Super Bowl

Groupon Makes Big Bid on Traditional TV, Buys Super Bowl Pregame

Social E-commerce Sensation Looks Beyond Word-of-Mouth, Lines Up Shops for Major Push

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NEW YORK (AdAge.com) -- Groupon may not need Google to grow. But it does need some good, old-fashioned advertising.

With a swift talk-to-the-($6 billion)-hand, Groupon turned down an acquisition offer from Google. But as it eyes more global markets and aims to connect with a wider swath of consumers -- while also fending off mounting competition from the likes of Living Social and other daily-deal clones -- Groupon is turning to Madison Avenue.

In the coming weeks, expect to see the social e-commerce trailblazer make its foray onto TV, including pregame spots in the Feb. 6 broadcast of Super Bowl XLV. You would have seen Groupon in the big game, according to two industry executives, but it was shut out: that inventory, which nets as much as $3 million a pop from advertisers, had sold out by October.

Groupon has been ramping up by quietly tapping a variety of agencies to handle various marketing duties. It's expected to partner with MDC Partners' Crispin Porter & Bogusky for traditional advertising, and, considering that shop's reel of creepy (Burger) Kings, talking mannequins and Volkswagen Beetles, Groupon appears to have no intention of playing it safe.

It has also added a media agency of record in Publicis Groupe's Starcom. Over the Christmas holidays Groupon CEO Andrew Mason sent a note to cable networks alerting them to the new relationship. And last month, Groupon tapped Havas-owned Euro RSCG, Chicago, for help with customer-relationship marketing strategies, a move that Groupon Director of Marketing John Becvar last month said was part of an effort to "test different programs with our growing base of Groupon subscribers."

It's a decisive shift in marketing strategy for the Chicago-based company, which has been among the best case studies for the power of word-of-mouth marketing, having grown in 2010 from one country to 35, with nearly 400 million subscribers. But a little over two years into its existence, it seems Groupon thinks that "tell a friend" isn't enough to grow as quickly as it intends. As of last week, Groupon said it's not yet ready to comment on any of its marketing plans. And agencies declined to speak with Ad Age as well.

But Rob Solomon, president and chief operating officer at Groupon, in November suggested to Ad Age the company was nearing a point where it felt it was time to begin experimenting with what's now typically referred to as traditional advertising -- TV, print, radio, outdoor billboards -- to maintain momentum. Said Mr. Solomon: "The next level of extending the brand is traditional offline media and techniques to build the brand. If you look at the great iconic brands that have been built on the internet, they all go through that transition, and I think we'll go through a similar progression."

In contrast, Groupon's most formidable competitor, LivingSocial, told Ad Age it has no intentions of having a Super Bowl presence, let alone toying with broadcast anytime soon. Currently, it spends about 95% of its ad budget online. The Washington, D.C.-based group-buying site, which launched in 2009, has yet to hire an ad agency, and creative work it has featured thus far has been developed in-house. LivingSocial completed a major round of funding, including $175 million from Amazon , in December.

"I would guess that in [Groupon's] meetings they're talking about credibility and brand development," said William Baker, professor and chair of the marketing department at the University of Akron. "People know [the Groupon brand] but it doesn't have a whole lot of credibility as a tier-one brand, so just the act of going on TV around the Super Bowl can add that credibility and boost top-of-mind recall. From standpoint, it seems like a good risk."

Other observers are less buoyant on Groupon's plans to go from online to offline media. "To me, this smells of 1999, when there's a lot of venture capital money being thrown at getting out there and getting known," said Sucharita Mulpuru, an e-commerce analyst at Forrester Research. "That was a na�ve mentality then. There's a lot of expectation of the overnight reach you can get and it doesn't always pan out in terms of quantifiable revenue."

Ms. Mulpuru pointed to Facebook as a successful social brand that has acquired hundreds of millions of users without investing in offline media. "I've maintained all along that the biggest challenge Groupon has is to have consistently good deals, day after day and in market after market," she said. Asked for her predictions around how it might capitalize on the Super Bowl buzz, she speculated that Groupon is "a clever group, maybe they'll come up with some crazy half-off offer for the entire country that will crash their servers.

"The offline marketing will get them some new names, broaden their reach and make them a part of the daily lexicon and get a lot of PR," she said. "But PR does not always translate into sales and that's important to keep in mind."

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