Reaching Wealthy Consumers In A Digital World

by Sherrill Mane

One-fifth of U.S. households, 24 million to be exact, holds approximately 60% of total U.S. household wealth and 70% of total U.S. consumer wealth. Defined by Ipsos Mendelsohn as the “affluents,” these 24 million households have an annualized income of $100,000 or more. This group is two times more likely to buy consumer products and services and when they do, they spend over three times as much as their less economically fortunate counterparts.

What makes affluents particularly intriguing is that despite the current economic uncertainty, research shows that they will likely spend significantly in a number of consumer categories in the next year. That’s why the IAB partnered with Ipsos Mendelsohn to conduct the first custom study of affluents and digital media. The primary objective was to develop initial insights about affluents and their attitudes, awareness and usage of digital media.

What we did not know when we began the work was that our study would be released close to the time other noteworthy studies and papers about the affluents. Clearly, we were onto something and uncovered quite a few gems in our findings.

Affluents embrace technology and digital media including advertising.

In response to a battery of questions about lifestyles and attitudes, affluents shared that in the last decade, their lives have become increasingly intertwined with technology (79%). This holds strongly across age groups within the affluent population including more that 70% of those 65 and older.

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Another One Bites The Dust: Yelp Scaling Down Its Groupon-Killer

Yelp is scaling back its daily deals product, Bloomberg reports.

It’s still going to do some daily deals but it is slashing its deals salesforce by half and focusing away from the product. 

This is pretty significant. Yelp has relationships with merchants and a big consumer presence. 

One problem is that some people say Yelp has an adverserial relationship with merchants. Merchants can only control comments and reviews on their page if they buy advertising, which some merchants view as a racket.

In any case, Yelp isn’t the only one getting out of the daily deals business. Facebook is shuttering its own daily deals effort, and Google’s doesn’t seem to be going anywhere.

This is a pretty bullish signal for Groupon: everyone’s been saying that the business is vulnerable because it has no barriers to entry and is easily replicable. And yet, that’s not happening. It seems to be the case that running a successful daily deals operation at scale is really a specific, hard thing to do that not everyone can get right, including companies that would seem predisposed to do so.

Facebook ditches Daily Deals

After four months of testing in places such as Atlanta, Dallas and San Francisco, Facebook has made the decision to ditch its Deals program despite acknowledging that there “is a lot of power in a social approach to driving people into local businesses”.

by Helen Leggatt

Facebook’s Daily Deals, a feature similar to that offered by the likes of Groupon and LivingSocial, is no more. This should not be confused with Check-In Deals which presents users with offers when they check in to locations via Facebook Places. Daily Deals – arranged by a sales team with local merchants – were emailed to Facebook users who signed up to the program.

No reason was given for the decision to ditch Daily Deals, but Facebook remains positive, saying “we remain committed to building products to help local businesses connect with people, like Ads, Pages, Sponsored Stories, and Check-in Deals.”

Vinicius Vacanti, co-founder of Yipit.com, wasn’t surprised to hear of Facebook’s decision saying the Deals product had been “an underwhelming product and experience”.

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Hewlett-Packard, in seismic shift, bows out of mobile devices

HP TouchPad

The HP TouchPadis not gaining traction

HP is shutting down its mobile hardware business and will stop making the TouchPad tablet and smartphones as the company looks to sharpen its focus on cloud, solutions and software for enterprise, commercial and government markets.

HP said it will discontinue operations for webOS devices during the fourth quarter of this year because the devices have not met internal milestones and financial targets. The news means the end of the line for mobile devices under the Palm brand, which HP acquired last year.

“Consumers are changing their use of the PC,” said Léo Apotheker, president and CEO of HP, Palo Alto, CA, during a conference call to discuss the company’s third quarter results and the news. “The tablet effect is real.

 

“Sales of the TouchPad are not meeting our expectations,” he said.

Growing competition
HP also said it will continue to explore options to optimize the value of webOS software going forward.

Mr. Apotheker pointed to marketplace dynamics, growing competition and an increasingly complex marketplace as contributing to the company’s decision to cease operations for its webOS devices.

He also said that webOS is a respected platform and that HP will explore options for how to derive value from it in the future.

HP recently suggested it might be open to licensing the webOS software to other hardware manufacturers.

WebOS was one of the factors in HP’s decision to acquire Palm for $1.2 billion last year. HP had said it wanted to bring the operating system to a wide variety of mobile hardware devices, including tablets, laptops and desktops.

WebOS currently runs on HP’s Palm smartphones, as well as the TouchPad tablet. 

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Don’t Mean To Be Alarmist, But Groupon Is Running Low On Cash

By Henry Blodget

One of the fastest-growing companies in the history of the world, Groupon, is now running seriously low on cash.

 

The company is not broke, by any means. It can also presumably raise additional capital in the private markets if its IPO gets further delayed.

But Groupon’s cash cushion relative to its liabilities is small–and the gap between the two is going the wrong way fast.

As of last quarter, Groupon was still cash-flow positive. If it remains that way until after the IPO, the cash situation won’t become critical. If the company stumbles, however, or the economy suddenly turns south, Groupon could get into serious trouble in a hurry.

Here are the details…

On the surface, things look great: As of June 30, Groupon had $225 million of cash. Despite losing $103 million in Q2, moreover, the company actually generated about $25 million of free cash flow in the quarter. So a cash crisis would seem to be the last thing the company needs to worry about.

But the devil–and danger–is in the details.

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Meet The Analyst Who Says Facebook Management “Is In A Virtual Panic” As “Growth Hits A Wall”

By Nicholas Carlson

Right now, aggressive investors – including storied hedge fund SAC Capital – are going out and loading up on Facebook shares for around $32 to $35 a pop – an implied valuation around $76 billion.

 

The reason why is pretty simple.

Thanks to its 750 million users, lots of people with lots of money think that Facebook is probably going to IPO at a $100 billion valuation sometime in early 2012.

These private investors also figure that Facebook will follow a pattern set by recent tech IPOs and that its stock will pop like crazy during its first few weeks on the market.

Presumably, some of these investors also believe in Facebook’s long-term prospects – its ability to grow its already multi-billion dollar profits and revenues at a pace close to the one Google set in its early years.

One man – one analyst – thinks they are wrong.

Meet PrivCo CEO Sam Hamadeh, Facebook bear.


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