By Ben Spielberg
Who doesn’t love saving money? I know I do, and in this economy, saving a few bucks for a massage, a couple cupcakes, or camping supplies can do a lot of good. That’s what Groupon is—you can enter your email address to the website, and every day Groupon will send out an email with today’s special “deal.” On Groupon’s website, there is a special counter at the bottom with the amount of dollars saved (as of December 5th, over $806 million) and the amount of “Groupons” that are bought (over 18 million). The company is constantly blowing up, and there have even been reports that businesses have been unhappy with the results of using Groupon to advertise their special deal because they received too many customers for that day! Posie’s Café in Portland, OR had so many customers coming in with their Groupons that they actually couldn’t afford to pay rent for a month, and had to dip into some personal accounts. Of course, the advertising they received from all of this is exponential.
During the last week of November, Google was rumored to be talking to Groupon about a potential buyout. These buyouts have become quite common in the world of websites—MySpace was purchased by Fox Interactive Media in 2005, and Google acquired YouTube in 2006. These are huge (emphasis on huge) deals, going for billions of dollars per website. So this past week, it has been reported that the rumors are true—Google did want to buy Groupon for $6 billion. However, to everyone’s awe, Groupon denied to sell. As somebody who can only dream of that kind of money, I have to say I was pretty shocked when I heard this. I don’t think there’s any way I could deny a billion dollars, let alone from Google, one of the most progressive and evolutionary companies in the world! But maybe the owners of Groupon have their reasons—for most of their deals under $10, Groupon takes 100% of the profit. This is a pretty good mark-up considering their advertising approach is completely viral and word-of-mouth. Considering there have been over 18 million coupons bought from the website, it’s pretty safe to say that they are making some really good money. During Groupon’s first year of business, they were estimated to be creating revenues of up to $500 million per year. Considering this is their second year of operation, it’s likely they could be bumped up to a billion already, since there are already 35+ million subscribers to the daily mailing list. And maybe Groupon denied Google as an act of passion? A lot of these buyouts have destroyed strong websites in the past, and people do need their deals.
- The Groupon Phenomenon (talkingpointsmemo.com)