Gini Dietrich

The Groupon Bubble Is About to Burst

By: Gini Dietrich | February 9, 2011 | 
151

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, an integrated marketing communications firm. She is the author of Spin Sucks, co-author of Marketing in the Round, and co-host of Inside PR. She also is the lead blogger at Spin Sucks and is the founder of Spin Sucks Pro.

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151 Comments on "The Groupon Bubble Is About to Burst"

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

sydcon_mktg
sydcon_mktg
5 years 5 months ago
I agree, Gini. We werent offended watching but were like “seriously”? I didnt like when they said it was there sense of humor and that they had used other agencies before with no success because said agencies didnt share their sense of humor. My thoughts on that reply were, well are you sure your patrons are going to share your sense of humor? Is that why people buy your deals, because they lover your sense of humor? I also read that Groupon was not going to do a ad, but were a last minute addition due to LivingSocial buying a… Read more »
HerzogIND
HerzogIND
5 years 5 months ago

Last comment has it. Spend your money on improving the business–don’t get suckered into allure of SB by ad folks who have grown up dreaming of getting into the big game.

MaureenB2B
MaureenB2B
5 years 5 months ago

I agree with your points, but how do you not see this as another Kenneth Cole thing? Seems like a very similar methodology to me: tug on heartstrings re a social issue then take that attention and point it toward your for-profit effort.

ginidietrich
ginidietrich
5 years 5 months ago

@MaureenB2B I do, actually. But lizstrauss already did a nice job of talking about that. I see this as really weighing heavily on the Groupon bubble. It’s going to burst and that’s the point I wanted to make.

ginidietrich
ginidietrich
5 years 5 months ago

@sydcon_mktg Exactly! They’ve forgotten two things: 1) Their audience put them where they are and 2) They’re a social company. Now they’re talking down to their audience, instead of embracing them for change. It’s going to hurt them. Badly.

ginidietrich
ginidietrich
5 years 5 months ago

@HerzogIND Ego + arrogance = disaster.

ginidietrich
ginidietrich
5 years 5 months ago

@HerzogIND I meant money + arrogance = disaster. I’m tired.

dariasteigman
dariasteigman
5 years 5 months ago

I thought the ad was tasteless when I saw it. But the arrogance and tone-deafness that is Groupon is really the bigger story. I know some people have couched their critiques with a “I know these guys are really smart, but.” But … they’re not?

You’ve picked out what was my ‘favorite’ line from Andrew Mason’s attempt to explain away their ad: What type of company would go out of their way to be so antagonistic? Apparently his, since his explanation that we just don’t get it was so offensive.

MaureenB2B
MaureenB2B
5 years 5 months ago

@ginidietrich Love it!

EricaAllison
5 years 5 months ago
Pop!Arrogance=walking away from the mega deal.Arrogance=the apology (or lack of) issued. Although I immediately went Huh? and found the commercials ridiculously insensitive, most of the folks I talked to didn’t really even pick up on anything. And the folks I talk to are fairly bright individuals, just not tuned into social messages and ad analysis like most of the folks comenting might be. Arrogance=they think a watered down apology will work. Issue a bland statement adn then ignore the whole situation. It will die down eventually. Lesson learned from KC and BP…or at least that’s who Groupon (leaders, PR team,… Read more »
JimEverett
JimEverett
5 years 5 months ago
Gini, your post and Liz Strauss’ post are all the attention I’ve given to this topic (other than noticing a few tweets). I’m glad you got ‘suckered’ into writing this. I love the way both of you addressed it. “Another ego play in a long line of arrogance” is a great description. One of the interesting things about these ‘long lines’ in our lives is that we can never foresee where they will really lead. Unfortunately Groupon’s ego has been rewarded along the way, which, step-by-step, makes it easier to go to the next extreme and lose all touch with… Read more »
dariasteigman
dariasteigman
5 years 5 months ago

@JimEverett Rewarded them — up until now. The social coupon market is still very young. Groupon acts as though they own it; but there are other companies in play and I suspect that most customers aren’t yet wedded to any brand in this space. A lesson Groupon needs to learn, fast, if they want to be worth ANYTHING for much longer.

bryanwillmert
bryanwillmert
5 years 5 months ago

Great Post Gini!

I am with you on the fact that I didn’t even look at the commercial as offensive until everyone started throwing their arms in the air, but then again I still didn’t see it! I am also in agreeance that the deal to not allow Google in was a either a strike of genius or idiocy. Time will tell which of the two it was, but I tend to lean toward the later!

Any business venture that allows arrogance in, is only steps away from destruction!

JimEverett
JimEverett
5 years 5 months ago

@dariasteigman I agree they have been rewarded ‘up until now’ and with your view of the social coupon market. The danger in being so ‘successful’ is that you can start to believe all the reasons for your success are the ones you like and the ones you implemented on purpose. It appears that this is leading Groupon to do only what they like and, as you suggest, they’re likely to get results they don’t anticipate.

NancyMyrland
NancyMyrland
5 years 5 months ago
Oooohhhh…look at these bright, new, shiny tools we have at our disposal! Let’s use some of our gozillion dollars to go play with media! Yay, this is great! We even get to hire a big-time agency to create something edgy for us that will just wow everyone! Wow! I mean, we’re wowed! Yay! Oh, you didn’t think it was as funny as we did? But it cost us alot of money. We sat around and laughed when those Crispy people showed it to us, and told us it would be great. Well, what’s wrong with you goofy people? You’ll be… Read more »
PhilipNowak
5 years 5 months ago
Gini and others, I appreciate your perspective, but I think it’s a shame that our society is so soft that they consider these ads insensitive and Groupon’s response as arrogant. I thought the ads were spot on with capturing the voice of Groupon and they shouldn’t change a thing going forward. Quite frankly, I hope to see more tongue-in-cheek ads from Groupon as well as from other companies. That being said, I didn’t find any of the “PR backlash” case studies out there offensive whether it was Kenneth Cole, Motrin or Ricky Gervais at the Golden Globes. I believe the… Read more »
DonovanGroupInc
DonovanGroupInc
5 years 5 months ago
Okay – so I watched it and all I can say for me is “seriously…is this supposed to move me to use Groupon”? Their perspective on their future net value notwithstanding – I guess the true testament as to whether they survive or not when the bubble bursts as you say Gini will be determined by the market. Sometimes just because you can doesn’t mean you should and that’s how I think they should have looked at the Super Bowl ads…or is it just cause I’m out of touch with who they were trying to reach? Maybe. Finally, in terms… Read more »
elizabethsosnow
elizabethsosnow
5 years 5 months ago

However, as I recall, the sock puppet got a sitcom deal 😉 I kid. Sort of. I think they did actually try to extend the mascot’s lifespan somehow…

wabbitoid
5 years 5 months ago

Yuppers. Groupon thought they could party like was 1999.

There is a very consistent pattern here and it points to the $6B and all the King’s Horses of Goldman-Sachs looking like a very sick li’l fairy tale in just a short while. Turns out that the real story was more like the Emperor’s New Clothes, all played out in sock puppetry for kids that thought they had much nicer toys to play with.

Call it a morality lesson and maybe it’ll be worth it.

PattiRoseKnight
PattiRoseKnight
5 years 5 months ago

At the very end of the “apology” it looked like he might apologize but he never did say two simple words – I’m sorry.

ginidietrich
ginidietrich
5 years 5 months ago

@PattiRoseKnight Isn’t it amazing what “I’m sorry” will do? Even “we take full responsiblity for this and it was wrong” goes a long way.

ginidietrich
ginidietrich
5 years 5 months ago

@elizabethsosnow I think you’re right. And I remember PetSmart offering to buy the sock puppet for a gazillion dollars. We should reinvent that somehow!

johnfalchetto
5 years 5 months ago
Gini, I always thought coupons were for grandmas anyway. Didn’t see the two other ads, but they sound even worse than the Tibet one. Sounds like a bunch of ‘creative directors’ went out on the town one night and it sounded funny at the time.On the up side if every firm knew how to handle a brand crisis, where would the PR world be. I say keep going startups, KC and other BeniHana, keep showing us how bad life is when you don’t have a good PR team by your side, or worse when you don’t want to listen to… Read more »
FollowtheLawyer
FollowtheLawyer
5 years 5 months ago

Social media WOM fueled Groupon’s growth. While the company now has the critical mass to sustain its position without that cadre of first movers, why risk alienating their unpaid salesforce of raving fans? Further, why give fencesitters a reason to dislike you?

To extend the sports metaphor, they killed their momentum by taking their own noisy supporters out of the game.

Does that mean they’ll lose? Probably not. Will it now take more effort to remain leaders? Definitely.

While the ads were bad, the strategy behind them was worse.

dino_dogan
dino_dogan
5 years 5 months ago

Thnx for this article Gini…I was going to stay out of it and ignore Groupon and Kenneth Cole but now Im off to write an article on the newly popular, apology driven, marketing strategy. I think I’ll publish it this friday…will link back.

faybiz
5 years 5 months ago
G- brilliant I was offended to drop being on Groupon. There are TOO many competitors for them to act like they are the only game in town any more.Mason is apologizing left and right and eventually people are going to realize what a theft their deal is.Most people are not going to care and they RELY on it (the marketing was about it, see you care more about getting a deal than Tibet etc).But the worm is turning. Add to your pile of stupidity the japan apology this year (look it up on youtube, just as bad), the tibet stuff… Read more »
FollowtheLawyer
FollowtheLawyer
5 years 5 months ago

No outrage about HomeAway’s “test baby” slamming against a glass wall spot?

TroyCostlow
TroyCostlow
5 years 5 months ago
Gini, it’s rare that I disagree with you on anything, but we are on COMPLETELY opposite sides here.That ad was funny, unique, and shockingly memorable. Groupon’s initial response was my favorite part – putting up a website that let people actually donate to each charity, with Groupon matching all funds. Phenomenal! If you’re upset, you ultimately have two choices: Help the cause, or choose impotent outrage while the problem persists. It’s sad that most people would rather complain than help; actions have more impact than words. How many of the whiners in the media actually donated money to Tibet? People… Read more »
bitpakkit (Ben Watson)
5 years 5 months ago

For a limited time only, Groupon now discounts your intelligence. http://bit.ly/fwHWAi (could not resist – sorry about that!)

ShatterboxVox (Jay Pinkert)
5 years 5 months ago

RT @bitpakkit: For a limited time only, Groupon now discounts your intelligence. http://bit.ly/fwHWAi (could not resist – sorry about that!)

JMattHicks
5 years 5 months ago
@TroyCostlow I get what you’re saying and I respect your opinion, but the logic you use in defense of Groupon has to be applied effectively across the board before it holds true legitmacy, and it can’t be effectively applied across the board. Yes, actions speak far louder than words, but according to your logic, the following must be true: People upset over the massacres in Rwanda have no reason whatsover to be upset about it unless they’re giving money to the cause or are boots-on-the-ground helping. We had no right to be outraged over the 9/11 tragedies unless we either… Read more »
JMattHicks
5 years 5 months ago

@TroyCostlow Sorry about the typos…but I think everyone knows what I meant on the errors!

sydcon_mktg
sydcon_mktg
5 years 5 months ago

@FollowtheLawyer I believe they already profusley apologized and removed the ad from their website. Still it was dispicable.

faybiz
5 years 5 months ago

@jmatthicks Here here! Good job sir

wabbitoid
5 years 5 months ago

@TroyCostlow The problem is that we live in a culture based largely on narcisssism. The argument you are making is similarly focused.

The ads attempt to profit off of other people’s misfortune. I find that utterly disgusting in any form. A few pieces of silver do not make such an immoral display acceptable in any way as far as I’m concerned.

Templar
Templar
5 years 5 months ago

Can I take you up on “betting your life”?

jennalanger
5 years 5 months ago

@PhilipNowak Is there a difference between making light of sensitive topics and making fun to gain profit? That’s my real question.

FollowtheLawyer
FollowtheLawyer
5 years 5 months ago

@sydcon_mktg Like Groupon, there was no apology from the CEO, just an explanation. Last I read they’re recutting the ad to remove the baby, but the online interactive version where you can insert a facial image of your choice and see it slammed against the glass wall will remain.

A debacle.

jennalanger
5 years 5 months ago
Sure, the ads were tasteless. Ya, they got the point across of what Groupon is. And I’d agree they go in line with the cleverness that Groupon portrays in the copy of their deals. But for a Super Bowl Ad? REALLY? This super bowl was the most watched television broadcast ever in the US. To me it seems like the absolute worst time to try an ad that has the slightest chance at offending anyone. I still don’t understand how those ads ever go approved. They had such an opportunity to do something great, and I think they smashed it… Read more »
TroyCostlow
TroyCostlow
5 years 5 months ago
@jmatthicks Your arguments is strong (and the typos are fine – it’s the internet, after all), and I was perhaps too hyperbolic – but I think you’re blending two distinct ideas:One is the idea of being upset in the face of tragedy, which is entirely permissible & understandable in all its forms (9/11, Rwanda, etc). Empathy is one of the greatest human emotions, and its power is immeasurable. I hope people are always moved to action whenever tragedy strikes – if we lose that, the world is in horrific shape. So I agree with you on this. The other is… Read more »
TroyCostlow
TroyCostlow
5 years 5 months ago

@wabbitoid Can you explain your definition of narcissism in this context & how it impacts the argument?

sydcon_mktg
sydcon_mktg
5 years 5 months ago

@FollowtheLawyer I beleive an apoloy can be found here from Chief Executive Brian Sharples: //blogs.wsj.com/venturecapital/2011/02/08/as-groupon-defends-its-super-bowl-ad-homeaway-apologizes/

sydcon_mktg
sydcon_mktg
5 years 5 months ago

@ginidietrich Here is one of the articles about the last minute ad buy to compete with LivingSocial http://www.businessinsider.com/why-groupon-was-forced-to-run-a-super-bowl-ad-2011-2

JMattHicks
5 years 5 months ago
@TroyCostlow “The other is being completely divorced from an issue, yet outraged when it is mentioned in a context you don’t like – and this is my primary focus in the previous rant.” I see what you’re saying, I really do and I’m not just being disagreeable. But I don’t completely agree. As teenager and then as a Youth Minister, I spent 5 years doing inner-city work in the 4th and 5th Wards of Houston, Texas and it would bother me that people who say things like, “man, those areas need a lot of help.” but then brushed over it… Read more »
DivaKatrina
DivaKatrina
5 years 5 months ago
I can hear the conversation play out in the creative meeting…the Hurely deforestation is actually kind of funny – but I think it’s because I never imagined her doing an ad that referenced trimming her bush (lol). Anyway, the other two were a big stretch – and not funny. All in all, the concept should have never even been story boarded. Where was the voice of reason on that creative team? I agree with @JennaLanger – not a good time to try something that could potentially offend so many. It’s definitely created buzz, but they’ve missed the opportunity for redemtion.… Read more »
timjahn
timjahn
5 years 5 months ago

@JennaLanger Or is the Super Bowl the best time to try such a commercial? If you’re going to stir the pot, make it a big pot.

timjahn
timjahn
5 years 5 months ago

Clearly many folks here are not fans of Best In Show. Or Spinal Tap. Or Christopher Guest in general.

Or Weird Al for that matter.

And that’s a shame.

ginidietrich
ginidietrich
5 years 5 months ago
@TroyCostlow Troy, Troy, Troy. And we had such a good day yesterday! 🙂 I’m with you. The ad didn’t offend me. I don’t see what the big deal is. But it offended A LOT of people. To the tune of major daily newspapers picking it up. But, as a communication professional, it’s my job to protect our client’s reputations. And, if our client’s customers are mad, it doesn’t matter if you’re not really sorry. You have to be sorry. Just the other day, we had a client get really angry with us. I mean, yelling and screaming angry. Was it… Read more »
jennalanger
5 years 5 months ago

@timjahn Yup, good point. It seems like that might have been what they were going for.

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