Can Consumers Forgive Groupon's Ad Gaffe?

Despite Commercials' Controversial Content, Site Has More Subscribers Than Ever

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NEW YORK ( -- Despite hitting the sort of rough patch that would doom most relationships, Groupon and its partners looked like they were going to make it. Sure, the group-couponing site's first TV ad in the most-watched TV event in history caused an outcry, but the company stood firm, subscribers actually increased, the charities it tied up with were supportive and its ad agency soldiered on.

Until last Friday, when Groupon CEO Andrew Mason notified the world the company would pull the ads.

Readers probably know the backstory by now. Groupon decided to bet big with edgy ads during Super Bowl XLV. Created by CP&B and directed by Christopher Guest, the ads used celebrities to juxtapose injustice in Tibet to a deal on fish curry, deforestation to a bargain bikini wax, and endangered whales to a cheap tourist jaunt. It was clear after the game ended that some of the 111 million watchers did not get the joke.

The decision to pull the ads appears to be more a move to save face than to stop defecting customers. Groupon is said to have gained subscribers since Super Bowl Sunday, not lost them, according to multiple people in discussion with the company. However, its biggest competitor and another startup airing its first spot around the Super Bowl, LivingSocial, saw two-times more new subscribers than normal since Super Bowl Sunday, said a spokeswoman.

The entire disaster may have been avoided had one little URL,, been included in the ads. On the site, people can donate to nonprofits working for the causes featured in the ads. When the ads caused backlash, CEO Mason first said on Tuesday that Groupon would add "" to its spots to clarify. But the decision to leave the spots in rotation changed just two days later. The involved nonprofits were informed Thursday evening the ads would be pulled.

"We thought we were poking fun at ourselves, but clearly the execution was off and the joke didn't come through," wrote Mr. Mason in his final blog mea culpa. "I personally take responsibility; although we worked with a professional ad agency, in the end, it was my decision. "

(Groupon does have a marketing head, Aaron Cooper, senior VP-customer marketing, who came to the company after stints in online marketing for Orbitz and for trading tool OptionsXpress.)

So how have the nonprofits fared? Greenpeace racked up $100,000 in donations in less than 48 hours. On its blog, about half the comments are supportive, while the other half are critical. "In terms of reaching the fundraising goal that Groupon has set, [the campaign] was a success," said a Greenpeace spokeswoman.

The Tibet Fund is "disappointed that Groupon decided to end" the campaign, said Rinchen Dharlo, president of The Tibet Fund. "Even though it offended many people, it brought the issue of Tibet to millions of people who may have never heard about our struggle." All three nonprofits involved defended the ads after they aired.

And the client-agency relationship? It's said CPB will be creating new ads to replace the canceled campaign. CPB and Starcom, Groupon's media agency, declined comment and referred calls to the client.

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