Every Friday we round up media & tech industry news you may have missed.
Groupon and the daily deal peddlers were front and center most of this week, starting with a Monday TechCrunch post under the click-inducing title, “Why Groupon Is Poised For Collapse,” in which Rocky Agrawal lays out his case for why “Groupon usually wins and merchants usually lose”:
Businesses are being sold incredibly expensive advertising campaigns that are disguised as “no risk” ways to acquire new customers. In reality, there’s a lot of risk. With a newspaper ad, the maximum you can lose is the amount you paid for the ad. With Groupon, your potential losses can increase with every Groupon customer who walks through the door and put the existence of your business at risk.
Groupon is not an Internet marketing business so much as it is the equivalent of a loan sharking business. The $21,000 that the business in this example gets for running a Groupon is essentially a very, very expensive loan. They get the cash up front, but pay for it with deep discounts over time.
Running a Groupon isn’t always a losing proposition for business owners, but figuring out its worth comes down to two key components, according to Agrawal: 1) How many Groupon customers were already customers and 2) How many new customers actually return and pay full price.
Oh, and for those thinking about investing in the recently-IPOed Groupon? Consider the following:
Groupon is essentially holding a portfolio of loans backed by the receivables of small businesses. If a business goes under, consumers will come back to Groupon for their money back. Unless Groupon is actually doing credit assessments on businesses that it chooses to feature, this is a big risk for Groupon.
Do read the full piece here, which includes a section on how merchants can exploit Groupon’s system.
A CS Indy interviewee crunched some numbers and determined that, “Coupons can help if food costs are low and margins high, and hurt if their users displace regular, full-price-paying customers.”
And the Bay Guardian‘s Sarah Phelan reports on a lawsuit being brought by a Northern California tour company, which claims Groupon gamed Google’s AdWords algorithm and advertised discounts that didn’t exist, in effect pulling a bait and switch on customers to the detriment of companies that are actually offering the product people were searching for:
In its suit, [San Francisco Comprehensive Tours] claims it successfully bid on keywords such as “San Francisco tours,” “Alcatraz tours” and “Napa wine tours” for years. Then, in September 2010, Groupon started bidding on these terms as well — and though it rarely offered any discounted Alcatraz tours, it began to rank high in search results, driving up SFCT’s ad costs.
The suit notes that one time, in response to the keyword “Alcatraz tickets,” Groupon’s ad copy read “Alcatraz tickets — one ridiculously huge coupon a day: Do Alcatraz CA at 50 to 90 percent off.” Groupon’s actual ad that day was for discounted acting lessons.
For example, a Bing search for “travel” brings up a link to a product page on STA Travel’s (my employer) website based on the Like of one of my Facebook friends. It’s in the fourth spot right behind Travelocity, Expedia and Yahoo Travel.
If I log out of Facebook, head to Bing and search for “travel,” the first link to STA Travel appears on the eighth page at position 72.
With younger consumers showing a strong preference for brands that have been recommended by friends or family, building a social media presence — especially on Facebook, where connections tend to be stronger — is crucial to reaching the audience of Youngs.
What I like most about Twitter is how it connects me to some of the smartest and funniest people in the world. For me, Twitter is a personalized RSS feed. When working on a breaking story, I always reserve a corner of my two screens for the pertinent tweets of people who follow the news even more closely than I do.
Related: the BBC has developed an iPhone app so that its reporters in the field can “file video, photos and audio directly to the network’s production system from an iPhone or iPad.”
The original editorial calendar showed only one dark week, surrounding the July 4 weekend.
Staffers now have been told that they will not have to work the week of July 18-22 since no issue will appear on July 25. They also can spend a little extra time at the beach the week of Aug. 15-19, since there will now be no issue on Aug. 22.