1. “Imitation as the Mother of Invention”: How the WiPromo Business Model Mirrors
That of FaceBook – Authored by Alex Tilt, Founder of WiPromo, LLC
Casual observers of the WiPromo business model sometimes comment that the strategy is
unproven and therefore fraught with risk. Without wishing to debate the fact that all
start-ups are risky, the purpose of this brief strategy paper is to explain the origination of
the WiPromo concept and its similarity to that of Facebook. Bibliographical credit is
owed to Nisan Gabbay’s blog and his 11/5/06 posting titled “Facebook Case Study:
Offline Behavior Drives Online Usage”. Mr. Gabbay attributes much of the continued
success of Facebook to the following strategy:
Provide Pre-existing Offline Community with a Complementary Online Service:
The original Facebook (“FB”) business model was to provide an information service
(interactive student directory) that was not available online. Similarly, WiPromo (“WP”)
does not create a community where one doesn’t exist; rather WP plans to provide a
unique communication service (interactive Member to Member Discounts or “M2M”) to
a potential 3,000 U.S. Chambers of Commerce and a pre-existing offline community of 3
Million Chamber Members and their 90 Million employees. And just as FB created a
popular online utility for enabling pre-existing social behaviors within an existing offline
(student) community, WP is designed to piggyback on the popular offline M2M Discount
Programs and provide a location aware, real time, personal shopping utility for
consumers (“Buyers”) and local merchants (“Sellers”).
Restrict User Registration
Just as FB made important product decisions to ensure harmony and trust between the
offline community and the online service created, WP intends to limit membership to
only Members of the local Chamber. These measures aim to reinforce feelings of
exclusivity and foster a sense of local community that is only available to Chamber
Members.
Monetize by Aggregating a Series of Deeply Penetrated Communities
The WP online advertising model is arguably more compelling than FB because it
attracts value oriented shoppers who are anticipating a shopping adventure versus the FB
faithful who log in for virtual social connections. Based on the personal profiles of its
users, both FB and WP provide a convenient, high utility online service for enabling pre-
existing social (and shopping) behavior in an offline community. However, FB motivates
its users through passive social voyeurism while WP relies on greed and an active call-to-
action – the key to measuring advertising effectiveness. If a local or regional advertiser
wants to target a particular community WP is a more relevant way to get your message
across. More importantly, CPM rates for local, targeted advertising command a
significant premium from advertisers because they tend to convert at multiples 10-50
times higher than traditional banner advertising. Since all members of the community
shop, it is logical to assume that a majority of registered WP Buyers and Sellers will log
in at least weekly to take advantage of WiPromo offers. That means that brands can run
time-oriented CPA campaigns and reach not one, but three distinct audiences: local
SMB; local consumer; and regional mobile.
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2. It is envisioned that WP will have ample opportunity to diversify its revenue streams
beyond traditional banner advertising due to its deep penetration of local and targeted
geographic regions. Having the attention of the majority of local business will allow WP
to roll-out its premium subscription service, WiPromo Metrics, a merchandising decision
support dashboard for automating future WiPromo campaigns.
Build Strong Brand Recognition Amongst its User Base and Advertisers
The key to targeting branded advertisers is having a strong brand that advertisers want to
be associated with. While WP is ingredient branded behind well established Chambers of
Commerce, the goal is to differentiate WP by aggregating its online audience into unique,
regional geographic media markets or “pods”. Because Chamber members are employed
and have more disposable income and are more likely to have children and homes and
automobiles and credit cards, they are more desirable from an advertiser perspective. WP
represents a more compelling local advertising opportunity than FB because WP can
guarantee deeper penetration of local communities whereas the original FB relied on
micro communities such as high school and college campuses. The most noteworthy part
of the WP advertising strategy is that CPM rates for local advertising campaigns are
substantially higher than national ones because of their more targeted nature and the fact
that WP tracks its user’s daily intent to buy and sell specific goods and services.
Launch Strategy
FB was launched by word of mouth and blasting of emails across the (Harvard) college
campus. Similarly, WP will have access to the email addresses of participating
Chambers members and their employees. WP awareness will be reinforced by existing
Chamber communications – the frequency and reach which is estimated at 15X/month
and 50% of Chamber members, respectively. Because local Chambers are members of
state Chambers which, in turn, are members of the U.S. Chamber, WP will use B2B
referral marketing and a targeted geographic roll-out strategy starting in a major
Northeast city. And just like FB which focused on 30 campuses with its initial funding,
WP intends to acquire a like number of Chambers before going out for additional growth
capital.
Conclusion
Given the fact that over 70% of the $14 Trillion U.S. economy comes from consumers;
there is plenty of offline shopping behavior to drive usage of the WP website. More
importantly, this offline behavior occurs every day – which greatly improves the chances
of users remembering the WiPromo service. By providing both Buyers and Sellers with a
free customized shopping profile based on lifestyle modes – LiVe, Work and Play – and
then simply matching real time supply and demand, it is human nature to be curious
about promotional offers (“WiPromosquot;) that help Buyers save money and Sellers
generate free sales leads.
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