Groupon is getting way ahead of themselves. My 2011 prediction… Google buys Twit
Richard Bashara says: Ted I’m going to agree with a “but,” look at Facebook. Zuck’s had how many chances to sell FB? You can’t deny that Groupon has set a trend. Perhaps trying to stay on top of the wave could pay off.
And if Google doesn’t buy Twitter, I’d be quite surprised. Who knows, maybe Twitter will try to stay independent though. As a publishing tool, it’s clearly becoming more active than Digg or Reddit.
Ted Rubin replies: Twitter is incredibly concerned, as they should be, about how to sustain and monetize what they have. Google is incredibly worried about Facebook and how to penetrate and participate in Social Media/Marketing. Solves a critical problem for both.
As far as comparing Groupon to Facebook, I think the projectory of their growth is where it ends. Facebook competitors have many more barriers to entry than competitors to Groupon, and they control the hearts and minds of their members. Groupon exists only as long as they can provide such unsustainable discounts. With Google… the value of their local search and local relationships/workforce came in to play and made them much more valuable than as a stand-alone. IMHO 🙂
Richard Bashara says: Ted How many Internet companies started without a profit generation model? Google is perhaps one of the bigger examples of this in practice. I agree that Twitter needs to get its rear in gear to monetize, so perhaps Google+Twitter=success. I have to remind myself that most of the net (read: those outside of the Twittersphere) view Twitter as a joke, and a bad one at that.
Re: Groupon staying on top… Google’s foray into eCommerce has always been a good idea waiting to happen IMO. Perhaps Groupon is the missing link, and I’ll admit the space allows for more competition, but in the end the majority will go where the users are. If Groupon can establish a solid base (check), good deals (check) and get the word out effectively, they can last for as long as needed. Let’s not forget the ability to adapt. I don’t know that we’ve seen what Groupon can do long term yet. Perhaps they have a few tricks up their sleeve (a partnership with something like Shwowp would be a real plus, don’t you think?)
That being said, I doubt Twitter or Groupon will stay their own entities for long.
Ted Rubin replies: I agree Most in the marketing community (outside the social media world) misunderstand Twitter due to a lack of understanding of how Twitter works and what is has become …when used wisely, it is not a broadcast tool or a standalone tool for marketing, it’s an enhancement to your marketing strategy and an extremely valuable networking, experimenting and seeding tool. While it allows you to provide a broadcast-like tweet to all your followers, most will never see a single tweet and the real value is that it also allows you leverage the social graph of your followers, and to interact directly with one person in plain sight of thousands of people and allows them to pass along to others in their network. Think about how much we learn about someone by watching their interactions with others, and you can understand how this feature of Twitter quickly creates (or destroys!) trust throughout your social network. But I am sure I am preaching to the choir here.
I am not saying that Groupon will not survive, and they certainly have a business model, although their sales for the year seem to be grossly overstated in many circles. I simply believe passing up what was offered by Google showed tremendous hubris and that I believe they will come to regret the decision… even if they never voice that regret or remain successful. Like Gilt Groupe they rely on tremendous discounts which garner large audiences very quickly but are difficult, at best, to maintain. I think Google, beyond the ridiculous sum they were willing to pay, offered incredible synergies with regard to audience, local advertising (which in essence is what Groupon offers) and commerce.
Richard Bashara Tweets: Man, @TedRubin really broke down the Google/Groupon deal. Gotta say, I’ll agree with you mate: https://goo.gl/EyWsn
Richard Bashara says: So I guess the new question is, who would you sell to if you were Groupon?
yep. I would. I can see both sides, but I agree that their annual sales seem high? even if they are accurate, that may not last, they have MANY copies out there now.
last year when I was running a business, I tried (for a small while) to come up with a groupon deal that would be good for me, my clients, AND my employees. this formula could not be achieved in my spa… and I was fine with that (after reading the comments & questions section of groupon, there are many of those I would rather not have… but that is a Whole Other Discussion!).
Groupon is a phenomenal business model, whose services I have used many, many times and will continue.
…and I agree with you, Ted !
Just remember… Groupon is a the latest version of lead generation. Their model is not based upon initial profitable sales, but on monetizing the value of those you acquire through their offers to make the lead acquisition profitable.
I signed up for groupon…but I live in Hot Springs. Arkansas. I’ve been waiting for days and days for something to come up that I can us. Facebook on the other hand…I can use that. I can talk to the freaky chick who’s actually pretty wise and we become friends because our mom’s were friends. That’s priceless. A coupon for a place that’s fifty miles away, well that’s kind of neat.
I agree with you completely. I think that everyone saw how Facebook became a mega success story so they thought that they can turn down offers to be bought out and succeed like they did. The problem is that although Groupon was a good idea, it is too easy to copy the idea and become even more successful than they are, especially if for an internet giant like Google. Groupon takes out too much commission and Google Offers is going to take over.