BILLION DOLLAR FLASH IN THE PAN

With revenues approaching $500 million and having been in business just under two years its valuation is estimated to be $1 billion.

Groupon is a phenomenon that needs to slow down fast.

An article in this week’s BrandWeek covers two years of marketing efforts for the company that shuns traditional methods and relies on viral impact and PR efforts to push the envelope.

But can this business sustain itself in a fickle world of web “loyalists”? There is no doubt that Groupon is a success today. What it will become tomorrow is anyone’s guess …. if it survives.

I took the plunge about a year ago and purchased several restaurant chits that gave me an average 30% savings at three establishments (the restaurants pony up as much as 75% to the customer and Groupon). One chit introduced me to a new Chinese sandwich shop I would have tried again but, it went out of business. One was mediocre and a third was below sub-par.

Since the chits were good for several months I decided to wait a few months to avoid crowds. And I wanted to ask if they would “do it again”. No, no and NO!

Apparently it was good business for Groupon but not nearly a first base hit for the restaurants that need repeat, full-paying customers. Groupon is the leaking bucket that will eventually run out of water as it tries to refill itself with compelling offers.

Dismissing my preferences only for restaurants, I have since been deluged with offers for nail salons, spas and women’s apparel. According to Groupon’s SVP, marketing, Aaron Cooper …”When you deeply understand your customer and product, you’re going to be better …. no need to hire traditional marketers ….you’re going to be better”.

Pride before a fall …. hubris. I recently unsubscribed from the service and am a happy, “spam” free camper.

WHAT IF NEWSPAPERS DIE ?

The current issue of BrandWeek touts the results of an AdWeek Media/Harris Poll that suggests that, while newspapers are read both online and in print by a majority of adults, paying for online content is not in the cards.

The newspaper industry has unfortunately created an appetite for free online news content in an effort to generate traffic for their websites. As more eyes landed on the their sites and as aggregation sites began to re-publish news content, the model began to backfire as newspaper circulation and online cpms dropped. It became a lose-lose combination.

A recent study released by the Pew's Center Project for Excellence in Journalism paints a picture that goes a long way to support Rupert Murdoch's efforts to raise a pay wall for online newspaper content. The study suggests that while the news landscape had expanded considerably through online channels, most of what the public reads and learns is overwhelmingly driven by traditional media -- primarily newspapers.

What happens if newspapers die?

To quote from the study ..."The questions are becoming increasingly urgent. As the economic model that has subsidized professional journalism collapses, the number of people gathering news in traditional television, print and radio organizations is shrinking markedly. What, if anything, is taking up that slack?"

Until such time that circulation and advertising can support the online models (unlikely), only a payment for content model will keep the information flow from drying up. If we do not wake up and pay for content origination, we are doomed to a Twitter-like world and information without substance.