Will Groupon’s Deal With Deutsche Telekom Be A Winning Template For Growth?

Today we know a bit more about how Groupon (NSDQ: GRPN) plans to extend its business opportunities in the years ahead: mobile services will be playing a key role, and so, it seems, will carriers.
Today, Deutsche Telekom (NYSE: DT), owner of T-Mobile, and Groupon said they would collaborate to offer Groupon’s local deals to Deutsche Telekom’s subscriber base across Europe. It represents the first carrier deal for Groupon, and a big step for T-Mobile in how it hopes to use its network for more mobile data and mobile commerce activities.
The deal will include marketing activities as well as “deeply integrating” Groupon’s offers into Telekom’s services. While the deal looks like it is mainly aimed at T-Mobile wireless customers, the joint press release also notes that “selected fixed” services will also get the Groupon treatment.
One of the key gating factors for any mobile service not directly integrated into the fabric of a phone’s OS is that users have to make the effort to download apps; many phones still require users to “turn on” those services to get automatic notifications. Mobile web services are even less automatic. This is one area that this deal hopes to address most immediately: starting sometime in the first half of this year, Groupon’s local offers will be pinged directly to subscribers “without the need for a separate download,” say the companies.
Michael Shim, the ex-Yahoo (NSDQ: YHOO) executive who decamped to Groupon about a year ago to become its VP of mobile marketing and partnerships, is the man behind Groupon’s partnerships, and it looks like this could be the start of other, similar deals with other carriers. The Deutsche Telekom deal announced today, it should be noted, does not appear to extend to T-Mobile USA. That is slightly bizarre, given that it’s Groupon’s biggest market, and therefore a more likely place for those deals to get grabbed up.
In the lead-up to Groupon’s initial public offering in 2011, the company had to weather scrutiny from more than a few people over whether it would be able to sustain its basic business model, offering daily deals on goods and services to a subscriber base. The rapid rise and success of the company led to hundreds of similar companies, which in turn led to an increase in the rise of the syndrome commonly known as “daily deal fatigue.”
But in this age of growing smartphone penetration and usage, it’s easy to see the mobile opportunity for Groupon. Location-based offers, based on a user’s actual purchasing history, using the phone’s own charging capabilities to complete the transaction and then broadcasting (read=marketing) that deal to their friends? It seems like a no-brainer.
So far Groupon has not capitalised on that opportunity as much as one might think — perhaps not because it can’t but perhaps because the scale for such services still isn’t quite there. Taking just the first of that chain of events described above — location-based services — a recent report from Forrester notes that only six percent of consumers in the smartphone-friendly U.S. use location-based apps on a regular basis. If the U.S. is producing such a low number, what does that mean for the rest of the world?
Nevertheless, this deal with Deutsche Telekom could be a crucial step in getting Groupon more easily integrated into those services, and it gives Deutsche Telekom another partner in its quest to drive more service revenues from its consumers not only from mobile data, but from other, more lucrative services like mobile commerce.
It is not the only carrier eyeing up this space: O2, owned by Spain’s Telefonica (NYSE: TEF) has been ramping up its own local deals and location-based services in the UK and Ireland — a service that it will likely try to extend to Deutsche Telekom’s home market of Germany, where it is a spirited competitor to the incumbent. That could be another fire driving the Deutsche Telekom/Groupon engine.