GroupMe turns to advertising, sort of

March 28, 2011: 9:00 AM ET

The group messaging startup will offer slickly branded groups promoting bands, TV shows, and concerts. In other words: sponsors. Will users love or loathe the idea?

By Daniel Roberts, reporter

GroupMe sponsored groups on the iPhone

GroupMe sponsored groups on the iPhone

At the SXSW Interactive conference in Austin this month, while speaking about the recent heavy influx of platforms that offer group text messaging, Ted Livingston, CEO of KIK, told CNNmoney, "The four big [companies] that all the blogs talk about is us, Beluga, GroupMe and Fast Society." We're not so sure, Ted. From what we've seen, and others agree, GroupMe has had the most buzz, far and away (BrandChannel called it "the belle of the SXSW ball"). But will users who swear by the young app go for its new attempt at sponsored partnerships?

GroupMe, beginning today, will be promoting musicians, concerts, events, and television programs through branded groups, which will be available under a "Featured" tab in the main menu of the GroupMe app. Say you and five friends all happen to like Bon Jovi; you can create a Bon Jovi group. Nothing changes about the way your group functions—you can still text each other all at once, and also use the group for a conference call -- but now, you're entered for the chance to win tickets, CDs, or even the opportunity to have Bon Jovi pop up in your group and text message with you. In some cases, GroupMe says, the artist or celeb may even get on a conference call with you to prove it's really them.

That all sounds good, but we can't help but think that a group of friends would have to really like Bon Jovi to care enough that they'd create a messaging group around the band. The same goes for America's Best Dance Crew or Bad Girls Club, two TV shows that will also have featured groups available. To be fair, there will also be group options for Bonnaroo and Coachella, which we could more conceivably imagine people joining for the chance to win tickets. It's not likely that users who love GroupMe will be so disgusted by sponsored groups that they abandon the app, but it's hard to say how many of them will actually create a group around one of the featured brands.

Jared Hecht, the company's co-founder and co-CEO, believes strongly in the idea and thinks users will appreciate that they aren't just going to start seeing advertisements. "These are essentially brand experiences that give users a great time," he said. "It's a really cool way for brands to engage real life groups of friends that are already talking about the brand anyway."

GroupMe's announcement touts that, for TV shows groups, users will get "reminders of when the show is on, tidbits from the characters, the behind-the-scenes inside scoop and more." As for artists or concerts, being in the group gives you updates on show dates, giveaways, and that coveted chance to interact with a celebrity. "Bon Jovi could jump right in and answer questions for you," said Hecht.

When the GroupMe team was developing this, it was first used it to discuss the Lost series finale. Hecht sees their new implementation as an enabler of conversations like these—it's not an ad, and your texting does not have to be all about the brand. Nor do you have to actually recreate a group if you already have one with friends; you can merely type # plus the name of the brand or celeb. One thing's certain: this is the first step toward a revenue model for the app, which will come later down the line and, Hecht said, "will be about showing people offers that are contextually relevant to what they like and want to do." He agreed that the sponsored groups are a bit like Gmail's banner ads, which are contextual -- served up based on the words in your email.

For example, Hecht said, "We did this cool thing with MC Hammer, where all anyone would have to do was type #mchammer, and then they could win a contest where MC Hammer would jump into the group and message with you, or conference call with the group. It's kind of ridiculous but it's also really awesome."

Again, it's difficult to tell if users will think it's awesome. Famously, Twitter has struggled to find a way to make money. One way they've tried is through "promoted" trend topics -- but those are bought by advertisers and seem to be untargeted, general attempts at reaching users.

GroupMe's idea of letting users self-select the advertising they want to opt-in to, based on cultural or media events they like anyway, is a natural evolution of Twitter's model. But a lot has to line up right here: one of the sponsored brands has to appeal to an entire group of friends, they have to actively choose to use the sponsored group, the advertising and featured offers have to be unintrusive enough that friends don't leave the group, and advertisers eventually have to be convinced it's a valuable enough medium to pay for. If the dominoes don't line up just right, GroupMe could find itself with a "Featured" tab that users, well, don't use.

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About This Author
Dan Roberts
Daniel Roberts
Fortune

Daniel Roberts covers a wide range at Fortune with a focus on sports business, tech, entrepreneurship, media, and food and beverage. He is the lead reporter on the 40 Under 40 franchise. Prior to joining Fortune in 2010, he was a staff reporter at The Bronx Times and reported for the New York Daily News and The Wall Street Journal. He holds a B.A. from Middlebury College and a master's in journalism from Columbia University.

Email Daniel Roberts | @readdanwrite
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