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After all, if you stopped marketing tomorrow you’d have a nice, profitable $10 million a year business. This is incredibly naive. To pretend that marketing isn
by hvs 15y ago
After all, if you stopped marketing tomorrow you’d have a nice, profitable $10 million a year business.
This is incredibly naive. To pretend that marketing isn't a core part of Groupon's model is like pretending that Ford doesn't need car dealerships.
- pbreit 15y agoNot really. Groupon's marketing spend goes to list-building. It could reduce it's marketing costs dramatically and still run its business for the most part.
- pbreit 15y agoWhy do people downvote merely because they disagree? Very annoying. If you disagree, include a reply.
- jeffdavis 15y agoEven if you assume that current customers require little marketing effort (which is a huge assumption), what about the businesses? Let's apply the same logic to GroupOn's business customers: once they acquire a customer through a GroupOn, that customer will remain loyal and they don't need to market to them again. In other words, that business doesn't have to offer sharp discounts for quite a long time, and therefore ceases to become a GroupOn customer. So, GroupOn needs to spend more on marketing to get new businesses to offer deals. Sure, it's plausible that if they stop marketing, they still have a business. That's certainly the story they are trying to tell. But accounting is not about plausible-sounding stories. It's about cold, hard numbers in black and white.
- pbreit 15y agoACSOI has to do with acquiring subscribers, not businesses (that's covered in SG&A). It's beyond plausible that Groupon would still have a thriving business without spending to acquire new subscribers.