Zixxo Relaunches, Focused on Coupons

About a year ago I spoke with Mike Hogan, the CEO of a locally oriented site called Zixxo. At the time, Zixxo was going to offer free classifieds and coupons. The idea was that the classifieds would create a marketplace to attract buyers and sellers, but the business model was going to be based on charging local businesses for self-service coupons. To make matters even more complicated Hogan was simultaneously trying to build a local sales channel.

All of this was awkward and confusing to say the least. But now Hogan and company have rethought the model and streamlined it considerably. And they've done some smart and interesting things in the process.

Consumers can check out coupons in their local area by visiting the site, but Zixxo isn't relying upon destination traffic for its bread and butter. It's syndicating coupons and creating an affiliate network. The company is also seeking to work with third parties (e.g., newspaper and yellow pages publishers) who would extend Zixxo's coupon functionality and administrative tools on a private-label basis to their own advertisers.

Zixxo has also built obligatory "Web 2.0" functionality into the site by creating community and viral elements — users can rate local businesses and the coupons themselves.

The administrative area has functionality that makes it similar to paid search and contextual ad networks. Advertisers can run different campaigns and can pause campaigns. And my understanding is that merchants are charged only when coupons are actually printed.

Hogan describes the new model as "AdSense for coupons." As far as I can tell what Zixxo is doing is unique, in allowing the self-service creation of coupons (the company has stock images to choose from) and syndicating them. (ValPak is starting to syndicate online.) Hogan also says his API will allow anyone to put coupons on a map, which is another interesting idea consistent with some of the trends in Local Search/Mapping.

Another interesting angle here is that coupons are one of the only ways (another being call tracking/PPCall) that businesses can track online advertising to the actual sale offline. And coupons are a familiar ad vehicle to everyone involved. The challenge here is the familiar channel issue: getting businesses to show up and self-provision coupons — it's the same one faced by anyone trying to penetrate the small business market. That's why having a "multi-channel" approach is critical. And Zixxo does have several ways to acquire customer-advertisers, as mentioned.

One thing the company doesn't have to worry about is educating consumers about the product. Consumer demand for coupons is proven: According to Carolina Manufacturaers Services, an industry organization, 323 billion coupons (worth about $37 billion) were distributed in the US in 2005 and 88% of these coupons were published in Sunday newspapers.

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TechCrunch reports on the consumer RSS feature of Zixxo, which I hadn't discussed above.