Groupon, one of the fastest-growing companies on the web, is reinventing web advertising.  For broadcasting discounts to its subscribers – such as 50% off a manicure-pedicure if 100 people sign up  – Groupon receives half of whatever the merchant brings.   Businesses on average collect only about 25% of what they would normally make, yet they are throwing themselves at Groupon.  Why?  Because this is a new form of advertising that has one very big advantage over the old-fashioned kind: it actually works.

Source: Newsweek

Date: November 19, 2010

Link: http://www.newsweek.com/content/newsweek/2010/11/19/groupon-s-coupons-become-the-new-advertising-model.html

Questions for discussion:

• Why is Groupon such an effective way to market a business?
• If merchants are collecting only about 25% of what they would normally make, how are they justifying that loss?
• Groupon plans to implement software to deliver more relevant offers to its subscribers.  How does that “targeting” give Groupon an edge over its competitors?