The Daily Parker

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Groupon's daily snooze

Groupon, now trading somewhere around 25% of its IPO value, continues to unimpress people:

The disclosure that I found most revealing in last week's financial report was the relationship between Groupon's marketing spending and its growth rate. Traditional daily-deal revenue declined 6.9 percent from the first quarter to the second, as Groupon dialed back marketing outlays by 24 percent.

Hawking Groupon shares in the IPO roadshow, Mr. Mason said the company eventually would be able to cut back on marketing without sacrificing growth. This was meant to assure prospective investors that money-losing Groupon would become “wildly profitable,” as Executive Chairman and co-founder Eric Lefkofsky put it in an illicit media interview during the IPO registration process.

My guess is that another quarter or two like the last one will be enough to ease Mr. Mason into a position better suited to his eclectic interests. The challenge will be finding a replacement with certifiable executive skills and strategic vision.

Which prompts the question of what a better strategy for Groupon might be. Mr. Mason talks about becoming the “operating system for local commerce,” jargon that could mean anything—or nothing. Corporate mumbo-jumbo won't help Groupon now. It needs a new business.

I've noted before, Groupon's IPO benefited only one group of people: Groupon investors. The company has an easily-copied idea, and appears to lose money on every coupon it sells. Good on them for having $1 bn in cash; they'll need it.

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