and brand partners will be able to provide special deals and offers to consumers who are already present in the brick-and-mortar stores. These consumers are already labeled as high-intent shoppers, and providing them deals focused on the area of the store that they are shopping in will help marketers make a more effective sales pitch. RetailMeNot also entered into a similar agreement with Gimbal, another beacon network provider.

Their stock is trading at $20.08 with a market capitalization of $1.10 billion. It touched a high of $28.50 in June last year.

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