Social couponing finally made it to the big game.
Groupon was a busy sponsor during last night's Super Bowl, checking in with controversial ads that are bound to stir up debate over the fast-growing site's references to some notable causes.
- Cuba Gooding Jr. discussed the plight of the whales, before pointing out how he was able to take part in a discounted whale-watching cruise.
- Timothy Hutton draws attention to the unrest in Tibet, only to dig into some half-priced fish curry at a Tibetan restaurant in Chicago through Groupon.
- Elizabeth Hurley plays up the rainforest deforestation, before moving on to describe marked down Brazilian waxes through Groupon.
The spots may be tasteless, but this is also the Super Bowl. When companies fork over nearly $3 million for 30 seconds of national airtime, they're aiming to stand out among the advertisers trying to do the same thing.
Flash sale websites have come a long way. Market leader Groupon saw its registered user base skyrocket from 2 million to more than 50 million last year, offering the buyers of prepaid vouchers $1.5 billion in deal savings. After shockingly refusing Google's
Provocative ads will also keep the public talking about Groupon by the water cooler this morning.
Groupon isn't alone in this high-margin niche.
Rival upstarts aren't the only potential competitors. Google is launching a similar platform. AOL's
Groupon is also being challenged by niche-specific sites. OpenTable
During Travelzoo's conference call last week, the travel publisher hinted that its margins are in the 30% to 40% range on these deals, less than the 50% that Groupon typically rakes in with its merchants. In other words, competition should drive industry margins lower. Groupon is in the enviable lead, but it can't afford to lay off the accelerator.
Did the site offend a few people last night? Absolutely. Did it introduce its service to even more potential deal-seekers? Definitely. Groupon will gladly take that trade-off as it barrels toward an eventual IPO in the coming quarters.
Did you catch Groupon's ads? What did you think? Share your thoughts in the comment box below.
Google is a Motley Fool Inside Value recommendation. Google and OpenTable are Motley Fool Rule Breakers picks. Amazon.com is a Motley Fool Stock Advisor selection. The Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Longtime Fool contributor Rick Munarriz is a fan of discount sites, and he's already tracking local deals through Groupon and LivingSocial. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.