Digital A-List

Ad Age Digital A-List: Groupon

Super Bowl Gaffe Aside, Newest Digital Darling Enjoyed an Explosive Year, Growing Globally and Telling Google 'Thanks, but No Thanks'

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With all the ink dedicated to Groupon over the last year, it's almost unnecessary to extol its virtues here. But, considering the newest digital darling is already profitable and presenting the hottest thing for small business since the Yellow Pages, we can even forgive its mammoth Super Bowl gaffe.

Deal makers: Groupon C0O Rob Solomon, left, and founder and CEO Andrew Mason have lots to smile about.
Deal makers: Groupon C0O Rob Solomon, left, and founder and CEO Andrew Mason have lots to smile about. Credit: Tim Klein

In a little more than two years, the Chicago-based company has amassed 60 million users in 42 countries, and it's already turned down a $6 billion bid from Google. Most important it's shown that there is, indeed, another way to skin the small-business cat to get at the sector's billions in marketing spending.

Online ad spending for small and medium-sized U.S. businesses will grow 20% over the next five years, according to Borrell Associates. But local online promotions budgets -- including couponing, loyalty programs and deals -- is expected to explode from $566 million in 2010 to $8.2 billion in 2015. And Groupon is riding the trend, said Larry Shaw, VP-research for Borrell, one that's especially relevant for small business, which is Groupon's sweet spot.

The group-buying site has also wrangled national advertisers in the past year, but those deals are just gravy, a Groupon spokeswoman once told Ad Age. With annual-revenue estimates ranging from $800 million to $2 billion, Groupon is undoubtedly a giant. In its Gap deal alone, it is estimated to have split $11 million with the retailer.

To keep its explosive growth going, Groupon has recently enlisted the help of adland. While its first Super Bowl ad from CP&B was eventually pulled after the campaign was called offensive, Groupon has since launched a replacement ad that's running in prime time. It's also working with Euro RSCG for customer-relationship management on both the coupon-buyer and merchant-retention fronts.

And, like other recent sensations such as Facebook, Groupon is showing early signs of thinking outside its own website. It launched a partnership with the price-comparison app ShopSavvy to include Groupon offers in its "deals" tab, meaning Groupon is starting to bubble out from email, its site and apps into other corners of the internet.

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