Groupon is a form of advertising. You could advertise in print, on Yelp or elsewhere and pay money out without knowing whether a customer will actually use you

Groupon is a form of advertising. You could advertise in print, on Yelp or elsewhere and pay money out without knowing whether a customer will actually use your business. Even with PPC you rarely have the ability to track to the sale for businesses like this (restaurants, salons, action sports, entertainment etc). With Groupon, you don't pay a cent. Instead, you just price your goods/services at break even and get hundreds of new customers in the door. If even a small percentage become repeat business, that still seems like a pretty good idea. Underpricing a free (for consumers) service, on the other hand, seems like a terrible idea for a business.