I agree and I think it is an important insight. Why did everyone jump onto this thing?
My intuition is that the turbulence in media, from mp3 players to PVRs to online newspapers to Netflix and other on-demand video experiences has seriously damaged the way in which small business would "talk" to their potential customers. This is a gaping hole that has yet to be well served.
So I wonder if the macro experiment was that something like Groupon would replace it those other forms of outreach.
I think small businesses have always been hungry for more customers, so I believe the dynamic is something slightly different.
I think the Groupon space was basically a big many-sided bubble. Consumers loved the discounts and the urgency of it. Businesses loved the pitch, and the big response was spectacular compared with regular coupons. Investors loved the large user bases and the crazy growth. Groupon loved the high margins and the ability to make the books look great. And media had some great stories to sell.
But I don't think there was much real value there. Many businesses didn't really see long-term benefit from running daily deals. The traffic was large, but fickle.
The only reason this got so big was that Groupon deals had relatively long feedback loops, so it took businesses a while to learn that there were better marketing options. And there were plenty of businesses for Groupon's massive sales team to burn through before their reputation started to wear thin.
> So I wonder if the macro experiment was that something like Groupon would replace it those other forms of outreach.
It's flawed as an experiment in reaching people through new media because the price points are unsustainable. If you're offering a product or service that's at least marginally interesting at 70% off as a reward for booking through a certain channel, then some portion of the population is going to book through that channel no matter how cumbersome it is.
In other words, if the deal is compelling enough, the channel doesn't really matter.
What we're seeing is small businesses wising up to the fact that no, they're not going to get enough increased sales to account for the loss leading groupon. So they're moving back to the traditional 10-20% off 'deals', and the deal sites are taking a bath in the process.
My intuition is that the turbulence in media, from mp3 players to PVRs to online newspapers to Netflix and other on-demand video experiences has seriously damaged the way in which small business would "talk" to their potential customers. This is a gaping hole that has yet to be well served.
So I wonder if the macro experiment was that something like Groupon would replace it those other forms of outreach.