Groupon: In bed with the Devil?

Groupon, the daily deal giant, paid $3 million for a 30-second Super Bowl spot last week, and one wonders in hindsight if the vast majority of those dollars weren’t handed to someone in a red costume, with horns and the “purest of intentions.”

Groupon CEO Andrew Mason spoke to the recent controversy, saying that the ad was an attempt to make fun of those who it represented (that’s right – Groupon), and not at all a manipulation of the current climate of adversity in Tibet. That’s not all, though. Mason even suggested that there was yet another white-hat agenda: to bring awareness to Groupon’s various charitable endeavors. Perhaps Mason meant what he said, but many, many people disagree.

Look at it this way – if a joke actually has to be explained in detail, something isn’t right. The irony lies in the fact that with some slight editing, the ad could have not only been honorable, but inspiring to millions all over the globe, millions who are desperately waiting for ad agencies to produce campaigns that include integrity, compassion, and understanding. Groupon sure dropped the ball on world relations here, as many would agree.

The ad agency in question? - Crispin Porter & Bogusky. You might remember their recent campaign for Domino’s Pizza, where the company downs itself for creating a sub-par offering to hungry consumers over the years. CP & B took the stance that the best course of action (instead of coming clean about the several scandals over the years) would be a proactively apologetic campaign, one which would gradually win back customers, and re-solidify the Domino’s brand.

Here's how Crispin Porter's group creative director Tony Calcao explained it to Hemispheres Magazine:
"We realized that we couldn't just come out and say we have a brand new pizza, because no one's going to believe Domino's. The first thing you need to do is own up to the fact that you had to make a whole new pizza."

Where will the line be drawn when it comes to advertising to the masses? Should the courts get involved, or will their fines be well worth the black-hat advertising of certain ad agencies or companies?

Another social network has arrived: ChirpMe

February 3, 2011

By Brian Good, Founder, DealDoc.com

Editor’s note: The following is a guest post by Brian Good.  Brian is the founder of DealDoc.com

Yet another social network has entered the fray, and its name is ChirpMe. It combines a mix of Facebook, Groupon, Twitter, Match.com, and a FourSquare concept is soon to be added. Founded by Josh Viner and his brother Jonathan (a couple of social visionaries in their own right) ChirpMe launched in January 2011. Within the first 48 hours, more than 1,000 people had already signed up. The boys hope to take the network nationwide in the near future.

“It’s a place where you connect and get to know people, get to know your friends better, and at the same time you can meet new people,” Josh said last week in an interview.

The system draws on this information to populate your account (though you are invited to fill in additional details). The site drives interactions in a variety of ways. During the initial setup, users select New Haven restaurants that they are interested in going to, information which will be used later on by the system to link that user with others who are interested in the same place. The users will be coaxed into going there by means of a special ChirpMe.com-only offer. It’s win-win-win: the users get a date, and a discount on a meal, the restaurant gets more business, and the site gets a kick-back from the restaurant.

The restaurant deals are the best example of spurring in-person contact, but the site also has more conventional electronic interaction methods. For starters, the system asks users randomly-generated questions for them to post answers to on their pages. Users can also trade comments back and forth on each others’ pages a la Facebook. You can even link your ChirpMe status to your Facebook account so that your posts show up in both places.

As previously mentioned, ChirpMe is only available in New Haven right now, but the model is really great for driving hyperlocal commerce and communication. It will take time for the brothers to grow it out to different cities. Larger, sprawling metropolitan areas like New York and Seattle may prove too unwieldy for ChirpMe, however taking a neighborhood-by-neighborhood approach might give them smaller chunks to chew on.

Groupon Patents and Lawsuits

Deal-of-the-day giant Groupon has recently come under fire due to their continued efforts to sue their competitors.  The legitimacy of these lawsuits has been brought into question, as they are based on the concept of online collective buying. Groupon feels they have exclusive right to the online collective buying process because of a company owned patent.  The patent at the center of these lawsuits describes Groupon’s collective buying process as the “On-Line Marketing System and Method”. While there have been many different companies that offer a very similar service to Groupon, the company has aimed their lawsuits at competitors who threaten their business.

Mobgob and Scoopon have both been targeted and Groupon currently has lawsuits against them. Groupon claims their business has been hurt due to patent infringement to these lesser-known websites, which has caused harm to their business, reputation, market and goodwill. As was the case in the suit against Mobgob, Groupon hopes to gain control of the offending company’s website in order to eliminate it. While Groupon owns a patent that it claims protects this process, can they really claim right to an idea that has been in practice for some time?

Collective buying is nothing new.  BJ’s, Sam’s Club and Costco are businesses that are based upon this concept; consumers pay lower prices when buying as a group than they would individually. And really, every modern day big box store or discount website is based upon the same principle. Buying a large amount of a product and selling it at a relatively low price ensures sales for the manufacturer, a profit to the company serving as the middleman, and a bargain for the consumer.

Companies like Groupon and their competitors simply take this same process one step further. Creating local markets that allow customers to collectively join in on good deals has simply been a natural progression of business. This is exactly what a consumer is doing when shopping at any large, corporate owned store.  A person could even argue that the modern American consumer business industry is based on the collective buying process.  In Groupon’s case, the consumer is able to get a good deal on the desired product because there is no guarantee that the proposed deal will go through. If there are not enough buyers interested in a particular deal, it will not happen.

However, this same process occurs in all forms of business.  When a particular product does not draw enough sales it will eventually become unavailable.  While this process could take several months in normal circumstances, collective buying daily-deal websites simply allow the deal to expire at an expected time, rather than having the product in question become less available, until it is eventually no longer carried. When done online or at a local big box store, collective buying is, quite simply, a natural progression of business.

Submitted by Brain Good at DealDoc.com Daily Deals

LivingSocial Gains Major Ground on Groupon

The numbers tell a powerful story. Online daily deals website LivingSocial had an 80% increase in traffic two weeks ago, while Groupon.com took a 20% hit in the same department. That begs the question: Is there a new kid on the block to be reckoned with?

No one really knows just yet. The harsh reality is that anyone can come in, get viral, and dominate the online deal market in less than a day or two. That’s just how open the market is to penetration through marketing and rock-bottom prices. Groupon turned down an offer of $5 to $6 billion dollars from Google after sprouting up at lightning speed. Will they begin to re-think the decision they made? It will be interesting to see what transpires in the days and weeks to come. Facebook is also rumoured to be in the market of deal offerings, and you know what that means.

LivingSocial went viral with their offer of $20 Amazon gift certificates for $10, since they got the word out, and people bought in from across the globe. All it takes is one high-profile deal to do wonders for an online business, and here’s a stellar example. LivingSocial claims to be on track to overtake Groupon in 2011, and by all accounts they mean business.

Perhaps LivingSocial will get an acquisition offer as Google tries to build up Google Offers. That may prove to be a deal that will be too good to pass up, especially if the timing is right. That said, Google just might decide to go it alone, based upon the search engine giant’s nearly $200 billion market cap. They could surely dominate the scene if they chose to.

LivingSocial looks to increase the number of people purchasing online from local merchants in their area. After all, user confidence with online payment is at an all-time high, and social media channels have unlocked a global door for reaching huge audiences very rapidly. When you add in the fact that customers have become increasingly disconnected with brick and mortar attempts to offer deals, a powerful storm of online dominance is becoming the norm in today’s real-time society. It just makes sense to evolve and conquer in the world of online deals.

To further bolster their claim, LivingSocial has an in-house team that has already worked with tens of thousands of merchants to find win-win strategies for each of them. The ball is rolling, and in fact, it’s crushing the competition. 2011 will unveil the strategies put in place by those who want to compete in the online arena, and we’ll be there each step of the way.