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Can Groupon take on Facebook?

March 20, 2011

groupon

Groupon Inc. made news at the end of 2010 when rumors were confirmed that it spurned a $6 billion bid from Google, but that attention is credited with helping it expand aggressively into new markets.  This growth and name recognition is in part why the two year old, Chicago start up is estimated to have a valuation of $15 – $25 billion; 3-4 times more than the Google offer from just 4 months ago!

The business model of Groupon is not novel – after all coupons (even of the online variety) are not a new concept, but the way this firm has promoted these discounts is innovative.  Its that aggressive in your face, limited time offer for discounts that in part has helped Groupon become a shoppers best friend.  In spite of their success, a valuation of $15-$25 billion sounds high to me – especially in light of Goldman Sachs valuation of Facebook in January 2011 of $50 billion. Does Groupon have roughly half the market value of Facebook?

The reach and opportunity for Groupon seems far less than a company like Facebook, but recognizing how quickly consumer behavior can changes, both firms are engaged in a bare-knuckled marketing blitz to out-do each other.  Groupon in recent weeks has increased its presence on Facebook with an aggressive advertising campaign and Facebook in response is now test marketing in several key markets Deals. Similar to Groupon, Deals from Facebook will allow consumers to find deals and participate in special offers.

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One Comment leave one →
  1. April 29, 2011 3:47 am

    Im not sure about this Groupon is great however with face book looking at face book shops to sell products then who knows who will come out on top. why dont you start a poll on you blog and see what everybody thinks?

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