Groupon Reinvents Local Advertising

Savvy young urbanites looking for new ways to explore their city find love with the process of bargain hunting on the Web. The result is an overnight success story called Groupon.

Forbes calls them the “Fastest Growing Company Ever”

This summer I was very excited when Result Advertising started to begin work with Groupon. Although we have only been placing radio and TV (click to see), it’s a thrill see and hear first hand the culture all that goes on inside the walls of this crazy start up.

First you need to understand that Groupon is an internet phenomenon. And if you haven’t heard of them yet, you soon will, and will be like catching a cold. What I really mean by that is Groupon’s brand is extremely viral. You’ll probably sign up because you’ll get an e mail from a friend inviting you to do something really fun or unusual, like taking trapeze lessons, or eating at a trendy restaurant. With that e mail or text will be a link to Groupon saving you a lot money, like 50%. Soon their daily deal email “broadcasts” will start to seep into your life. These daily deals go to 11 million shoppers in 150 cities in 19 countries and this month they started tweeting about group deals to many millions more. In April the startup got $135 million in funding from Digital Sky Technologies, the Russian investment firm that also funded Facebook and Zynga.Founded by Andrew Mason, a 29 year old entreasure with a passion for music and making a difference, Groupon was born out of the Andrew’s earlier on line concept, the Point, an online platform for petitioners to muster support for all sorts of causes using collective buying power.

I first read about them in an in-flight magazine featuring the wisdom of Ashton Kutcher’s internet marketing agency, and now I see them everywhere. Just last week they were on the cover of Forbes titled “the fastest growing company ever.” In fact, the only company to reach a $1 billion valuation faster was YouTube (now part of Google). They’re on pace to pull in $1 billion in sales faster than any company in history. This list excludes investment holding companies (which tend to be preassembled before formally launching) and those built mainly through mergers or acquisitions.

Cost per new customer acquisition is the often biggest and most expensive marketing challenge for any business, and Groupon handles this overnight. As a matter of fact, Groupon sometimes works too well. What to do if you’re a small bakery, and overnight you now have 5,500 new clients? You get to work!

What’s next for Groupon as it relates to Broadcasting and Advertising? Rest assured that it will be cutting edge. Recently Groupon cut a deal with Bravo and in July Andrew spoke at the Allen & Co. media summit in Sun Valley, Idaho where he said in an interview that his company is here talking to media companies about reinventing local advertising. “Offering customers a daily deal, and packaging it with related reviews written by a group of 70 writers, is a more compelling marketing vehicle for businesses than traditional banner ads, which are forgettable and don’t help a business generate loyalty.

Reinventing local advertising? He’s doing it. As you probably already know, in the world of new media your juice comes from your database. How loyal and responsive is your community? How big is it and how fast is it growing? What do all involved get from their experience? To the public Groupon is a trusted city guide for savvy young urbanites looking for new ways to explore their city. To local businesses:

• Direct Flow of new customers, who keep coming back again and again.
• Customers are (practically) guaranteed.
• Businesses see the results immediately. E mail goes out, customers have 24 hours to sign up.
• Groupon delivers the most desirable demographic which happens also to be the hardest to reach with tradition advertising. Upscale online savvy, educated and affluent.
• It’s free. Groupon makes money when businesses make money.

It’s a solid model. And now with all the copy cats, including Living Social, CBS, Clearchannel and other local media jumping on board, the challege becomes a race of awareness. Who will be the first in the mind of the consumers? And what will that look like? Coke isn’t number #1, they’re the “Real Thing.” Leaders act like leaders, followers narrow their focus and become the “Next Generation.” It will be interesting to see how it all plays out.