Sorry!! The article you are trying to read is not available now.
HOT TAGS:  

Groupon Kidding Investors, Themselves

Print comment Post Comments
NOW THIS IS HAPPENING
DailyFeed
How is Groupon different from any of Omnicom, Interpublic, or WPP's direct marketing ad agencies?

It isn't.

Groupon seems to have convinced itself -- as well as Kleiner Perkins, Battery Ventures, Greylock Partners, Maverick Capital, Silver Lake, Technology Crossover Ventures and DST -- that it's something it wasn't, isn't, and will never be.

In Sunday's New York Times, David Streitfeld wrote of the Chicago "couponing" company:

Groupon shuns being thought of as a marketer or, worse, an ad agency, promoting cheap pizza or sushi for anyone who wants to hire it. The hope instead is that its users will eventually perceive it as an impartial guide to a city or a neighborhood, somewhat in the manner of the local paper’s weekend section. With more than 400 writers and editors, Groupon’s domestic editorial staff is on the verge of eclipsing the big name across the Chicago River, The Chicago Tribune.

However, Groupon not wanting to be thought of as a marketer doesn't make it something else. Groupon is a marketer. And it's certainly not "an impartial guide to a city or neighborhood," because an email blast advertising a local deal on pedicures, paid for by the pedicure salon -- no matter how cleverly written -- is hardly trusted editorial.

Groupon believes it has something no other company has, namely, "The Voice."

This, Groupon insists, "is what subscribers respond to as much as the deal itself." As Streitfeld notes, "The more you can laugh with Groupon, the more you will like it. Or so the company hopes."

Wrong.

The more you can save with Groupon, the more you will like it.

In 1993, Miller Brewing hired the famed Cliff Freeman & Partners to use humor -- CF&P's decades-long forte -- for the launch of its new clear brew. (Full disclosure: I worked at CF&P in the early 1990s, but did not work on any of the commercials discussed here.)

It is now available on eBay as a collector's item.

CF&P turned out stellar work for Church's Fried Chicken, too:



So, when's the last time you ate at Church's?

Does it matter that Groupon has four in-house "humor writers" that add a flourish to copy the company's stable of writers churns out every day?

Yes -- to the humor writers:

“My dream,” said Groupon's Sam Weiner, “was to get a job writing comedy and make more than minimum wage watching dogs die,”  which is a reference to Mr. Weiner's former job at a doggy day care outfit.

His current job satisfaction notwithstanding, potential investors can be heartened by Groupon's excellent brand recognition, actual revenue from the companies that pay Groupon to advertise their products and services, and competitive advantage by being first to market.

But if Groupon went away tomorrow, how deeply would we really be inconvenienced?

Points out David Streitfeld:

The big Internet companies owe their dominance to something singular that shut out potential competitors. Google had secret algorithms that gave superior search results. Facebook provided a way to broadcast regular updates to friends and acquaintances that grew ever more compelling as more people signed up, which naturally caused more people to sign up. Twitter introduced a new tool to let people promote themselves.

Groupon has nothing so special. It offers discounts on products and services, something that Internet start-up companies have tried to develop as a business model many times before, with minimal success. Groupon’s breakthrough sprang not just from the deals but from an ingredient that was both unlikely and ephemeral: words.

If Google disappeared tomorrow, we'd feel it. If Amazon closed its doors tonight, everyone with a Kindle would actually find their lives disrupted. When and if a Groupon IPO comes to pass, the offering could value the company at $25 billion, which would surpass Google's valuation when the search giant went public.

“They’ve cracked the code on a formula for how to basically give access on the Internet as a marketing channel for offline merchants,” said Marc Andreessen, co-founder of Andreessen Horowitz, in January.

And they've done it well. Groupon has created excellent advertising for the myriad local kayaking outfitters, yoga studios, and Asian fusion restaurants that have hired the company -- sometimes with such a response, the retailer couldn't handle all the new business.

Which doesn't make Groupon the next Apple or even the next Pets.com. Because Groupon already is something. Why pretend otherwise?
POSITION:  No positions in stocks mentioned.

TICKERS