Maybe because it’s late or maybe because there are quite a few “moving parts,” it took me a little while to get Aboonda. The new service, in limited availability in a few California cities, brings together a range of interesting elements that are relatively new or untested in local. Accordingly, the company is offering a CPA model to local businesses. In this case the “A” is actual purchases. More provocatively it’s effectively paying for word of mouth to promote its roster of local merchants.
The company makes money in a couple of ways:
- From individuals who become “distributors” (think Amway) and pay a monthly fee ($85)
- From local merchants when purchases are actually made
Remarkably, and perhaps foolishly, the company is guaranteeing consumers will make at least $50K in purchases at participating restaurants and stores over the next year (with the qualifier that not all “vendors” can qualify for the guarantee). Tracking is provided through the purchase method itself: text/SMS message.
When consumers make purchases local businesses pay a fee/commission to Aboonda. Consumers are “bribed” to make referrals to friends and family to generate income for themselves. According to collateral on the site, here’s how it works for consumers (quoting verbatim):
- Aboonda “bribes” you to use the service for the first time by paying for your lunch at a participating restaurant.
- Then Aboonda’s customer service calls you to see how things went, bribes you some more, and supplies you with 50 referral cards to give to friends and family.
- As your referrals make purchases you immediately begin to earn money in your Aboonda account … $200, $500 and more per month.
The people who become distributors (called Aboonda Ambassadors) spread the word through their networks and try to recruit other would-be ambassadors. According to the inaugural entry on the Aboonda blog:
We’ve developed a referral marketing model that empowers consumers to make some extra income as they steer their social networks to Aboonda’s participating vendors – local retailers, restaurants and service providers – who enjoy increased top-line sales, free promotion, and new profit centers . . .
Aboonda makes a commission when its users purchase with Aboonda’s Buy-By-Mobile technology at local retailers and restaurants. It is therefore Aboonda’s job to get its users to spend as much as possible at its participating local vendors.
Abooda was founded by Frank Turner, formerly of AT&T yellow pages. This is one of those ideas that really looks good “on paper” but may be very hard to execute in practice. The challenges as I see them are:
- Getting the ambassadors involved
- Getting people to make these local buys via SMS (not an insurmountable obstacle but represents behavioral change to a degree)
- Selling the service to local businesses (the guarantee, designed to generate sign-ups may actually generate sketpicism as being “too good to be true”)
In fairness I haven’t spoken to Turner so I don’t know anything more about Aboonda than what’s on its site. Take a look and tell me what you think.
May 5, 2009 at 2:38 pm |
What a surprise to read about Aboonda on one of my favorite blogs. Thanks, Greg.
Your analysis, for the most part, is spot on.
While I cringe at the comparison to Amway, it’s fair enough, though I’d argue there is a big difference between “network marketing” (layers upon layers of opportunity seekers) and “referral marketing (incentive built in for talking to friends). Think of Aboonda as a monetized referral marketing model.
And you are correct that selling the service to local businesses is the toughest part of our model … it is in fact the ever-elusive holy grail of local search, and the main cause of failed models. That’s why local search cannot be just another Internet widget, and why our growth will be slow and steady.
I’m confident that once we build out the dbase tables, complete with vendor search, Yelp-esque user reviews, and twitter-driven local promotions, Aboonda will make a bit more sense.
Thanks again.
May 5, 2009 at 2:45 pm |
Sorry about the Amway comparison. It would probably make me cringe too. Good luck. I’ll be especially interested to hear how the referral incentive system works. You’re one of the first I’m aware of to try that.
May 5, 2009 at 4:52 pm |
Interesting that the cards provide a genuine pay-for-performance modle. The trick is to keep the shop keeper honest.