Just a month after Savings.com was scooped up for some $100 million in cash by Cox Target Media, the owner of the Valpak coupons that seemingly make their way into everyone's mailboxes, it's now expanding to Germany to dominieren den Markt Kupon (dominate the coupon market).
Savings.com, an online coupon site which started out in 2007, hopes to establish itself in Germany, as the market for performance-based marketing ripens and matures. "We want to be early and we want to be the leader," said Thomas Swalla, COO of Savings.com, in an interview.
"In the US, adoption of performance-based marketing started in 1996, with [companies like] Commission Junction," said Swalla. "In Germany, this business model really got going in 2007."
Savings.com, or Savoo.de in Germany, plans on expanding to France, Brazil and Japan after Germany, said Swalla.
Indeed, it would seem rapid expansion is a must for this company as it can earn some $50 million in an earnout if it meets certain growth goals.
Savings.com is essentially a provider of performance-based marketing because it works with large national brands, like JC Penney and Home Depot, to deliver their coupons online. Go to Savings.com and you can pick up a coupon for discounts - like $10 off any purchase at Home Depot if you spend $100 at any of their stores - from a number of these merchants.
Only if a consumer uses the coupon at the merchant's store does the merchant pay Savings.com. Hence why it's called performance-based marketing. Savings.com gets anywhere from between 2% and 3% to up to $15%, said Swalla. The commission depends on how aggressive a merchant wants to drive sales.
While Swalla wouldn't disclose how much revenue Savings.com is generating, he did say that Savings.com generated $500 million in merchant sales in 2011. So basically, one can do the math on how much the company is generating.
The coupon market - online and offline - is about $6 billion in the US, Swalla said, estimating that 25% is online. The German market is much smaller. Swalla sizes it up to be around several hundred million dollars.
A little history on Savings.com
Swalla says that Savings.com's biggest competitor is WhaleShark Media, which is a roll-up of coupon companies and deal sites that has raised $300 million from notable VCs, such as Google Ventures, Austin Ventures, Norwest Venture Partners and Institutional Venture Partners.
But Swalla says that Savings.com, which has only raised $4 million in funding in its lifetime, has been able to succeed [to a respectable exit] against its well-funded rival for several reasons. 1) The company built out its merchant relationships early on and established a strong relationship with them to get exclusive deals. 2) It worked a lot on a personalized service, meaning it was able to capture a lot of personal information from users early on in order to get them personalized deals. So if you like Sears and handbags, Savings.com would send you discounts on handbags from Sears. The company sends its users 12 deals a day. 3) It leveraged "deal pro's" - in other words, bloggers (about 100) who would write about deals to watch. A customer could then follow a deal pro to get good deals.
The personalization and following of influencers contributed to the company's ability to attract 6,000 to 10,000 new users a day. Savings.com also gets about two million visitors a month in off-peak shopping months and double that during busy shopping times, such as the holidays. It's demographic is 83% women in households that make more than $65,000 a year.