Groupon stunned industry observers when it turned down a reported a $6 billion acquisition offer from Google last December. Weeks later, it raised nearly $1 billion in venture capital funding and bought several smaller deal sites around the world. The company also saw staggering growth from its November 2008 founding to spring 2010, when experts valued it at more than $1 billion.
Armando Roggio, Practical eCommerce
Groupon does not accept any offer that a retailer wants to advertise. Rather, the company must approve the offer based on its perception of the deal’s real value. Once approved, Groupon takes an active role in writing the promotional copy and positioning the offer for success. It selects offers it believes in and then gets behind them. For e-commerce marketers, the takeaway may be to provide real value. Groupon tends to use the price as a way to engage potential customers in a dialogue about the product’s value.
Rick Munarriz, The Motley Fool
The merchant appeal explains why both Google and Yahoo showed interest in gobbling up Groupon last year. If advertisers are spending money to pursue new customers through Groupon, that’s money not spent on local paid search ads on Google and Microsoft’s Bing. Will this be a passing craze? Is Groupon the next great online advertising platform? A consortium of early investors seem to believe that Groupon is just getting started. They may be buying a site on the rebound, but that’s better than not having a shot at all.
Groupon took the time to note a few of its accomplishments from the past year, including expanding into 35 countries, launching in almost 500 new markets, growing subscribers to more than 50 million and saving consumers more than $1.5 billion. It is also prepping to advertise during the Super Bowl pre-game show.
Some said Groupon execs were unwise to turn down Google’s $6 billion offer, but the deal-finder may be proving its individual worth, as it is poised to raise close to $1 billion in venture capital. As Groupon gets money to fuel its development, marketers may not want to miss opportunities to reach consumers via this growing platform. Marketers may consider offering deals through the rapidly rising online coupon site to raise brand awareness in 2011. Groupon has more than 35 million registered users and counting. Plus, the site recently launched a BlackBerry app.
OUR VIEW:
Groupon’s growth throughout 2010 was impressive, as was the confidence of its executives to refuse Google’s reported multibillion-dollar acquisition offer. If the company continues to grow in popularity — the pre-Super Bowl ad will certainly help raise brand awareness among later adopters — then it will continue to present a compelling case that it is an important advertising medium. However, the company should be sure to stick with its own secret sauce of taking an active role in local advertisers’ marketing to continue to present compelling offers.
