Last Updated Aug 27, 2010 4:28 PM EDT
What is Groupon? It's one of a growing number of sites that offer registrants special deals -- with unique, you-can't-do-that-offline particulars. Every morning, Groupon emails its users a special offer (example pictured here), often targeted geographically. The twist is that for the deal to happen, a set number of people have to buy in. Think of it as a version of Amazon's Gold Box in which everybody plays.
Unlike JetBlue, GAP did spend a little money on promotion, buying an ad on Digg, and also using one of Twitter's new advertising platforms, the paid @earlybird account, to promote the deal. But compared to using traditional media, its advertising investment was a drop in the hat -- and almost used to simply hedge the bet that word would get out through non-paid channels. GAP and Groupon mostly used a variety of free -- or almost free -- platforms to publicize the deal, including sending the deal out to both companies' email lists, posting it to their respective Facebook pages, distributing it through their Twitter accounts, and so forth.
And it worked -- depending on your perspective. GAP and Groupon released figures yesterday showing that the offer was indeed, the biggest so-called "Groupon" to date, setting a record for Groupon activity, with users buying at a clip of 534 per minute late in the morning the program launched. GAP sold $11 million in merchandise that day, via a total of 440,000 Groupons.
Where dissecting this deal gets more interesting, though, is in who the winners and losers are. Groupon is certainly one winner because it helped promote the Groupon experience to probably millions of people who might not have already been aware of it. To some, GAP getting publicity, traffic and a surge in sales was a win -- particularly because it didn't have to spend much money on promotion.
To others, GAP gave the store away. One member of the social media intelligentsia, Omnicom Group's Augustine Fou, told me yesterday that in a sense, all GAP really succeeded at is getting publicity for publicity's sake. "This [deal] is at a time when people would have gladly paid the full $22 million for products because they are in full-on back-to-school mode," he posited. Measuring the deal's true return-on-investment, he says, depends on how GAP crunched its numbers. It's a win for GAP, he said " ... IF the advertising manager at GAP took dollars out of TV budget to spend on this."
One clear loser, however? Traditional media, with the exception of Digg and Twitter. Time was when this promotion, or one like it, would have been advertised via print ads and TV commercials. But Groupon and GAP's distribution over their own social platforms made those channels superfluous. Further, as Fou pointed out, traditional media loses because it's not nearly as trackable. Traditional media would never be able to offer up voluminous detail to an advertiser on which parts of the promotion moved more business.
While there will always be a need for advertisers to buy TV commercials promoting their brand, the lightning-fast trackable way that news of a good deal travels through the Web -- and the increasing sophistication with which advertisers are using it -- makes one wonder how much longer it will be until the Web, and social media, becomes the medium of choice to promote a good deal.