Please ensure Javascript is enabled for purposes of website accessibility

Groupon's Comeback Includes Tiffany Haddish and Oliver the Cat

By Lisa Schmeiser - May 10, 2018 at 9:17AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company used to be a poster child for massive underperformance both among customers and among investors. It's been making changes

F. Scott Fitzgerald assessed the likelihood of comebacks in America in the essay "My Lost City," writing, "I once thought that there were no second acts in American lives, but there was certainly to be a second act to New York's boom days."

The sentiment applies to businesses, too. Groupon's (GRPN 7.10%) reputation began sliding in 2011 and it only kept slipping downward over the next few years. It missed analysts' forecasts quarter after quarter. The stock plunged on understandable concerns that the company couldn't figure out how to do business. The company faced both internal drama (one former CEO, Eric Lefkofsky, was nicknamed "Punchable" by another former, CEO Andrew Mason, who said, "He seemed like a guy I wanted to punch, because he's so insensitive to creating any kind of decorum or comfort for anybody") and external hits to its reputation as angry merchants and disgruntled customers took their complaints to the press.

But then, Groupon began working on its second act. It hired a new CEO in 2015, then promptly closed down businesses in Morocco, Panama, the Philippines, Puerto Rico, Taiwan, Thailand, Uruguay, Greece, Turkey, Sweden, Denmark, Norway, and Finland.

In 2016, Groupon doubled down on improving its business, paring costs and buying up the remains of what had once been its biggest competitor, LivingSocial, in a deal that valued LivingSocial at so little, Groupon said, "the acquisition consideration is not material."

Two discount coupons.

Groupon's seeing favorable public profile. Image source: Getty Images.

"We're about to have $66 worth of fun, girl!"

And by 2017, Groupon was behaving like a business: It grew its gross profit, it overhauled its operating expenses ... and it was helped along by a huge booster shot of free publicity. On July 19, 2017, comedian Tiffany Haddish made an appearance on the late-night Jimmy Kimmel Live! show and over the course of seven minutes, talked about the experience of taking Jada Pinkett Smith and Will Smith on a swamp tour she had booked via Groupon. The clip went viral.

Here's an aerial view of a wetland

Pictured: Wetlands, where one could have had $66 worth of fun with the swamp tour specials on Groupon. Image source: Getty Images.

Now, it's entirely possible that Groupon executed some stealth marketing to get that story placed on a late-night TV show. It did boost its marketing expenses by 14% in 2017 to $400 million. And that didn't all go to grabbing and retaining customers. While Groupon added 1.7 million active customers in 2017 -- for a total base of 49.5 million active customers with gross profit per customer staying steady at $27 -- the strategy of the spending, the company said, was "driving brand awareness and educating consumers through offline ad campaigns."

(And real conspiracy theorists about Haddish being paid to shill for Groupon point out that there exists not one paparazzi photo of Will Smith and Jada Pinkett Smith on a fully booked swamp tour.)

But whether Groupon's 2017 marketing spend included Haddish, its 2018 budget does: Haddish is now a spokesperson for Groupon and the site notes:

Tiffany ranks in the top one percent of most frequent Groupon purchasers and has literally saved thousands of dollars as a Groupon customer. She's also been a strong Groupon advocate with her fellow celebrities and co-stars, taking a Hollywood A-list couple on a swamp tour experience while filming "Girls Trip" in Louisiana.

By capitalizing on celebrity cachet -- and building off a strong 2017 -- Groupon's continued to burnish a second act. It flashed its Internet culture fluency by announcing a cat as its new "fuzzy smart assistant" on National Pet Day, showing a confidence in its business by being willing to court more positive attention.

Groupon touts that Oliver offers "hands-free help around the house." But, he's a cat. So Groupon notes that "anatomically, Oliver is hands-free and does not help with anything around the house." His "extension cord" is a ball of yarn. His "protective case" is a cardboard box.

Groupon's ready to reengage with the Internet as the generator of memes, as opposed to becoming the punchline of them. Speaking the marketing language of a mobile-first audience could help it build brand equity with a group of young adults who will then make it a routine component of experience-based or bargain e-commerce. 

Groupon's still not back to a $16 billion valuation like it had in its first act. But its second seems to be keyed to elements that play well in 2018: solid fundamentals in how it does business, a focus on mobile customers and local deals, and an understanding of how Internet attention may be the most effective profile-raiser of all.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Groupon, Inc. Stock Quote
Groupon, Inc.
GRPN
$11.77 (7.10%) $0.78

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.