Groupon Optimizes Marketing Costs

It seems that Groupon is not doing as well as this company would have liked. Representatives of the "discount" service speak less and less about access to an IPO, and the date of entry to the exchange is postponed with enviable constancy. Repeatedly, experts criticized the company for too quick embezzlement of funds received from investors. Most of the money received goes to marketing, which is put at Groupon in a big way.

In the first two quarters of 2011 alone, the company spent about $ 345 million on marketing. This is approximately 100 million more than the same expenses for the previous year (first half of 2010 - $ 241.5 million)). Despite the costs, the effectiveness of service promotion is not as great as management would like. Now, according to company representatives, marketing costs will be reduced, and management is now looking for new methods to promote discounts to the masses.

Experts note that sales of company services in the first quarter grew by about 63%, and in the second quarter - already by 36%. At the same time, Groupon's loss (meaning net loss) in the first quarter of 2011 amounted to $ 102.7 million. This is almost three times higher than the same indicator in the first quarter of last year, when the net loss amounted to 36.8 million dollars.

Now about 4,800 thousand people work for Groupon (in the sense that the company has so many employees). When the service starts to make a profit, no one can say for sure, neither the company's management, nor the experts. Some generally doubt the success of the chosen strategy of the company, with an almost uncontrolled expenditure of funds on staff expansion and marketing costs. Apparently, the leadership, which has now announced a reduction in marketing costs, already doubts such a strategy.

Via forbes