• by Gary Kreissman , December 3, 2010

Everyone in online marketing can't stop talking about Google's likely acquisition of Groupon.  Are they paying too much? Or is it a discount deal?  What makes Groupon so special?  Is it the poster child for social media? Do they really hire out-of-work comedians to write their copy? And of course -- why didn't I think of that?

For performance marketers in particular, Groupon looks like the culmination of many trends - rev share, local, social and more.  Over the past few days, I've spoken to many players in the performance arena, and I'm seeing consensus around five lessons that Groupon appears to be teaching us.

All business is local: Remember Tip O'Neill's wisdom that all politics is local?  At least most of it is.  And the same applies to promotion.  Offers are more pertinent when the consumer can relate and perhaps even touch the product. Google knows local has been largely untapped - and access to local market consumers and sales teams with many feet on the street represent a quick acceleration versus creating a new service.

What's the performance implication? If you're going to base your compensation on a slice of revenue, local relevance improves results.

Be big and be branded: Nobody gets excited about a 10% or 20% discount now.  In this lousy economy, that's become the expectation.  You don't have to wait very long to get that deal or a better one.  But a 70% discount grabs immediate attention.  There's a reason the stores are jammed on Black Friday and Web traffic spikes the following Monday.  Bigger deals garner bigger attention.

Groupon went big but didn't stop there.  The company added focus on well-known brands - and that added huge credibility.  Groupon transformed its own story from marketing services provider to news sensation when they ran a substantial preschool Gap promotion.  Performance implication: Make the offer important enough to garner user attention and action.

Same-old doesn't cut it: So how does comedy relate to couponing?  That's not what you'd call a natural fit.  Even in a viral, YouTube world, most marketers don't look for parody or silliness in promoting their brands.  But Groupon hit upon a humor-driven formula that's proven compelling to Gen X and Boomers alike.  Performance implications: Everything is testable, and testing what looks like a disparate element could be the magic formula for greater response and sharing.

Segmented offers work: Why are certain offers selected by the Groupon team?  They not only have to be relevant, but represent a category that enough readers will want to share with like-minded friends.  There's someone with a passion for anything and they tend to have friends with similar tastes.  Performance implication: Find offers that appeal to specific tastes and that users will want to show peers.

Scarcity matters: How do you get someone to act today, not tomorrow or never?  Make the deadline clear or offer a limited number of options.  Psychologists have demonstrated that limiting choices and making go/no go decisions clear engender more involvement and greater response.  Groupon offers are available for a very limited time - users can't file them and think they'll act on them later.  Performance implication: Build perceived value and action by limiting availability. 

 These are some of the thoughts that repeatedly have been coming up in discussing the pending deal.  What other observations are we missing?