Deals for the ‘Poor’ College Student Niche

College students are broke: True or false? Well, it’s sort of true, but not as true as you think.

They actually represent a $300-billion-a-year market, with most of that money being spent on school itself and necessities such as vehicles. But $70 billion of that total is discretionary, with $45 billion of it spent locally on businesses such as restaurants and bars: Someone’s got to be eating cheap pizza at 1 a.m. and drinking PBR, right?

The potential of that $45 billion figure and the unique consumer demographic that holds those dollars in their hands caught the eye of Matt Levenson, founder and CEO of Moocho, a one-year-old localized deal site with tentacles in 19 of the largest colleges in the nation with plans to go national and, eventually, global.

“There’s tremendous buying power around the local campus, and the merchants just don’t have a good way to connect with the students,” says Levenson, 37, the former chief operating officer for event ticket site StubHub.

Because it caters to such a targeted market with pretty singular interests, Moocho doesn’t end up offering the wrong type of deals to its subscribers and is instead honing in on a niche. “We don’t do microdermabrasion, we don’t do the dentist office,” he says. Instead, the focus is on food, drinks, and other stuff that college students go off-campus to buy, with deals for 50 percent or more off.

The 20 schools that are part of Moocho have yielded 70,000 subscribers out of a possible field of 800,000 students total. Those 70,000 represent about 5 percent of the national college audience. This year, as it expands to new campuses, the company would like to see the numbers rise to 100,000 or 200,000, Levenson says.

Next up: This month, the company is planning to add some new features, including Parent Mooch, which lets mom and dad set up accounts for students, and a slew of features that give deal subscribers loyalty points for returning to a merchant, including Moocho Mobile Bucks, which is a mobile payment app.

So is the company profitable? Depends on the school and how long they’ve had a presence. The pilot program launched in spring 2011 at the University of Wisconsin-Madison, where 5,000 students, or 12 percent of the student body, signed up for 55 deals spread out over four months. And it was “extremely profitable.”

“The second semester is when you reach profitability,” says Levenson.

To get the word out on Moocho, the San Juan Capistrano, California-based company has hired students to serve as ambassadors who get others to sign up by setting up tables on campus. Each campus has a manager, typically a junior who is in marketing, plus seven other students. Managers can make as much as $5,000 or $6,000 per semester working 10 hours a week, but most average between $2,500 and $3,000 for the semester. The company also does some advertising on campus websites and a bit of Facebook and Google advertising.

Levenson has worked with successful Internet companies before. StubHub sold to eBay for more than $300 million, and he also was the head of Campus Operations for Versity.com, an academic note-taking website marketing to college students, where he built the business to 165 branch locations, 10,000 field employees, and 750,000 subscribers.

Many of the Moocho deals are either restaurants, restaurant/bars, or bars, and the offers are for 50 percent off and more. If cheaper drinks or perhaps underage drinkers are going to create problems, it's the responsibility of bar owners, not Moocho’s, Levenson makes clear.

“The merchants have to ultimately identify who’s of legal age and who’s not,” says Levenson. And parents who set up accounts can specify that they don’t want Moocho dollars used for alcohol.

"There’s the peace of mind for parents, who don’t have to worry that their kids are out of money,” Levenson says. “And they know this is just for food and that their kid can eat.”

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Teresa Novellino writes for Portfolio.com