
Groupon Traffic Declines Nearly 50% - domino
http://www.mediapost.com/publications/?art_aid=157597&fa=Articles.showArticle
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kinofcain
My bet is that facing insolvency and the lukewarm reaction to their IPO
filings they've reigned in ad spend and are relying on their existing
customers to bring in revenue, rather than buying fresh eyeballs.

If that works in the short term, it could make their growth numbers look
terrible but make them closer to breaking even (if not outright profitable),
possibly delaying the need to bring in fresh capital or at least making their
business look like it's worth _something_ , if not $20B.

Continuing to buy boatloads of traffic probably isn't sustainable and while
it's possible they could stop buying ads altogether and have a few profitable
quarters riding the wave of customers they bought over the last few years,
that's not sustainable either.

~~~
mikecolella
We monitor millions of urls with adsense and other ad networks every day and I
can confirm that Groupon is only advertising a tiny fraction of what they were
3 months ago through these channels, web-based US traffic.

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enoptix
I question the accuracy of these numbers. Hitwise, Quantcast, Comscore, etc,
all use sample data and extrapolate their numbers based on these figures.
Often the data is gathered using toolbars that are installed as part of
another software package.

I work in search marketing and I can't tell you how many times Comscore or
Hitwise has said a clients web traffic has taken a dive, even though the real
on-page analytics are reporting the opposite. It's very frustrating that
people take these numbers at face value.

~~~
AJ007
From what I've seen first hand on my own websites' ad inventory along with
what my $$ ad intelligence tools tell me, Groupon's US ad impressions have
dropped off a cliff in the past few months. As of halfway through this month
they basically stopped buying display ad inventory -- this is from the US side
of things. I think they are buying more display internationally (which I am no
expert on.)

Hitwise, Quantcast, Comscore, by themselves don't mean too much. When you
combine them all together and you look at traffic numbers for really giant web
sites they are pretty close to being accurate.

I was pretty optimistic about the daily deal sites, but Groupon (and
LivingSocial to a degree as well) pulling back on their ad campaign coverage
so dramatically is not a good signal. The other competitors that were spending
early on (late last year) did not last very long, and it was a good signal of
things to come.

Groupon has a great business model, but as with any business model that relies
on buying tons of ad inventory it raises your profile too big too fast. That
in exchange explodes your ad costs and eliminates your margins. At the end of
the day Google and website publishers end up the winner. That's one of the
reason I've split my business across lots of different websites. Had I not, I
don't think I would have been able to keep it running profitably.

Update -- here is something to take a look at. Earlier this year InAdCo was
running display campaigns on behalf of Groupon on a massive scale, chances are
if you were using the internet you saw these ads more than once(they had some
fancy in-ad signup form) If you take a look at their traffic on quantcast it
had a huge spike April-May and then went to nothing
<http://www.quantcast.com/inadcoads.com> The traffic returns in May, but as I
recall it was pushing LivingSocial at that point. Their traffic has dropped
off again, with neither Groupon or LivingSocial to be seen.

~~~
robryan
They were wasting a stack of money promoting their Australian site stardeals
though the google display network before they even had any deals on the site
for people take up. Sure I get the strategy of trying to build up a mailing
list so the initial deals will sell really well but as with most things they
do it's throwing a boatload of cash down now hoping they can build up some
sort of defensible mailing list.

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MJR
For my area it's the same types of deals - stores, restaurants and services.
It's either restaurants at 50% off or nail salons, lawn services, maid
services, painters, etc. How many of those do you need? If you bought the deal
from the painter, do you need another deal from a painter a month later. Once
you check off those boxes of things you need or want to get done, it's just
repetition for stuff you don't need anymore. There's nothing new keeping you
coming back. No wonder traffic has dropped, the quality and the novelty have
worn off.

~~~
callmeed
In their defense eating out, getting nails done, massages, etc. are things
many people do weekly.

The bigger problem is its basically an "unloyalty" program for the businesses.
Why go back to the same massage therapist and pay full price? I'll just wait
until the one down the street runs their 50% off deal in a couple weeks.

~~~
pbhjpbhj
> _I'll just wait until the one down the street runs their 50% off deal in a
> couple weeks._ //

That may not be the worst of it - the people will wait for you to do a deal.
It seems likely every new customer you gain this way will only purchase at a
discount, Groupons look like ant powder to me.

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trocker
"Forrester recently predicted that the daily-deal market will be virtually
nonexistent by 2016."

The market will be nonexistent is a conclusion overdrawn.Taking the
statistical data and interpolating it might give us figures but it is really
hard to believe that people's interest in saving money will be non-existent in
four years.

What might happen ( what is happening presently) is there will be many more
competitors in this market and it is very much unlikely that one competitor
will be consistently able to secure all the good deals in the market.This
might lead to market in which companies will thrive to get good deals with no
significantly big success. In this very scenario, any company which will be
able to successfully integrate the great deals from all the websites like
groupon,living social etc can be very much successful without many efforts
needed to be put in.

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ghshephard
An interesting assessment that I've heard from someone who would have reason
to know is that Groupon is moving towards pivoting away from the "Daily Deal"
business and monetizing their network of small business relationships using a
different business model.

That would explain the reduction in ad-spend on end-user acquisition. If my
sources are correct, we'll see something new popping up in the next 120-180
days from our friends over at Groupon somewhat unrelated to the coupon
business.

~~~
netcan
Very interesting.

If so and if successful, this will demonstrate the value of a good customer
list. Something for business school books.

Tens of thousands of local businesses that have a history of being
experimental in their marketing is not something to be sneered at. It can be
pretty hard to find and contact these businesses in any kind of a scalable
way.

~~~
gopi
Actually its all public data and many companies (dailydealmedia.com) are
selling the monthly list of merchants who ran a daily deal

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badclient
Has anyone else noticed a decline in the quality of offers over the past six
months? I've literally went from subscribing to several livingsocial/groupon
products to gradually opting out after one too many crappy massage-related
offers. In general I see fewer food-related offers.

~~~
mrchess
I stopped using Groupon because businesses [in MA] were becoming mean. In most
of the food deals I cashed in on, once I mentioned I was using a Groupon,
their faces would go sour and it would make me feel cheap... something about
the entire atmosphere would change. Anyway, I stopped using Groupons because
now they just make me uncomfortable.

~~~
pbreit
I am not affiliated but this service is clever in that you don't have to
reveal to the waiter that you are using a coupon. You send in a picture of
your receipt and they give you a refund. They can also steer diners towards
off-peak hours. <http://www.dailygobble.com>

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pchristensen
No mention of how they measured this, except this:

"That's according to new Hitwise data based on Web-based traffic, but
excluding mobile and app-specific traffic."

Groupon has lots of mobile apps: <http://www.groupon.com/mobile>

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dazzla
Let's not forget that Groupon where not first to the Daily Deal concept. QVC
have offered a "Today's Special Value" since 1987. Woot.com have been going
since 2004. Groupon is certainly a great evolution of the Daily Deal and a new
genre of Daily Deals but not the origination. So I think Daily Deals are
certainly here to stay even if the local daily deals are not.

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dkrich
The deal-a-day industry is an interesting phenomenon because you have
companies that are internationally famous whose fame doesn't really bring any
added value to businesses because their customers are local. I think Groupon
would work far better for ecommerce sites because there you aren't limited to
local customers, and would be willing to pay more for instant nationwide
exposure. And because the audience would be enormous, they could command much
larger margins and stave off competition from local sites eating up their
business. Of course Groupon scaled up way too fast and is now heavily reliant
on volume that only selling to a huge number of businesses can bring.

Assuming Groupon is in financial peril, if I were CEO I would think about
canceling the IPO, laying off most of the employees, and switching to
ecommerce deals. No matter how you slice it, brick-and-mortar deals is a
losing business model for a business after a certain scale.

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fens
Obviously there is fatigue in the market due to the saturation. It has become
increasingly difficult to sift through lists of deals to find the one that
you're truly "interested" in. It's like sitting down with a different coupon
book every day and looking for the best coupon to clip out, no one has that
kind of time except for the real bargain hunters.

The market will stabilize and settle down, but I highly doubt the concept of
"daily deals" or "group deals" will disappear as Forrester predicts.
Discounting based on bulk-buying has been around for ages, and leveraging the
internet is just a small pivot.

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bauchidgw
google trends for websites graph groupon.com, groupon.fr, groupon.de,
groupon.co.uk
[http://trends.google.com/websites?q=groupon.com%2C+groupon.f...](http://trends.google.com/websites?q=groupon.com%2C+groupon.fr%2C+groupon.de%2C+groupon.co.uk&geo=all&date=all&sort=0)

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richcollins
Web(van) 2.0

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qq66
They must have known about these massive problems in the business... why
didn't they sell to Google and let them have the nasty surprise?

~~~
jmathai
The only thing I read which made sense was that the acquisition offer could
have included performance requirements that the Groupon team knew they
couldn't meet.

Google's not stupid and wouldn't spend $6bln on something as risky as Groupon
without some safety nets.

~~~
byoung2
At the time, reports were that Google was offering $5.3 billion with $700
million in earnouts based on performance. Google was obviously front-loading
the deal so performance wasn't as big of an issue. Google just wanted to get
their paws on Groupon's network of relationships with local merchants. I
imagined Google pushing local deals through adwords, or complementing the
inbox deals with Gmail ads, or targeted deal commercial prerolls on YouTube
videos. I bet Google didn't really care about how they performed, because they
wouldn't need to be profitable on their own inside Google, they'd just need to
drive more ad traffic across all properties.

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sunnydp
A trigger point for a mini-tech bubble burst ?

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suking
This is going to be the LTCM of IPOs.

~~~
marcf
If it makes it to IPO. At this rate, it won't.

