The email “daily deal” market has ballooned over the past year. The leader, GroupOn, is on the verge of an IPO. Various niches have formed as others try to improve on GroupOn’s model by being increasingly more local or more specialized. Races have found their ways onto these sites, and while providing a bargain for those buying, do the races really make any money on these entrants? And how do those that registered at full price feel about this?
I subscribe to a bunch of these email lists, and regularly purchase services from them. Over the past few months, I’ve seen the Slacker Half Marathon, the BeachPalooza, the Naked Foot 5K, and the Colorado Endurance Conference advertise on these email lists. In the case of Slacker, the offer was a $25 entry into the half marathon, normally $50, among other offers
. For BeachPalooza, it was a $25 entry to the 5K, normally $55
. For Naked Foot, a 5K entry for $20, normally $40
Normally these email marketing vendors offer their customers a 50/50 split. So for the Slacker Half Marathon’s sale at $25, Slacker would get $12.50 and GroupOn would get $12.50. It’s negotiable, if GroupOn is light that week, Slacker could negotiate a more favorable split, or if GroupOn thinks that they’ll sell a lot, maybe they’d allow for a less favorable split. I recall looking at the Slacker sale mid-morning and seeing that it had sold 133, so let’s assume that they sold at least 150 entries to the half. 150 x $25 = $3,750, split evenly that’s $1,875 for each party. For Slacker, that’s of course $12.50 per entrant then.
Assuming the Slacker course can accommodate an unlimited number of entrants, fixed costs are irrelevant. Entrants up to a certain point will receive a t-shirt, and let’s assume that each finisher will get a medal, and that the race may pay the timing company based on the number of entrants, that leaves just a few bucks per entrant to cover any remaining costs.
I’ll assume they’ll still turn a profit on each entrant then, but aren’t there better options to get 150 entrants, options that would allow Slacker to gain those same entrants at a higher rate? Why not lower the entry fee, not clear to $25, but to $30-35 maybe, pay RunColo to email our growing list of emails for something far less than $1,875, and then raise the registration back to the normal $55 after the one week (or day) period? More money would go to Slacker, hopefully a similar number of entrants would sign up, less money would go for advertising, and the race’s profit would increase.
GroupOn of course has more email addresses than RunColo or any other running-related lists, but these running-related lists go to…runners. Given the same offer, the buy-rate when sent to runners should be higher. Decrease the offer a bit to incentivize the race, the buy rate would decrease, but the race’s profit would be maximized. It’s a complex equation worth a lot of thought, and one that races should consider. They could perhaps justify a lower profit per entrant with the goal of making up for it in increased sponsorships. Whether for- or non-profit though, every race wants to maximize the money they collect.
And of course, the other question is – how does someone that paid for $55 for an entry to the Slacker Half Marathon now feel? Often credited to PT Barnum, the memorable quote goes, “there’s a sucker born every minute.” GroupOn Living Social Denver Post Daily Deals Weekly Plus Denver Deals Westword Voice Daily Deals (Denver) Zowzee (Denver) Zozi: Deals on Unique Activities Deals to Locals (Arvada)