Groupon Regroups on Mobile, Agency, IPO Strategy

Groupon’s meteoric rise is probably already a B-school case study.

The startup, with 30-year-old Andrew Mason at the helm, emails a whopping 70 million deal-of-the-day promotions to subscribers world-wide. The next stage, according to a company profile in Bloomberg Businessweek magazine: skipping email and going straight to users cellphones with Groupon Now, a new mobile app that offers deals based on time of day and the user's location at that moment.

It's a development that could define the near future of local commerce.

Mason is aiming for nothing less than to reinvent when and how we eat, shop and play. It’s a significant departure from the old Groupon’s deal-a-day model, offering users two buttons at the outset: "I'm hungry" and "I'm bored."

For consumers, both buttons bring up lists of time-specific daily deals, based on location. For businesses, owners can choose when to make those deals available, programming their promotions much like TV programmers schedule their networks.

"For merchants, the daily deal is like teeth whitening, and Groupon Now is like brushing your teeth. It can be an everyday thing to keep your business going," Mason tells Bloomberg Businessweek.

From a brand marketer's perspective, it helps creates buzz and excitement, using geotargeting and savvy timing — not to mention smarter allocation of resources including labor.

“We want people to think about Groupon every time they walk out the door," says Mason. "The company I admire most is Netflix. They have figured out a way to be successful and cannibalize their core business. Nothing is more romantic to me." 

Business Insider suggests that Groupon could quickly scale up Groupon Now by creating an ad hoc ad network.

“Groupon could either offer specific deals — and dynamic, just-in-time ad creative — based on the user's location and time of day. Or it could make an attractive 'I'm Hungry' 'I'm Bored' button ad. The ads could direct people to a mobile web site or to Groupon's app, where users could complete their purchase. And then Groupon could give some money to the app publisher, as with any lead-gen affiliate relationship. If the deals are well-targeted, they could have high clickthrough or purchase rates, creating a hot ad unit.”

While the deals startup ramps up for an estimated $25 billion IPO after rejecting a $6 billion acquisition offer from Google, Mason and his team are still smarting from the flap created by its celeb-cause marketing-spoofing Super Bowl ads.

Now Mason is taking the blame for giving free rein to its now former agency Crispin Porter & Bogusky to create a buzz-generating Super Bowl campaign that would "be edgy, informative and entertaining, and we turned off the part of our brain where we should have made our own decisions. We learned that you can't rely on anyone else to control and maintain your own brand." 

As it reconsiders how it works with agencies, Groupon is also facing stiffer competition. LivingSocial is prepping for a half billion dollars in funding while other daily-deal services such as start-ups Tippr, Bloomspot, Scoutmob, and BuyWithMe, and established digerati like Yelp, OpenTable, Google, Facebook, Yahoo! and Microsoft all look towards what’s next. 

"Starbucks and eBay were standing still compared to what is happening with Groupon," says Starbucks CEO Howard Schultz, a Groupon investor and board member, to Businessweek. "I candidly haven't witnessed anything quite like this. They have cracked the code on a very significant opportunity."