Thursday, June 23, 2011

Groupon - An Internet Fad or a Real Competitor?


The buzz on Groupon is pretty strong.  No doubt your sales team is hearing about it all the time.  If it hasn't hit your market yet it looks like they will, or something very close will pop up.  Radio has also tried to package itself to meet Groupon 'at the pass' in many markets.



Yes, right now this is a 'hot topic.'  But, is Groupon poised to last -- or is it hopeful that Rupert Murdoch (or someone similar) will pull another MySpace and cash them out?

On the 'Tech Crunch' website Rocky Agrawal, an entrepreneur and contributor to Tech Crunch makes a very convincing case that Groupon will start to struggle as the hype wears off rather quickly.  As Rocky goes through the economics of the Groupon business model he pretty much ends up with a sophisticated Ponzi scheme.  He makes a very interesting argument that your sales team and probably a number of your clients should read.  Are all his facts straight?  I'm sure some holes can be found, but what he says as he digs into their business model is very interesting.  Check out Rocky's analysis here.

While Rocky digs deep into the mechanics of their sales pitch and business plan at Groupon what he doesn't cover is the ability to compete with Groupon.  Many of the local sales teams in Radio, TV and Newspaper are quick to counter with coupon plans of their own.  Other web competitors like Resturant.com and Living Social also have been quick to hit with their deals.  

We do need to take Groupon seriously on the sales side, their pitch right now looks very interesting to a lot of local merchants and national brands.  Radio does have a ton of advantages and can integrate some of the good sides of offers like Groupon.  Couple that coupon with the power to reach a ton of cume in the market quickly and you clearly have a winner.  

No comments: