Last Wednesday marked a major milestone for Groupon, the collective online buying powerhouse, as they celebrated their 10 millionth sale in North America. Groupon gained notoriety as a viral marketing wunderkind due in part to its quirky editorial style and its sweet sales offerings in 100 cities across America, Europe and beyond. Launched in November 2008, Groupon prides itself on cluing its crowd into coupons for the best there is to do, see, eat, and buy, regardless of where they might be.
The road to 10 million was solidified by a high-profile deal with Gap, a major coup for the nationwide retailer that garnered Groupon a reported 10 sales per second at points throughout the day. In total, 441,000 Gap groupons were sold.
The Gap promotion marked the first time Groupon featured the same business in each of its markets simultaneously. Though official numbers on the deal are not known, some conjectured that offering a 50 percent discount on $22 million worth of product would be a brand disaster for brick and mortars which might then split profits at up to 50 percent to payback the Groupon platform.
Groupon sales gurus argue that the lucrative 50 percent discount was just what Gap needed to get buyers back in the door to overspend the deal by upwards of $75-100. Groupons could not be redeemed online through Gap.com or its affiliates.
Because users must encourage other friends to buy in before any deal reaches its threshold and can be redeemed, Groupon’s subscribers scurry to promote the best products and quickly become brand enthusiasts.
In addition to e-mail efforts out to both Groupon and Gap’s databases, the campaign featured ads on Digg and Groupon’s 1,500 blogger affiliates. On Twitter, it began with an initial outreach to 210,000 followers via Twitter’s @earlybird and Gap accounts, not including the Groupon’s dedicated accounts for each of the 85 markets in the campaign. Gap’s Facebook, home to 607,000 fans, was tapped as well.
Profit margins aside, the payoff also solidified Groupon’s total audience. According to Ad Age, in an average week Groupon adds 500,000 subscribers; they pulled in 750,000 during the Gap deal. The speed hasn’t slowed this week. A current deal with Fandango is quickly approaching 65,000 sales. It’s no wonder why the company has expanded to 29 countries and 15 million subscribers.
Groupon is hardly the only dealmaker operating in the social space. Yelp is rolling out Daily Deals in New York, San Francisco and Sacramento -- a powerful new promotional tool for the review website, and perhaps something that could bolster geolocation sites like FourSquare and Gowalla in the future as they look to create reward programs beyond mayorships.
Other notable competitors include Scout Mob and Living Social. Business Insider expects many media companies to augment their own ad sales by offering similar deals. Those experimenting now include the Washington Post, San Francisco Gate, Zagat, Open Table, Rue La La, Gilt Groupe, and others.