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Gini Dietrich

The Groupon Bubble Is About to Burst

By: Gini Dietrich | February 9, 2011 | 
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Alright. I give! I wasn’t going to blog about the Groupon Super Bowl ad, but here I am.

If you haven’t seen it yet, here it is. Watch it quickly for me. Go on. It’s only 30 seconds.

Honestly? It didn’t bother me as much as it seems to have bothered CNN, the Chicago Tribune, the Wall Street Journal, and more. Then again, I’m not a China or Tibet advocate. Not that I don’t want freedom of speech and civil rights for every human being. It’s just not something I go out and rally for during my free time. Sure, I rolled my eyes. I even said out loud, “What was that?” But I didn’t find it offensive.

There were two other ads…one with Elizabeth Hurley talking about Amazon rain forests and one with Cuba Gooding Jr talking about the dwindling number of whales.

Seems alright, each one by itself, doesn’t it? The problem? Then they each go to exclaim that they got a deal with Groupon discounts, with Hurley even exclaiming, “not all deforestation is bad” while getting a bikini wax.

Tacky? Yes. Insensitive? Completely. Clever (which is what Groupon is claiming)? Um. No.

But the reason I finally got suckered into blogging is not because of the ads, but in how Groupon has handled the criticism. And, as we all know, Spin Sucks.

Have you seen Andrew Mason’s “apology?” It actually stops short of an apology, implying instead that if you didn’t get the ads, you’re just not smart. In a written, and carefully crafted letter (which I’m sure went through several rounds of drafts from their attorneys), he says, “We would never have run these ads if we thought they trivialized the causes – even if we didn’t take them as seriously as we do, what type of company would go out of their way to be so antagonistic?” He then points out how these campaigns benefited certain charitable campaigns.

I’m the first one to admit that even I, on occasion, need adult supervision. But these guys REALLY need adult supervision.

Where is their public apology, that’s not handled by the attorneys? Where are the actual words “we’re sorry?”  Where is their experienced PR counsel? Where is the sensitivity to, oh I don’t know, the fact that they’re a social company but being as anti-social as possible? Liz Strauss said it best when she gave her advice on how to heal this very public black eye.

You know what I think? I think this was another ego play in a long line of arrogance. It’s no surprise that I think walking away from the Google $6B deal was about as dumb as they come (and I’m willing to bet my life that they never see that kind of money again, even on the open market). I think this was a “HEY! We can have a Super Bowl ad! How cool is that? And we’ll work with the coolest ad agency around (Crispin Porter & Bogusky). We’ve arrived!”

But I leave you with one thought. The last time venture-backed dot com companies spent a ton of money on a Super Bowl ad to be cool, instead of growing their business, was in 2000. This game is often referred to as the “dot com” Super Bowl because it was held during the height of the dot-com bubble, and several Internet companies purchased television commercials. Pets.com famously paid millions featuring a sock puppet. And where is Pets.com today? Oh yeah. They went out of business.

You hear that? It’s the bubble. About to burst.

About Gini Dietrich


Gini Dietrich is the founder and CEO of Arment Dietrich, a Chicago-based integrated marketing communications firm. She is the lead blogger here at Spin Sucks and is the founder of Spin Sucks Pro. She is the co-author of Marketing in the Round and co-host of Inside PR. Her second book, Spin Sucks, is available now.

138 comments
paulevansmedia
paulevansmedia

Here's one from the Financial Times op-ed the other day ... hinting at founders lining pockets and a ponzi-like model that has Groupon using new suckers money to pay old suckers off ... Groupon is at a loss to justify itself http://ow.ly/5mOWZ

PJWright
PJWright

@Ginidietrich While this topic has been dormant for a while, I just ran across this article which explains a whole lot about Groupon and its business model.

ZZidan
ZZidan

word. Groupon is overly arrogant and is starting to ignore (or rather customers are starting the realize) the neglect toward individual interests...o yea, sign me up for a spider vein consultation, or don't, and for many business owners it doesnt pay to run a groupon deal

http://on.fb.me/antigrouponmovement

Howie Goldfarb
Howie Goldfarb

All I can say is you have driven so much traffic here just from Groupon and Brogan! You truly are Brilliant!

PJWright
PJWright

Has anyone followed the latest flub? Seems Groupon suggested to FTD that they increase their price so that when Groupon was used, the price of the flowers would come back to the original price.
Who could possibly be advising these guys??? Must be watching too much Mad Men.

CLGraphics
CLGraphics

Those commercials, combined with their 6$b snub brought an instant image to mind:

'Red' from That 70's Show, setting down his coffee, shoots 'that-look' across the breakfast table at 'Groupon', says ... "Dumb-ass", picks up his paper ignoring the indignant 'What? Why? Me?' look on 'Groupon's' face.

Funny what happens when you 'try' to be cool...

hackmanj
hackmanj

Funny I immediately thought of you when I saw those crappy comercials and wondered what you would have to say about them.

Oh and I hope they never get offered $6B or more again, the interwebs without Gini Dietrich would suck worse than Spin does.

Happy Birthday!

3HatsComm
3HatsComm

Wow some great discussion here. Like many I was not as offended by the ads as others, but thought there were in poor taste. Possibly b/c I didn't know/get the connection to any altruism or specific cause. Just felt manipulative. I thought one of the Pepsi Max ads dumb, w/ poor racial overtones. I thought most of the ads were just MEH. Which makes me question what if any market testing was done prior to running the ads.

What I do agree with @ginidietrich is the tone of the response, and I'll let you pick your own adjectives. The "pass the buck" mentality and odd rationalizations: i.e. they don't want ads "built around the crass objectification of women" and yet run spot w/ a thin, glamourized super model touting bikini waxing. That ad was more on its "social agenda" point, yet one could cue some "beauty obsessed" feminst rant. The other thing as you say is the lack of "social" for a social company. Looking at the comments left, a lot of negatives and not one reply from Groupon that I can find. FWIW.

cjstem
cjstem

I completely agree. The ads were bad. The response was worse. I had to blog out my frustration too. You can check out my thoughts on their response here http://ow.ly/3TW9J, but mostly I just wanted to affirm everything said here. It was not clever, and Groupon's response has been arrogant, narcissistic and deplorable.

adambrooks
adambrooks

I am receiving a refund for my unused coupons and closing my account. Want to make a statement? Yes, "save the money" by taking it elsewhere.

paulevansmedia
paulevansmedia

I have to disagree Elissa ... Dennis Miller talking about measuring first downs in angstroms may have missed 2/3 of the audience with his brilliant humor (and eletist as this will sound ... it's their fault not his) ... he never used the plight of others - not even the ignorance of his viewers - as a comedic foil. And while Groupon was nowhere near the blatant vulgarity of say, Lisa Lampanelli ... their agency should have been smart enough to steer them away from stiring up people's sensibilities ... unless of course, that was the plan all along.
If Groupon really does have a global conscience and wants us all to consider the plight of the rain forest, the Humpback and the people of Tibet, why not just make a billion dollar donation to those causes ... and while I don't use Groupon because it actually hurts small businesses in the long run, I will agree with the comment earlier, that there are certainly more people talking about them today, than there were last week. http://ow.ly/3TUmI Of course, that's just my opinion ... I could be wrong.

ElissaFreeman
ElissaFreeman

I once had a CEO who used to kibosh uber-creativity as being "too clever by half". I've always lived by those words...as you'll never make any friends by always wanting/needing to be the smartest guy in the room. After awhile, all that bravado wears thin...just ask Mark Zuckerberg. Andrew Mason is clearly sucking back his own Kool-Aid...and one of these days he's going to choke. Let's just hope the rest of us survive what could be his ultimate demise....

angiecat
angiecat

The ads were barely funny -- but they were unique, and shockingly memorable. I'm not a fan. Walk away from a Google $6B deal. Yes, arrogant decision making will lead to their demise. ~ Angie Gibson | Blue Poppy SEM

paulevansmedia
paulevansmedia

I hear the bubble bursting too ... Mason walks away from the best offer he'll ever get, competitors are birthing faster than Rabbits and now a Rice University study takes some of the shine off online couponing ... Groupon As The Emperors Tailor? | Evans Media Group http://ow.ly/3TARx

CoreyTyhurst
CoreyTyhurst

I think we all need to ask ourselves what the point of the ad was. If the intent was to create awareness of the brand, I'd say they were highly successful. I bet folks who had never hear of Groupon now talk about it at the dinner table in some shape or form. No publicity is bad publicity just ask Eminem... Or all of the people who feel compelled to discuss it here.

That being said, if their intent was to make their rand family friendly, I'd say they messed up. I doubt this was the case... Have you read any of the copy on their daily deals? Their brand pushes the envelope.

Net, I think the ad was an awesome call, but giving up the offer from Google was just silly.

PJWright
PJWright

@paulevansmedia Doesn't it make you question Google's thought process behind offering gazillions for Groupon? Does for me.

wabbitoid
wabbitoid

@FocusedWords While that's a good article, here's a study with a bit more depth that shows just how terribly flawed the business model is: http://t.co/rJi5zPH Basically, it's a consumer-based model with very little for businesses, which is why none of my clients have tried it.

ginidietrich
ginidietrich moderator

@HowieG If I were doing it on purpose, it would be brilliant. I'm just being me...talking about how crazy our industry is and trying to make the spin stop. :)

Todd Lyden
Todd Lyden

@ginidietrich @FocusedWords @faybiz
G- there are so many competitors out there now- I don't see how they can keep up once people see that they don't need to give up 50% or more for what is a glorified email list and bad customers. I am sure some convert but most of the studies are not bearing it out. The alternatives are going to start competing where Groupon isn't like ACTUAL good deed, charity stuff and not ripping off the smaller businesses for high percentage.

ginidietrich
ginidietrich moderator

@FocusedWords @faybiz I've done a lot of investigating on it because clients always ask if they shoud do it. We recommend Groupon (or a similar business) if they have something that didn't sell or they have overstock. It's great if you need a quick increase in sales, but not so great if you expect people to come back. I'm a fan for certain things. What I just don't get is walking away from $6B and the decisions they've made since then.

PJWright
PJWright

@ginidietrich @faybiz They have to have the best sales force out there. I have never understood how any business (especially small business) would buy into their model. Thought I was the only one out here thinking "The Emporer has no clothes."

ginidietrich
ginidietrich moderator

@faybiz They do do sales really, really well. And maybe just aren't experienced enough to say, "we need outside help on these things"?

PJWright
PJWright

There comes a time when the little voice in your head says "Maybe I need to get better help." I'm beginning to think that the little voice is on mute at Groupon. Youth is beginning to show and create serious cracks.

ginidietrich
ginidietrich moderator

@FocusedWords I think it's that, plus he's a gazillionaire at a very young age (it's the same thing you see in sports - money breeds arrogance), he doesn't have enough age to have experience, and his investors are notoriously arrogant. I'm not so sure it's him as it is his investors and no PR counsel.

PJWright
PJWright

@ginidietrich Overall opinion....Andrew Mason must have skipped any marketing/pr classes and probably doesn't listen when advisers say "I don't think you should do that...."

ginidietrich
ginidietrich moderator

@FocusedWords Oh yeah. I saw that. I think they ended up pulling the offer before Valentine's Day. The funny thing is that Mr. D said, "Why would FTD do a Groupon for Valentine's Day?" And then we find out it wasn't actually a deal. Sigh...

ginidietrich
ginidietrich moderator

@ElissaFreeman Remember when Dennis Miller was on Sunday night football and he didn't last the entire season because people didn't get him? Same thing.

ginidietrich
ginidietrich moderator

@angiecat It's funny - all of us girls think that move was arrogant. But the guys think not so much.

ginidietrich
ginidietrich moderator

@paulevansmedia Oh! I haven't seen the Rice study. I'll check it out. And "birthing faster than rabbits". LOL!

KenMueller
KenMueller

@CoreyTyhurst @ginidietrich I think that with the nature of the web, we are well past the "no publicity is bad publicity" argument. I think with the real-time nature of things, reactions come fast and furious. you no longer have any meaningful amount of time to put any sort of spin on things. Just ask the 26-year old Congressman from NY who resigned. I think there may be SOME business categories where any kind of publicity is ok, but we're less than willing to put up with things because we ALL have a megaphone in our hands 24/7 with things like Twitter and Facebook.

ginidietrich
ginidietrich moderator

@CoreyTyhurst Ah see...that's where you and I disagree. I think there is such a thing as bad PR. Bad PR equals decreased value 99.9 percent of the time.
But I do agree giving up the offer from Google was just silly!

jennalanger
jennalanger moderator

@ginidietrich @HowieG I just watched it. Wow, that would have been way better! It's a bit long, but they could say the same thing in 30 seconds. Remind me not to hire the person who made that decision.

wabbitoid
wabbitoid

@faybiz Wow. What amazes me about the times we live in is how much self-centeredness is advancing as an art form. >shudder!< A great example of the state of this art.

wabbitoid
wabbitoid

@faybiz Thank you! I enjoy being called out, and you did it well. I was wondering what google was up to because they are usually pretty smart, and this makes sense. Only feel dumb that I didn't think of it. :-)

Todd Lyden
Todd Lyden

@wabbitoid @FocusedWords @paulevansmedia Google wasn't looking at the tech (like so many other purchases) they wanted the capability and talent. They had been working on their own deals, but they wanted the Groupon infrastructure of sales people, which is the majority of what powers getting daily deals done.

wabbitoid
wabbitoid

@FocusedWords @paulevansmedia I think google got very lucky - dodged picking up groupon for too much, snagged PostRank on what appears to be the cheap. Big wins all around for them.

PJWright
PJWright

@wabbitoid I have been looking for the logic that a business would use to run a Groupon coupon. Still haven't found one that makes any sense to me. Within my niche, the RV Park industry, we have a couple of groups that have convinced parks to sell their sites at a 50% discount. While their biz model is a lot more logical, I see the same basic problem. People who buy deep discounts, don't return to buy at full price.

Trackbacks

  1. [...] agree with Gini Dietrich, these brands need adult supervision. The ‘it wasn’t me’ approach gets you [...]

  2. [...] This post was mentioned on Twitter by Kerstin Burns, Paul Evans. Paul Evans said: The Groupon Bubble Is About to Burst | Spin Sucks http://t.co/sePd73T via @AddThis [...]

  3. [...] circumstances in Tibet during their Superbowl commercial to sell us some fucking coupons. This blog post from my friend Gini over at Spin Sucks inspired the article you’re reading right [...]

  4. [...] a couple of posts on the horrid Groupon Super Bowl ads. This one from Spin Sucks criticizes Groupon’s “apology” and this one from Liz Strauss says clever is only clever when it doesn’t offend and offers [...]

  5. [...] My #pr20chat co-moderator Heather Whaling agreed Groupon’s ads were a miss. Gini Dietrich proclaimed the Groupon bubble is about to burst. Shelly Kramer called the ads a fiasco. And Liz Strauss was [...]

  6. [...] for a new feature where we talk about a recent post on our blogs.  Gini discusses her take on the Groupon Superbowl ad and I mention being SAD – that is, having split-attention [...]

  7. [...] for a new feature where we talk about a recent post on our blogs.  Gini discusses her take on the Groupon Superbowl ad and I mention being SAD – that is, having split-attention [...]