Samuel Yam is CEO of ChompOn, a platform for group buying.
AdExchanger.com: Where did you get the inspiration for the ChompOn concept? And, how is the company funded today?
ChompOn originated as a Stanford Computer Science Senior Project back in 2006. At the time, the concept was based on local coupons, since Stanford Student Enterprises would go to local businesses and sell coupon spots in their directory which was distributed to all students. At the time, we thought it made a lot of sense to move local deals online, but we put the project on hold after graduating. After the success of Groupon, however, we revisited the concept – Stanford Student Enterprises is now one of our clients, and plans to launch a Stanford group-buying service powered by ChompOn in Fall of 2010.
The company is currently bootstrapped. I’m personally a big fan of self-funding until there is an actual product that can be battle-tested.
What problem is ChompOn solving?
The fundamental issue we’re solving is how to get local businesses visibility online. If you look at Groupon today, one of their biggest problems is not being able to distribute out their deals quickly enough. They’re starting to explore personalization of deals and “deals nearby”, but their main distribution channel is still email and groupon.com. Our goal is to entirely decentralize the population and distribution of deals, allowing any website to distribute deals and allowing any merchant to provide its deals for distribution.
Why do you think an offering like Chompon’s will succeed as opposed to emailed daily deals of GroupOn today?
The whole re-emergence of email marketing is actually a really interesting trend in itself. With the proliferation of deal and discount sites all revolving around email, however, user fatigue will inevitably settle in – if it hasn’t already – and our prediction is that there will be much more caution around signing up for new email lists.
The advantage of ChompOn’s drop-in distribution on content sites is that users’ browsing behavior doesn’t have to change. Deals will ultimately displace some of the existing display advertising on sites, and you won’t need to check your inbox or click over to a deal site when you’re looking for a great deal – they’ll be all around you on the sites you already frequent.
What’s the target publisher market? Do you think so-called premium publishers could want this?
Publishers with an existing audience stand to benefit most from ChompOn’s group-buying platform. Instead of monetizing only through ads, publishers can essentially leverage their content site to sell goods – at a much higher margin – to their audience. Even premium publishers are always looking for more effective monetization channels.
Additionally, display ads may command a range of eCPMs (Groupon was charging approximately $10 for the display ads that used to run on their site), but being able to serve targeted and desirable deals to users will always trump both performance and brand ads – which is why Groupon replaced all their display advertising with “deals nearby” on their own site.
Please take us through a use case on how ChompOn works for the publisher? And, how does pricing work between ChompOn and the publisher?
The ChompOn platform truly is drop-in for the publisher. Once the publisher installs the widget onto his site, he can either start selling deals from merchants that he has personally negotiated with, or start selling deals from other publishers and merchants. ChompOn takes a cut of the revenue for providing the platform, payment solution, and possibly the deals being sold.
Any thoughts about leveraging the datasets you’re collecting – perhaps re-selling cookie data or offering retargeting of deals through display ad exchanges?
Data privacy is actually extremely important to us. We do not contact the publisher’s users, and the publisher can always download his user data at any point. We do anonymously leverage user data, however, to provide better deal targeting across our network of publisher partners. This allows us to guarantee that the deals users see are relevant and tailored to their personal tastes.
What’s your approach to the creative?
Deal creative is unique because of the extremely limited time offering – creating a sense of urgency – and understanding that the deal actually provides a great value to the user.
Can you characterize how ChompOn’s model is similar to an exchange?
The value in our platform lies in the ability for publishers and merchants to leverage the ChompOn network to distribute and populate deals. Similar to an ad exchange, ChompOn allows deal inventory to flow between publishers, and the platform will eventually allow for bidding and accepting of prices to distribute deals across publisher sites.
A year from now, what milestones would you like ChompOn to have achieved?
With the right publishers, we’d like to have a reach of several million users viewing the deals through our platform. Although Groupon has recently grown rapidly, they began this year (2010) with just around 3 million subscribers while still generating quite a bit of revenue, so we have high expectations to bump up our publishers’ revenues.
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