local media insider
Case Study

The Capitol Dish captures group deal vertical for D.C. restaurants

Alisa Cromer
Posted
Three times a week a deal on dinner grows digital revenues.

Revenue initiative: The Capitol Dish, a group deal program for the restaurant vertical
Company: Washington Post Company
Email list: General list is 800,000 total,  an opt-in list for Capitol Dish of 80,000 and growing
Key executive: Tim Condon, Director of New Ventures, Digital 

Vendor: SecondStreet Media


Challenge: The Washington Post has had a long term group deal partnership with Living Social, which is based in the D.C. area.

But the partnership was not ideal; first of all the Post ran only one exclusive deal and was not making as much as it thought it should. Since the deals had different splits, according to which company originated them,  each group “held back”  on its promotions.

"Anytime you have a partnership you are a little nervous about giving up too much,” Condon said. The arrangement gave the Post one exclusive deal per week on the platform, and the rest of the week featured Living Social's own deals. “We made money off of any customer who bought a deal from us” but most deals were Living Social deals, with a much smaller cut.

Condon notes: "It wasn't due to any ill intent on either side. It's just natural in a situation like this that aligning incentives becomes difficult when both parties have an interest in owning a marketplace."

His challenge was to figure out how should and could the Washington Post compete in the group deal space with its own partner – and the second largest group deal company, in its own backyard?

“We looked at the deal space and said as a large local publisher we should be in the space. So lets go at it a little differently.”

Strategy:

The Post’s strategy was to separate out the best vertical - restaurants - and specialize deals in that space.

“Living Social didn’t offer us a lot (of restaurants) that was unique.”   Restaurants typically embrace group deals to fill capacity – and also are also a fit with the Post’s high-end readers. 

The Capitol Dish offers three deals a week, or 12 to 14 deals a month on a platform supplied by Second Street Media (which also runs contests for its editorial department). The three deals are offered on Monday through Tuesday, Wednesday through Thursday and Friday through the weekend.

To launch The Capit0l Dish, the Post wielded a huge (800,000) e-mail list, but only used the list periodically to introduce and reintroduce the program, culminating in a new opt-in list of 80,000 e-mail names today.

“The list is growing fast.” Which is a good thing, Condon says, because most people who sign up have very specific interests and wait “until we find the right deal for them."

The average voucher is about $15, which the company splits about 50/50 with the restaurant as well as giving a small percentage to Second Street.

Results:

Besides developing a fast growing list of 80,000 opt-ins around the restaurant group deal vertical, the site is selling about 250 certificates per deal, or about $3750 -  just shy of $16,735 a month - since launching in October. So far this outperforms the LivingSocial partnership.

The most successful restaurants for the group deal sales have been, surprisingly, Thai, Vietnamese, Japanese and anything Asian, even though Second Street found that  American and Italian performed best in its other markets.

High performing restaurants are  largely in the mid-priced range, since the higher end restaurants are in demand but harder to acquire.

“It could be the luck of the draw, that sales people simply got into those (largely Asian) restaurants. It’s the quality of the restaurant that’s important. We've had some good Thai Vietnamese and Sushi restaurants with deals.”

Lessons learned:
"One of the things we realized is that when you focus on a speific vertical, you have to grow the list faster. There are only so many restaurants that each person is interested in."

The Capitol Dish is a great improvement on the Living Social partnership, but in revenues and in building the e-mail list, a key long term asset.  (Of the two revenue initiatives on this site, Condon feels that ServiceAlley is larger long-term opportunity since it has the potential to be national and he will be spending most of his time growing the partnership this year).

Alisa Cromer

The author, Alisa Cromer is publisher of a variety of online media, including LocalMediaInsider and  MediaExecsTech,  developed while on a fellowship with the Reynolds Journalism Institute and which has evolved into a leading marketing company for media technology start-ups. In 2017 she founded Worldstir.com, an online magazine,  to showcases perspectives from around the  world on new topic each month, translated from and to the top five languages in the world.

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