More from the lessons learned department — today I'll talk about trends we are seeing in local marketing as all the "new" approaches mature.  If you think back just 18 months ago, things like social media marketing, couponing, and mobile marketing were all relatively new.  Today, many of these things are top of mind for local businesses, especially those more comfortable with marketing & technology and those that are by their nature hungrier.  They're also increasingly working their way into marketing budgets for bigger companies in the form of fan page execution, Facebook ad management, and other tactics.

I think small and big businesses will continue to evolve in 2011 although around different things.  Small, local businesses will grapple with the realities of Groupon & knockoffs.  Bigger companies will increasingly investigate opportunities to redefine their relationships with agencies.  Today, I'll talk about what local businesses face in 2011.

I am not sure the world has ever seen a faster growing company than Groupon.  Often confused for a technology company, Groupon is more of a fascinatingly well-executed business process.  The trouble with Groupon is that modest success has to date been relatively repeatable, and now there are at least 150 known group purchasing knockoffs and maybe more.

I think you're already seeing signs that group purchasing as a sector is unsustainable and on the decline.  The increase in competition has had a significant dilutive effect on group purchasing.  Deal quality is suffering even for the leader in the market, so more or less all providers of group purchasing are struggling to guarantee a flow of great deals from compelling businesses.  It's why you see more acupuncturists and fortune tellers and laser hair removal offers from the leading group purchasing vendors.

All of this is why I think Groupon has raised significant funds to create its next trick as much as it is to appease anyone inside the company who wanted to sell to Google.  We'll know soon enough if Groupon can actually innovate and whether it is Microsoft or Google… either able to create new tricks or a one trick pony (although I think Android is Google's most feasible attempt at a 2nd trick and likely to succeed).

But back to local businesses, Groupon taken to its "nth" degree is inherently deflationary for all the businesses it serves.  i.e. if you as a consumer know that a business will discount products/services eventually, you'll delay purchases.  That's the very definition of deflation — mass incentives for consumers to hold cash because they know cash will go farther later.  If Groupon is the future of marketing and if you can only drive traffic to your store by creating a Groupon, then the local business world will just get that much more competitive and cutthroat.  If it extends to other sectors and grows significantly, you have a major deflationary force at hand.

So how will local businesses respond?  To date, they've basically paid Groupon & the like for the convenience of making marketing easy.  Local businesses seem mixed on whether or not group purchasing is a good thing.  Those that are jaded are really, really jaded.  Folks who break even seem to fall in two camps — those who desperately need more awareness in their local community & those who don't.  Local businesses who have an awareness problem tend to think of group purchasing more favorably because it is an added benefit.  But others, especially tried & true businesses in the community, are not as concerned about awareness and are thus probably less likely to use such a service.

However, any business that blames Groupon for the situation is probably misdirecting their anger.  Groupon is just a way for local business to throw money at lead generation without developing the skills necessary to conduct modern marketing.  People will always pay for convenience in every market, and this is no different.

A lot of people out there are looking for a Groupon 2.0 — a next iteration that is the same lightning in the bottle that Andrew Mason found a little over 2 years ago.  It is hard to know exactly what that will be, but the characteristics are becoming clearer as business models emerge and fail and as consumers vote with their pocketbooks and their usage patterns.  More on that later.  

In Part II of this blog post next week, we'll talk about trends in mid-market, brand, and corporate marketing.  Have a great rest of the first week of 2011!