In the third act of Glenn Beck's career, the former Fox News sideshow barker has decided to use his sales skills -- and let's face it, he does have them -- to compete with Groupon and Living Social, but in a "values"-based way. In doing so, his new email coupon business -- Markdown -- will face tough competition.
There's one obvious reason why Beck has decided to do this: Every book he mentions rockets to the top of bestseller lists, and he can use the remnants of his media empire, including his radio show, to plug Markdown.com and his clients. So he has a built-in customer base to talk to. But, as I've noted before, being successful at one thing does not automatically make you successful at another. Here are six challenges facing Markdown:
Markdown's political correctness might not sit well with Beck's hoity-toity-hating fans: Markdown's "values" -- very few of them expressed thus far -- are surprisingly liberal. Who could be against "support[ing] American small businesses by connecting chocolate lovers with world-class chocolate shops scattered across the country"? And "being good to our employees, our partners and our customers" is a value straight out of the Fair Trade movement.
Being a hardworking entrepreneur is not much of a "value," it includes every headshop, lesbian food cooperative and anarchist printing press in the country. And are $10 "Ruffles" -- the product currently on offer from Chocolate.com at Markdown -- really a "thing" with Beck's guns-and-Walmart crowd? What next, artisanal brie from Vermont and chardonnay from Napa Valley?
Markdown may lack enough frequency to drive volume: Beck says he will not inundate his audience with emails, the way Groupon and Living Social do. "That means no "daily" emails to announce marginal deals -- when we announce a Markdown it's for a very good reason." Now look at a typical Groupon offer. They tend to be limited to a few dozen or hundred takers, and they're one of many daily deals in any given city.
The key to success is frequency and volume from a large number of small offers, targeted geographically. It's a commodity business, in other words -- they're piling it high and selling it cheap. No deal on its own generates a large amount of cash for Groupon, but add them all up and you have a multi-million-dollar business. It's tough to see how Markdown becomes a business based on just one or two deals a week.
- Email coupons are in an unsustainable bubble: Markdown will be competing for clients with Groupon, LivingSocial, Facebook Deals, Google Offers, Aol's Patch.com, Yelp, Krillion, Spreebird and AT&T's YP.com, among others. The fact that a conservative radio host now believes he's qualified to enter the discount promotions business kind of confirms that the online-deal category is over-inflated. How many of these things can America support?
- Relevance, relevance, relevance: If Beck had started an online book club to promote Rand, Hayek and more obscure authors his audience might find inspiring, that would make a lot of sense. Beck has already demonstrated his book-selling skills. But chocolate and identity theft? (Beck's other client-- there are only two right now -- is LifeLock.)
- Beck has a history of not being straightforward about his political opinions and his commercial endorsements: For months, Beck talked up gold on air while at the same time taking money from Goldline, which came under investigation for selling low-quality product. It's difficult to get people to trust your recommendations when it's not clear why you're recommending them, or how you're being paid for those endorsements.
- Beck is advertiser poison: Didn't anyone notice that he was forced off the air in order to end an advertiser boycott of his show that cost Fox millions? Beck just isn't stable enough for most clients.