Internet Marketing Lessons from Groupon’s Recent Screw Ups

Ah, Groupon. Founded only two years ago, the online deal-of-the-day company starting banking big earlier last year. Using a unique marketing concept that appealed to coupon-clipperseverywhere, it seemed that it could do no wrong. Then the quirky little start-up decided to transcend its dot-com roots, buying a Super Bowl ad, something practically unheard of among similar social media based companies with humble beginnings. Sounded like a good step forward. That is, until the ads ran, shocking many sports fans and Bowl commercial aficionados alike for its un-PC take on Tibet.

Of course, by now, the Groupon flub is old news. Anyone who doesn’t live under a rock has seen the ad, either on TV or on YouTube. For a little refresher, the commercial featured actor Timothy Hutton, who starts by offering a little spiel on how Tibet’s culture is in jeopardy. What first sounds like a commercial raising awareness about an endangered culture being oppressed ends with Hutton weaseling like a car salesman about the great deals to be had on Tibetan fish curry, courtesy of Groupon.

Now we can argue all day about whether the commercial was offensive or in bad taste, and we can certainly make a case, as Groupon CEO Andrew Mason attempted, arguing that it was a joke designed to make fun of itself as well as an attempt to lampoon over-the-top, narcissisticcelebrity philanthropy. After all, Mason noted, Groupon is, in fact, donating a nice wad of cashto the causes it seemingly trivializes, so no harm, no foul, right? As the customer and media criticism continued to mount, however, Mason finally cried uncle and pulled the ads, saying a joke ain’t funny if you have to go around explaining it.

But what marketing lessons are to be learned from the Groupon ad debacle?

LESSON 1: A wacky, politically incorrect sense of humor might piss off some people, but it won’t do serious damage to your brand. If you have a controversial idea, a great product, and a loyal customer base, take the risk and go for it.

Groupon got what it wanted. Despite the legions of people crying “offensive” on Facebook and Twitter, swearing never to use Groupon again, the company got a huge spike in publicity. A recent CNET article included a graph from brand research company YouGov, which tracks different companies’ “brand buzz “essentially it’s positive or negative image– on a scale from -100 to 100. After the commercials aired, Groupon brand buzz fell a few points, from 14.4 to 5.3,but then it nearly doubled to 26.6 after Mason’s official apology. This all goes back to what actor Keith David once said, cynical but true: “It can’t hurt, publicity is publicity, controversy and all that, it’s all good.”

Personally, I’m a fan of Christopher Guest (who directed the commercials) and his oeuvre, and I got the humor the first time round. The armchair, self-righteous fist-shaking of those sitting at home being “offended” about Tibet a volatile political situation the details of which I suspect most know very little about doesn’t help Tibet all that much. Now did Groupon make a mistake,underestimating its customers’ ability to decode the intended joke? Sure. Could Groupon have tried harder to make the joke a bit more obvious? Of course. But, in the end, did Groupon trip seriously after its commercial faux pas? Nope, and what’s more, it probably benefited.

That being said, while your customers will forgive you for making these little indiscretions, they won’t be so easy on you if you break their trust at the point of exchange. As noted in a reader comment after the CNET article, “[The ad was] a stupid mistake that can be easily overlooked.However, the botched flower deal is a much bigger issue Trust takes time and effort to build up,but can be lost in a blink of an eye.”

Which brings me to the next Groupon mess-up, and the subsequent lesson to be learned.

LESSON 2: Your customers will turn on you when it matters when you fail to keep promises or when you deliver a sub-par product.

Recently, seemingly recovered from the Superbowl controversy, Groupon messed up too soon too fast, when it offered a deal on Valentine’s Day flowers from FTD.com, then failed to deliver.The Groupon offer included a $20 discount on flowers that are usually marked at $40. When the ad directed customers to a website special Groupon/FTD, the flowers turned out to be the original price with the Groupon discount, meaning that the price came out to the same withoutusing the Groupon discount. Even worse, customers noted that with additional shipping charges,the end was result cost more. Many complained the flowers were of poor quality and some didn’t receive them until the day after Valentine’s Day.

Although Groupon tried to make things right, working in conjunction with FTD to offer refunds,you can be sure that the deal site’s loyal customers have reason to be skeptical about Groupon in the future.

While Groupon is still at the head of the pack in its niche, new deal-of-the-day websites are springing up like wildflowers, and Living Social is making some serious headway in trumping its competitor. Both Google and Yelp have jumped on the daily deal bandwagon, so if Groupon wants to continue succeeding, it can’t afford to turn away its customers like it has in the past few weeks.

Bottom line when it comes to marketing, especially on the Internet, off-color humor won’t be your Achilles’ heel, but letting your customers down in the face of growing competitors will.

Alvina Lopez is a freelance writer and blog junkie. She welcomes your comments at her email Id: alvina.lopez @gmail.com.


50 thoughts on “Internet Marketing Lessons from Groupon’s Recent Screw Ups”

  1. Just to make a current example… Harold Camping predicted the end of the world in 1994..didn’t happen.. predicted it again…..didn’t happen

    In a few weeks he will predict a new date… he will still have customers.

    Some people are just that crazy.

    1. LOL! Yea, that’s pretty funny. True that a bit more business can be brought in for some silly things like that tho

      1. Kevin Kimes says:

        A tidbit of information on the “business” side of Harold Camping’s prediction: A pastor in another denomination, Doug Batchelor, who I listen to and respect quite a lot, offered Camping $100,000 for the rights to his Family Radio network (Batchelor operates Amazing Facts which has TV and radio ministries), starting on May 22nd.

        Interestingly enough, they got no response for their offer. Surely, if Camping truly believed his own prediction, he would have accepted the offer and used the $100,000 to help spread his message before the final day. Makes you wonder if he “really” believed.

    2. Ray Ebersole says:

      I think that he woke up this morning and said that a prophet came to him in a dream and told him that his calculation was off by 1 year.

    3. ahhuann says:

      haha Carl, i like your example!

      Groupon will still having lots of fans due to everyone is looking for great discount item. They will do whatever it takes to get a cheaper deal regardless of the quality.

      “Some people are just that crazy.” <- "Like" this, haha~

    4. On the first one, people shouldn’t be so easily offended.

    5. The whole end of the world thing is crazy, The Bible clearly states no one knows, not even Jesus. Don’t know why these people keep insisting they know.

    6. Handbags says:

      I know it’s crazy that people will believe this guy. If only people believed in the bible, they would not believe what this guy said. Because God clearly says in Mathew 24:36 that not even man or angels know. So how could this man know? He can’t.

      1. Amen. Whenever I hear people predicting the end of the world, I run in the other direction.

    7. Thats true although, Groupon have since fixed the problems which have happened to them or have tried to. Its interesting to see how they continue to grow as well as, learning lessons on what they did right – afterall, they’ve done a LOT of things right!

      1. They may have messed up, but they are huge and still growing.

    8. LOL Let’s wait for the new date he will predict. That silly man. 🙂

    9. They will keep telling and new people will keep’following them.

      This is how this world works … My friend.

      1. It’s how the inaccurate fringe world works, not the normal world.

  2. Hi Alvina,
    I agree that ads in “bad taste” can be overlooked by most. I have a sense of humor and seldom if ever get offended by a commercial. I get what the advertisers are trying to do.

    I worked for a Retail store that has been in business for over 100 years. The key to their longevity wasn’t the “stuff” that they sold but rather their legendary customer service. People will come back even if you “mess-up” as long as your business has integrity, honesty, and ethics.

  3. exsuit says:

    I missed the FTD news. I guess that’s part of the risk of running these daily deal sites in that your reputation is on the line if the vendor doesn’t come through.

    1. On this second one, yea, pretty big screw up.

    2. To be fair to Groupon it wasn’t their fault since FTD started to offer the same deal on their website (or a slightly better one since it excluded postage) and this was clarified afterwards.

      1. Yea, they are in touch with so many merchants, there are bound to be screw ups.

  4. Kent says:

    Hahahah! Thats too funny! I had to actually do a little research on tibet and come back to your site to make a valid comment.

    To be honest, the first 5 times I watched the commercial, I didn’t get the joke because it’s the commercial is not put together properly. Hes basically saying the people in Tibet are in trouble because he can buy there food for $15 instead of $30…like hes going to bankrupt the country because he’s getting a such a good deal on there food in Chicago with Groupons. Haha..retarded

    People are lame if they think that was a cheap shot at Tibet It was obviously a joke

    1. Yea, why does everyone get the panties in such a wad?

  5. I remember when 7 up ran the ad campaign of “Make 7….. Up YOURS!” lol. I thought those commercials were hilarious and that they likely caught positive attention of the younger crowds. Yes, I had an uncle that claimed he would try not to buy 7up as much for a while, but I think overall, most brands can make it past crazy ads like that as long as they provide a great product and service. the ad is just an attention grabber

    1. Crazy ads can be pretty risky, and they almost never work in PPC. Never try to be cute with your Adwords campaigns,.

  6. fazal mayar says:

    Groupon is just growing and growing, this is fantastic!

    1. Yea, this little controversy will probably soon blow over.

      1. yes now with this vontroversy I am sure many people who were unaware about groupon know them

      2. fazal mayar says:

        yeah, groupons will be affected by the controversy for sure

  7. imagine says:

    I think Lesson #2 is the most important. People may get over the sting of a non PC joke but when you have bad service bad customer service that will really bite into your future sales. I researched Groupon after the superbowl ad to find out more about the company and there were so many complaints about coupons that were bought and not redeemable that it made me not want to use the service. I will stick with scoutmob.

    1. yes bad ad can be evaporate but when your customers have to pay from own pocket than this is going to effect the business seriously for long term.

      1. Most business would be smart and give their customers a free deal for the mess up.

  8. Ray Ebersole says:

    The bad will that they caused on Valentines Day cannot be gotten back in good will no matter what you do. That was too much of a screw up on such a special day. To top it off they used bait and switch with the whole deal and the discount. More people will talk negatively about this than will the people that have gotten good service or deals from them.

  9. I think most deal of the day sites don’t upsell enough for the merchant.

    It is important as the merchant is not making profits on most deals.

  10. Kirk Taylor says:

    They should have taken the deal when offered to be bought.

    1. exsuit says:

      I think if they could have just taken the $6 Billion and walked away they would have. The problem was they would get caught up in a bunch of anti-trust suits for potentially years, and not be able to go through with an IPO as they would be committed to the google transaction until all the anti-trust/etc was over.

      1. Ya they should have done that.

  11. Hasan says:

    Great post john, i think there’s a lesson we can all learn fro groupon..
    Marketing can make or break your brand big time!

  12. PPC Ian says:

    Great guest post, well written and quite interesting. I do agree any PR is good PR, but at the same time you need to be politically correct.

  13. Will says:

    Groupon will need to watch out, They have a good client base now but could easily loose it to someone else just as quickly as it gained it. It is the risk of most social type sites. Myspace being the prime example.

  14. I come to JohnChow.com to read such great posts.

  15. John … waiting for dot com pho

  16. Jessica says:

    HAHA..!! Nice Post JOHN ..! That really made me LOL..!!

    Theres something we can learn from this posts..!! A Very Good and imp lesson..! 😛

    1. I agree there is valuable lessons to be learnt from this post although, you need to remember it was by a guest blogger and not john 😉

  17. Doods says:

    Interesting analysis into Groupon’s foray with marketing. Some good lessons to be learned.

  18. I love Groupon, great service.

  19. Ryan says:

    I have never been a big fan of groupon to begin with. Yes they offer great deals and it works well for the consumer. Businesses become to reliant on the gimmick and soon find themselves loosing money in the long run. The sales pitches that are used give the business hope that this will drive in customers, but that is not always the case. Even when they do drive those customers, you are not building a loyal customer, only building a one time deal that you may be losing money on anyway.

  20. fas says:

    Well what ever said and done, its true one needs to learn lessons from around rather than learning them afresh.

  21. Kevin Kimes says:

    I don’t find the ad offensive at all. I also don’t find it entertaining at all. It just seems to have a very boring punchline, or was perhaps delivered poorly.

    This leads me to believe it was precisely intentional, calculated to have exactly the effect it did.

  22. flash game says:

    i think groupon service is good.

  23. I have tried once in groupon its really nice service

  24. Forex News says:

    LOL Let’s wait for the new date he will predict. That silly man.

Comments are closed.