How Has Groupon Grown So Fast?

by Chris Silver Smith

Groupon, a portmanteau word which apparently was made from smashing together “group” with “coupon”, is the brandname of a local deals and discounts service which has been growing by huge leaps and bounds. Social Media meets Coupons, if you will. At this week’s DFW SEM meet on “Location, Location, Location – all about local search“, one attendee asked us during the Q&A how has Groupon grown so fast?

I think the answer is pretty straightforward. Groupon has done some brilliant advertising in Facebook. Here’s an example:

Groupon Ads in Facebook


Groupon Advertisement

Notice that the ad mentions the city I have associated with my Facebook profile — Dallas. The promise of the offers mentioned are highly compelling — “Half Off Dallas”, and “…up to 90% off each day”. These offers are really attractive and hard to ignore.

But, it’s the second part of Groupon’s one-two punch that really seals the deal for their rapid growth. Once you accept a deal, there have to be enough people sign up for the deal in order for it to happen. So Groupon asks you to forward the deal onto your friends via email, Twitter, Facebook and such — once enough people accept that same deal, it “tips” over, and your credit card is charged for the offer amount — and everyone receives the offer “Groupon” which you can print out to redeem the offer at the local business.

So, the social aspect distributes and promotes Groupon beyond the people who are converted by the ads, making the promotion very viral. And, some of the cost savings of the offers would be addictive — making the service pretty sticky and good for repeats of the viral distribution behavior.

Groupon’s success has attracted a lot of immitators, but there’s also other up-and-coming unique local offer services which are worthy of consideration in their own right. One such service I’m keeing my eye upon is Closely, which is a startup brainchild of Perry Evans (local tech virtuoso entrepreneur who previously helped develop MapQuest, Jabber, and Local Matters). Closely is a management tool/service which assists local businesses with distributing and measuring deals and offers through Twitter and Facebook. I think of Groupon as a good promotion vehicle for occasional offers — like a big, expensive TV ad. Whereas Closely seems suitable for very frequent or even immediate use, such as when your restaurant is empty on a Thursday night and you need to shoot out a fast offer to fill it.

Incidentally, one of my former coworkers from Netconcepts, Jill Kocher, has just accepted a job working as SEO for Groupon — congrats on the new job, Jill!  She reports on her Facebook page that Groupon is hiring “like madmen” — so any interested search marketers in need of a job should check them out.


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3 Responses to “How Has Groupon Grown So Fast?”

  1. Jozef Foerch says:

    an inspirational company for all those who consider creating or publicizing a great idea and having the ambition to market the concept!

  2. Jill Kocher says:

    Hey Chris — finally getting caught up on my blog reading. Who knew moving to a new city and starting a new job would be so disruptive? Thanks for the shout out about Groupon. You’re right, we do have a ton of copycats gunning for us. Keep watching, though. Groupon is launching some great differentiators in the coming months like personalized deals (launched last week) that will separate the kittens from the mountain lions. Hmm, I think I took the copy”cat” analogy too far.

  3. […] own competing product very quickly right now in order to not get eclipsed. I’ve noted how Groupon grew rapidly through ads in Facebook, and others have noted that many other Groupon Clones are cropping up as well. Yelp has just […]