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January 8, 2011
With Groupon, Who Needs Advertising?
What do you know about Groupon?
  1. Offers 50-90% off the Groupon Deal of the Day to stores in your city
  2. Allows retailers to open Groupon stores that let them promote deals anytime
  3. Uses email, Twitter, Facebook, and millions of followers to promote deals for free
  4. Spurned Google’s $6 billion purchase offer
  5. All of the above
If you answered “E,” you are correct. Groupon is all that and more. The beauty of Groupon is the irresistible deal—over 50% off. Now combine that with mob purchasing power as the deal isn’t on until it tips—that is, a certain number buy in and make the deal valid for all. Now, juice the response by making it a limited-time offer.

Groupon is the kind of idea you hear and go, “Why didn’t I think of that?” It’s so simple. Well, we didn’t think of it, and now we pay the price as ad professionals. Why would a local business, be it a retailer, restaurant, or entertainment venue, hire us to market them? Who wants to pay for ideation, production, printing, postage, media buying, and other related costs when you can accomplish the same with a “charge less” approach?

Put yourself in the shoes of a business owner. You own a restaurant. Every night a few tables are empty. Or maybe a store’s floor traffic hasn’t been that great lately and a great offer is all you need. I think you’d be sorely tempted to try Groupon. I talked to one retailer whose only reservation was a fear of being overwhelmed by the number of people taking advantage of the special offer.  

54% of facial treatments. Half off Botox. 83% off yoga.

We preach relevancy a lot. Looking at my Groupon offers in my Inbox, it’s pretty scattered. Then again, does it matter? With email costing next to nothing, they can afford waste that you wouldn’t accept in, say, direct marketing.

You can also easily forward the email to someone you know, thus increasing the relevancy and it’s still honed in on where you live.

Come to think of it, maybe those offers aren’t so far off the mark, even if intended for women in their 20s and 30s. I take yoga. Botox would clear up my forehead lines, and facial treatments might just give me the youthful appearance I need to compete with the twenty-somethings.

B’s to the rescue

Brands. Branding. B2B. Have we hit on Groupon’s weak spot? Groupon is all about price promotions. Remember Toyota’s experience with price promotions? Toyota was all about promoting with price cuts. Then Toyota switched to more brand-oriented marketing.

If you want to build a brand, Groupon may not be the best choice. Groupon leads to brand experiences, but they’re dependent on price. As Toyota discovered, price concessions may move cars, but it hurts profitability and cheapens the brand.

B2B is another area that may be resistant to Groupon. I don’t see any Groupon coupons for industrial or manufactured products or the B2B service sector. We ad professionals may have a glimmer of hope.

Groupon is here and we must live with it (and its many cousins). If you don’t see Groupon as a threat to advertising, you’re dreaming and probably already crafting a comment to post below. To that, I say: Go for it. Get it out of your system. Let’s have a healthy debate about Groupon’s impact on the advertising industry. 

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Mike Ogden is a digital/senior writer based in Kansas City. Ad agency stops have enabled him to create for major brands like American Century, Capital One, Sprint, and USAA. Seasoned and sharp with a touch of gray, Ogden, aka Og, is known for creating and championing ideas. Connect with him on LinkedIn.

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