Daily Deal Dilemma: Does Groupon Need a Refund, a Reboot, a Stern Reprimand or Just a Little Maturing?

The answer depends on whom you ask. If you ask Groupon CEO Andrew Mason, 31, he’s likely to say the latter.

But before we get to Mason, let’s recap.

Back in February 2012, I wrote about how Groupon, the daily deals “Mecca” was launching a PR blitz to help rewrite its then recently soiled reputation after a slew of communication missteps:  a fumbled Super Bowl ad and a case of fuzzy earnings math just prior to its November 2011 IPO.  It revamped its website and added the public relations might of Paul Taaffe, the former chairman and CEO of Hill & Knowlton. (For history buffs, that’s the 85-year-old Manhattan-headquartered PR agency once known for its support of Big Tobacco and its infamous “A Frank Statement to Cigarette Smokers,” 1954 newspaper ad, that claimed the “statistics purporting to link cigarette smoking with [lung cancer] could apply with equal force to any one of many other aspects of modern life.”  Gotta love this industry!)

In that earlier post I puffed on about the tough job that Taaffe had ahead of him, referring to the journey as a “rocky road” while going on to say that, “taming the daily deal beast just doesn’t seem like a job anyone should embrace,” and that “public relations leaders can only craft a message so far. Too much spin and a message – and a company – can spin out of control. Let’s see what happens next.”

And (nearly) spin out of control it has.

Earlier this month it was reported that the Securities and Exchange Commission had begun a preliminary investigation into Groupon’s questionable financial accounting practices after the company announced that it was revising its 2011Q4 earnings, cutting it by $14.3 million to $492.2 million from $506.5 million. The announcement left many Groupon naysayers crying, “I told you so,” while investors are jumping ship in search of…. better deals.

Fast forward a few weeks since the troubling news and Groupon’s stock slide continues. On Thursday April 26, 2012, Groupon’s stock price was nearing bargain-basement levels, trading at $12.06 a share, after its $20 a share opening in November and its 52-week high of $31.44. The reason for the downward revision? Groupon hadn’t set enough money aside for customer refunds.

So in light of all this communications turmoil, one would expect that Paul Taaffe and his team would be out in full force defense and crisis mitigation mode.  To date, however, Taaffe’s strongest defense was when he told reporters: “Every three months Groupon is a different company.”

Somehow I don’t think that’s what investors wanted to hear.

But to give credit where it’s due, Groupon CEO Andrew Mason at an informal town hall meeting on Wednesday admitted his company no longer has “any margin for error,” adding that Groupon is “still this toddler in a grown man’s body in many ways.” In helping the company grow up, the company has announced plans to bring on board additional senior management, and according to a recent Wall Street Journal article, at least two new board members – all designed to show that the company can mature, mature quickly and rebuild investor confidence.

As a public relations professional, one of the most important pieces of advice I can give is telling clients to be up front about their actions and intentions and if there’s no substance behind a marketing campaign, then there’s no point selling the message.

Frank town hall meetings that get section-front coverage in the Wall Street Journal (check out Marketplace in the print edition) is probably not enough to quell all investor fears. But as Groupon closes out another challenging month and is only two and a half weeks away from its next quarterly earnings report, it’s nice to see a maturing response.

Perhaps then – and in an ironic way – Paul Taaffe was on to something after all. Just maybe, Groupon is beginning to change. And just maybe this change is here to stay and the company will not be something different three months from now.

We’ll have to wait and see.

The Glad Demise of the Ugly American

For a very long time America has been seen as the global Pac-Man – gobbling up everything in its path. The debt accrued in a quest for “more and better” (in addition to an international policy of exploitation and planet policing) has sullied the intended image of America as being a beacon of opportunity, democracy and freedom.

On a domestic level it has left many in more than a bit of a pickle. Strained personal finances and a shortage of work hours have left Americans with time on their hands to spend someplace other than a restaurant or a shopping mall. Yep. The bottom has fallen out of the bucket – and change, though painful, is proving to be a very positive thing. Rewarding, even!

According to an article in the NYT, in response to the “Great Recession,” many Americans are choosing to spend their time and money on things like exercise, gardening and aesthetics, and are re-discovering the simple pleasures of “friend and family time.” People are now being presented with the opportunity to internalize the notion of it being better to “do things” than to “have things.”

And although retailers are suffering from the shifting value system, museums and the performing arts are enjoying an increase in support. People are still spending, but are opting for experiences over objects. Economists are concerned that the end of a spendthrift mentality could hamper efforts to revive the economy, but with people redefining their values, marketing just have to follow suit as in any market shift. In the big picture, we’ll all be better off for it.

Will this change in priorities be permanent? One can only hope so!

Meanwhile, despite our struggles, here’s to the hope that 2010 brings America happier individuals and families with a greater appreciation for their lives – and a greater empathy for the struggles of our neighbors around the world. After all, we’re all in this together.

How mobile is set to impact the 2009 holiday retail season

by Eric Holmen * • 15 Dec 2009

 

 

With Black Friday over and Christmas tree lights now officially blinking, it’s time to gather around and sing the Retailer’s Holiday Carol. All together now: “It’s the most wonderful time of the year.”

Except, of course, for the fact that last year’s holiday sales season was anything but wonderful. And retailers from Poughkeepsie to Palo Alto are worried that this year will be the same.

Analysts’ forecasts are mixed, and so it’s hard to know who to listen to. For some, the outlook is half-empty, whereas for others it is half-full. Last month, the National Retail Federation predicted a single-percentage-point sales decline from last year’s holiday period, while an independent research group, ShopperTrak, foretold a 1.6 percent increase. Deloitte estimates total holiday sales from December to January to be essentially the same as the same period a year ago.

So although these predictions don’t take on the catastrophic tone of last year’s, none of these analysts seem ready to join in the caroling and festivities just yet.

Gloomy projections notwithstanding, individual retailers are not all doomed to a lackluster holiday season. In fact, an environment of weaker demand marked by uncertainty in consumer’s willingness to spend provides exactly the type of opportunity for retailers to engage in forward-thinking marketing tactics — having few options can breed innovation. Increasingly, therefore, non-traditional marketing channels are being introduced by innovative retailers because the costs associated with catalogs, direct mailers, and mass media advertising campaigns are no longer justified by the returns they yield. The retailers that are best positioned for success this holiday season are engaging in high-return, low cost-per-touch, interactive strategies like mobile marketing and mobile advertising.

Mobile’s magic

It seems that each of the last five years has been touted as the year that the retail industry will finally integrate the mobile channel into its marketing efforts. And each year, this gets closer to the truth. Mobile device saturation in the U.S. is at its highest level ever (a fact that has been true every year, as Americans continue to adopt mobile technology in ever-greater numbers). Currently, more than 82 percent of Americans own and use mobile devices on a regular basis, making the mobile channel as wide ranging an outreach tool as mass media.

What’s changed this year is that more individuals are willing to use their mobile devices for more than a phone call or text message, for which we can thank smartphones in part. Thirty-two percent of American mobile users have used their devices for accessing the internet at some point, and a majority (54 percent) use their phones for non-voice activities. Thankfully, this type of usage has spilled over to the holiday period as well. The same Deloitte study mentioned above also indicated that nearly 1 in 5 consumers plan to use their mobile phones this holiday shopping season to find store locations, obtain coupons and sales information, and research products and prices. In the 18 to 29 year-old age group, four out of 10 (39 percent) say they plan to use their mobile phone for holiday shopping.

For retailers, leveraging this technology to increase holiday sales will be a hallmark of a successful season, and an imperative heading into the New Year. Mobile coupons are already featuring prominently in some retailers’ comprehensive mobile strategies, in addition to SMS (text message) marketing campaigns carried out with respectful express consent opt-in and double opt-in practices.

Mobile couponing, the latest technology-fuelled wave in direct discount marketing, is another aspect of the mobile-retail universe that is on the verge of breaking out on a big scale. Although some form of mobile coupon has been around since SMS became widely available on mobile networks and handsets, it’s only now that U.S. consumers have adopted a more value-conscious attitude and marketers look for high-impact, low-cost means of reaching new consumers that mobile coupons are finally coming into their own. The convenience of redemption, immediacy of value, and efficacy in driving both revenue and feedback are driving that trend. And the more that retailers embrace the mobile medium as a legitimate and powerful marketing tool, the more mobile coupons will flourish as a bona fide business driver and revenue generator.

In fact, a study by Juniper Research estimated that by 2011, retailers worldwide will be sending out nearly 3 billion coupons to mobile phones, which will be redeemed for $7 billion worth of discounts.

Apples, oranges and mobile

What has also emerged as a powerful tool and is being tested by some bigger retailers this season is mobile advertising. Mobile marketing and advertising – both in conjunction with mobile coupons or executed independently — have gained prominence among retailers over the past 12 months; however, there is a difference between the two. Both play an important role in developing the customer lifecycle and attracting new business, but mobile advertising is focused on precisely that — advertising. Mobile ad networks provide retailers with the ability to place banner ads on mobile sites, or iPhone apps, or within a text message; however, these reach an audience that is not likely to be existing customers. Mobile marketing, in contrast, focuses on developing and building the customer database and sending relevant messaging to that audience.

As such, mobile ad networks have evolved rapidly and the best networks can generate as many as 200 million unique mobile impressions in a month. Strong mobile ad networks also offer partnerships with mainstream media outlets, providing cross-channel integration and using traditional means to feed the actionable mobile sales channel. What this means is that retailers now have the ability to advertise on the billions of impressions mobile is capturing, combining marketing to build a database of engaged consumers they can sell to.

While the mobile channel may not be the holidays’ savior — because the American consumer will ultimately determine the fate of the retail industry’s highest season — it is allowing innovative retailers to differentiate themselves, using mobile advertising and mobile marketing to open whole new avenues of communication with existing and potential consumers.

And in my mind, that is definitely something to rejoice and sing out loud about. 

Eric is responsible for leading SmartReply’s strategic and creative teams in developing innovative voice, mobile marketing and advertising solutions.

http://www.retailcustomerexperience.com/article.php?id=1547&na=1

Marketing Q&A with Jennifer Rodriguez

Sep 15, 09 | 1:57 am

By Jennifer Rodrigues

You know it, I know it. The travel industry, and particularly lodging worldwide has experienced a mammoth slowdown.  ADR and RevPAR are at never-before-seen lows in all parts of the globe and there’s no end in sight.  And although many are projecting the economy will start to pick up in the next few months, hoteliers seem to have put themselves in a position of continued loss.  It’s a catch-22.  To survive the recession, hoteliers rashly cut their rates, sometimes even offering rates as low as one penny(!) just to get more heads in their beds.  Now, as the end of the recession is (hopefully) on the horizon, hoteliers are in another quandary: how do they increase their rates back to “normal” levels without alienating the post-recession consumer who is still very value-driven and price-conscious? 

And while the operational environment for hoteliers is difficult, the marketing environment is even more so.  This year, everything we thought we knew about “breaking through the clutter” changed. Being a Twitterer has become a profession, consumers have changed, our lifestyles have changed and business models are changing as you read. 

Gone are the days of roadside inn that could bring in business with a single sign on a main thoroughfare.  Gone too are the days of travel agents as the primary booking channel for consumers.  Today, hoteliers need to offer their rooms across a multitude of channels – the GDS, travel agents, phone and, most importantly, online – both through their own website and through online travel agency (OTAs) sites – and their marketing tactics have to drive traffic accordingly. 

Further changing the hotel marketing landscape is the rise in popularity of the social networking phenomenon with sites like Facebook, MySpace, Twitter, TripAdvisor, etc.  Many hoteliers feel that because these sites aren’t direct booking channels, they aren’t worth considering or including in their marketing plan.  But the reality is this – over a quarter (28%) of travelers typically turn to online travel search engines and review sites when shopping for travel[1] - meaning that if hoteliers aren’t using these sites to make valuable connections and open dialogues with customers, they will be missing out on revenue earning opportunities. 

So what do all these changes mean for you, the hotelier?  It means that you’ll have lots of questions.  And lucky for you, I have some answers; answers to your most burning marketing questions – from public relations, to marketing, to advertising and how these play an important role in the success of your hotel operations.  I hereby vow to provide you with the information you need to be more successful in your marketing campaigns.  And not just information and theoretical. Actual steps that you can take to implement the campaigns for your property today, to bring success tomorrow. 

Check back twice a month to read the Q&As and in the meantime, if you have a question, no matter how big or small, I’d love to hear from you - jlr@travelinkd.com.

JetBlue Reneges on All-You-Can-Jet Offer Two Days Early

 

Kathryn Elizabeth Tuggle

 

JetBlue Airways (JBLU: 5.24, 0, 0%) has sold out of tickets. 

Well, not exactly — but the low-cost airline carrier has stopped selling its “All-You-Can-Jet” passes two days early due to heavy demand. JetBlue began selling its unlimited travel passes on Aug. 12, and had intended to offer them through Aug. 21 “or while supplies last.”

The passes, which retailed for $599 each, allowed passengers to travel as much as desired from Sept. 8 through Oct. 8. On Wednesday the airline announced that the “or while supplies last” caveat would have to be invoked, and the passes were pulled from the market.

“We limited the number of passes sold to make sure that everyone who purchased a pass would be able to take ample advantage of it,” JetBlue announced on its Web site. JetBlue would not disclose how many of the passes were sold, or how much the demand has exceeded the supply thus far.

“There could be a potential backlash if consumers feel JetBlue was not transparent about the offer,” said Vanessa Horwell, a spokesperson for Airsavings.net, a worldwide airline consultancy.  “However, if they overbook and they can’t fulfill on their promises, that would cause more of a backlash than retracting this offer.”

Because JetBlue is a low-cost carrier, it gives them a bit more leeway to pull an offer like this one off the table, than say, American Airlines (AMR: 5.03, 0, 0%), Horwell said. JetBlue already marches to its own, lower-cost beat. As such, sales come and sales go.

With air travel expected to be down by 3.5% over the Labor Day holiday, Horwell said that anything to get Americans traveling again was a good offer, no matter how long it lasts.

“Given how troubled air market is, airlines need to fill their planes,” Horwell said. “I think this is indicative of the fact that people will travel at the right price. When there is value, people will fly.”

http://www.foxbusiness.com/story/markets/industries/retail/jetblue-reneges-jet-offer-days-early/

The six biggest myths currently confusing policymakers

Response written by SB, ThinkInk PR

In David Rothkopf’s recent article, he identified six myths currently pervading our national dialogue.  Three of Mr. Rothkopf’s assertions ring quite true, including his positions that finding a solution to the Palestinian-Israeli tensions will not fully stabilize the middle east, that the threat of terrorism is still real, and that President Obama is more of a pragmatist than the left might prefer.  His economic myths, however, are of mixed validity.

That the current crisis has killed capitalism is indeed a myth.  While the severity and acuity of our economic decline has prompted major government intervention, including initiatives that smack of semi-socialism (see: Detroit, Wall Street), capitalism remains the dominant ideology in our country.  The American dream is alive and well, even through this uncertain time, and that dream is fueled by capitalism.  It’s also worth remembering that the emerging powers of the world, as Mr. Rothkopf notes, are moving toward a capitalist position, not retreating into more state-secured economies, indicating that the long-term trend is toward freer markets.

This is not to say that the changes being implemented in this country are futile, or that they are destined to be mere bumps on the road toward wholly deregulated global markets- which brings up Mr. Rothkopf’s assertion about Wall Street.  His opinion seems to indicate that the reforms already in place and planned for the financial industry will either reverse themselves or be rendered moot within a few years, and that Wall Street will go back to business as usual.  On the contrary, the regulatory environment Washington is creating- slowly and incrementally, granted- will fundamentally shift the industry, hopefully for the better.  But it can be assumed that greater regulation will help safeguard the interests of the average investor, promote transparency, and limit the amount of jeopardy institutions that are ‘too big to fail’ can put the economy into.  With respect to Mr. Rothkopf, Wall Street may not become a Pollyanna playground overnight, but it will certainly never be the same again after this recession.

And clearly the recession is the biggest problem facing the world today.  There are other systemic challenges and other things-in-general to worry about, but the Great Recession is the 800 lb gorilla we’re grappling with now. Yes, once we’ve started to recover the climate will still be changing, but we’ll have some resources available to recommit ourselves to that fight.  There will still be a gulf between the rich and poor, but improved economic prospects will buoy all peoples.  A slower, prolonged recovery is still a recovery, and does not automatically imply another Japan-style ‘lost decade’.

I prefer to take a page from Daniel Gilbert’s column in the New York Times today, and insist that it is the uncertainty spawned by the downturn that is shelving optimism, rather than the conditions themselves. In his words, “Our national gloom is real enough, but it isn’t a matter of insufficient funds. It’s a matter of insufficient certainty.”

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Tue, 05/19/2009 – 2:40pm

• Solving the Israeli-Palestinian issue is the key to Middle East peace.

It’s important. It even has broad repercussions. But neither of these things mean that solving it will actually make the Middle East broadly more stable than it is today. First, there is no such thing as an Israeli-Palestinian issue. The Palestinians are divided and the wing with the greatest allergies to peace, Hamas, is actually Iranian/Hezbollah sponsored. Their involvement does not however, mean that arriving at the two state solution that is the only answer for Israel and the Palestinians will instantly reduce tensions between Iran and Israel…especially given Iran’s views objections to Israel on grounds that have nothing to do with the Palestinians. Further, will solving the Arab-Israeli issue reduce tensions between Shiites and Sunnis, Turks and Kurds, Iranians and Saudis, extremists and moderates throughout the Arab world, the Taliban and the Afghan government, the Taliban and the Pakistani government, al Qaeda and the west, etc.? Will it bring a halt to the Iranian nuclear program or stabilize oil supplies? No.

• Wall Street will never be the same.

Really? In the past week I have had conversations with senior Obama administration economic officials and prominent former Democratic cabinet and sub-cabinet members and the theme from all of them was the same. The reports of Wall Street’s demise as a center of obscenely high-paid, risk taking, politically influential, high-rollers are vastly overstated. To be sure we are in a downturn of historic portions and many big institutions have disappeared or been wounded. Further, new regulations like those associated with derivatives will be put in place. But some promised changes — like making it impossible for banks to grow “too big to fail” and containing executive compensation in meaningful ways — just can’t be done. Global corporations need global institutions of great scale to service them. Put limits on executive compensation in certain classes of companies and the best executives will move to others where they can make the dough. The firms within the TARP will skedaddle out as fast as they can and the firms left standing will have a great competitive position in global markets. There may be enduring caution on some level, but if you think that this recession is enough to crush the superclass on Wall Street (or their enduring hold on Washington policy makers) then you haven’t read enough about how cockroaches and other similar creatures can survive nuclear war.

Read the rest of the story: http://rothkopf.foreignpolicy.com/posts/2009/05/19/the_six_biggest_myths_currently_confusing_policymakers

U.S. House OKs 90% tax on bailout firms’ bonuses

07:31 AM CDT on Friday, March 20, 2009

WASHINGTON – Lawmakers, spurred by rising public anger, voted Thursday to impose a 90 percent tax on bonuses paid to high-income employees by companies getting big government bailouts.

The action in the House was the first move toward reclaiming taxpayer dollars going into such bonuses. The bonuses are widely seen as rewarding executives who had a hand in the troubles at giant American International Group Inc. and other bailed-out companies.

The House bill would impose the 90 percent tax on bonuses given to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money. It would apply to any such bonuses issued since Dec. 31.

The House vote was 328-93 to impose the tax. Similar legislation was introduced in the Senate late Thursday.

“This is not just another case of runaway corporate greed and arrogance, ripping off shareholders by excesses lavished around the executive suite,” Rep. Earl Pomeroy, a North Dakota Democrat who voted for the bill, said Thursday. “These bonuses represent a squandering of the people’s money. … Starting right here, right now, we are saying, ‘no more.’ “

Some members of both parties raised doubt about whether the legislation could survive a court challenge, saying it was tantamount to a retroactive “bill of attainder,” which is banned by the Constitution. Even backers of the bill acknowledged it amounted to an extraordinary use of tax law.

Read the rest of the story:  http://www.dallasnews.com/sharedcontent/dws/news/washington/stories/031909dnnataigtax.4e6f99cc.html

Treasury Will Make Grab to Recoup Bonus Funds

By JONATHAN WEISMAN, NAFTALI BENDAVID and DEBORAH SOLOMON

WASHINGTON — The Obama administration said Tuesday it would seek to recoup from American International Group Inc. the $165 million in bonuses paid to employees of the bailed-out insurance titan as it tried to contain a national furor over the payments.

White House officials are looking to use an executive-pay provision inserted into the recently passed stimulus law. The administration has seized on language that would allow the Treasury secretary to claw back payments if they were “inconsistent with the purpose” of the Troubled Asset Relief Program or “otherwise contrary to public interest.”

In a letter to Congress Tuesday, Treasury Secretary Timothy Geithner said the Treasury planned to use the law to deduct the cost of the bonuses from the government’s pending $30 billion cash infusion, and will also extract additional penalties from AIG operating funds.

Read the rest of the story:  http://online.wsj.com/article/SB123730459869257121.html?mod=rss_whats_news_us_business

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ThinkNote:

I agree wholeheartedly.  Regardless of whether these bonuses came from non-TARP funds, the fact the company needed funds – ALL $170 BILLION – to stop if from failing means it should conserve its cash AND PAY BACK THE MONEY, SO WE TAXPAYERS DON’T HAVE TO.  AIG should be showing responsibility and accountability – perhaps a bit a humility, instead of sticking it to American consumers one more time.

This is precisely why America is laughing stock of the world, and largely thanks to the deregulation mindset of the previous administration.  AIG’s irresponsible, Lassaiz-faire attitude should be buried, along with the ashes of Drexel Burnham, Michael Milken’s legacy and the LBOs that birthed this type of monster.
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A.I.G.’s Bonus Blackmail

By LAWRENCE A. CUNNINGHAM
Published: March 18, 2009
Washington

PRESIDENT OBAMA on Monday instructed the Treasury Department to “pursue every single legal avenue” to recover $165 million in bonus payments the insurance giant A.I.G. recently made to nearly 400 employees in its financial products unit. A.I.G. has, of course, received $170 billion in bailout funds and yet continues to incur extraordinary losses – some $62 billion last quarter alone.

A.I.G. insisted it was legally obligated to make the bonus payments and that failure to pay would breach its contracts with employees and expose it to penalties under state employee protection laws. The company also warned that breaching the agreements would amount to defaulting on numerous other business contracts, at staggering cost.

Amid this standoff, there has been an explosion of outrage against perceived excessive compensation to those who precipitated the financial crisis. Some lawmakers have threatened to impose a 100 percent tax on the A.I.G. bonuses and Senator Chuck Grassley, Republican of Iowa, even wildly suggested that the company’s executives consider suicide for their culpability. But moral outrage and public rebuke do not provide legal grounds for backing out of a contract.

If the government is serious about finding a legitimate basis for abrogating these payments, officials must look to basic legal principles. And if A.I.G. is serious that it is legally bound to pay these bonuses, it must do more than say nonpayment would expose it to damages or penalties. Nor is it enough to invoke the sanctity of contracts, because our legal and business system recognizes plenty of valid excuses from contractual duty and even justification for breaching.

Read the rest of the story:  http://mobile.nytimes.com/art/347833/28?smsredirect=true

Retention Pay for A.I.G. Workers to Fix Their Mess

By DAVID LEONHARDT

Published: March 18, 2009

We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses – which are now being operated principally on behalf of American taxpayers – if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.

- Edward Liddy, chief executive, American International Group

Ah, retention pay. It has been one of the great rationales for showering money on chief executives and bankers regardless of how well they are doing their jobs. It’s just that the specific rationale keeps changing.

In the booming 1990s, companies supposedly had to pay retention bonuses because executives had so many other job opportunities. There was a war raging – a war for talent, said McKinsey & Company, the consulting firm.

Then came the aftermath of Enron, when new scrutiny and regulations apparently made some chief executives wonder if they still wanted their jobs. “I’m thinking of actually getting out,” David D’Alessandro, the head of John Hancock Financial Services, reported hearing from one fellow chief executive. The antidote to such doubts? Retention pay, obviously.

Now comes Mr. Liddy, the government-appointed chief of A.I.G., defending multimillion-dollar bonus payments for the people who run the small division that brought down the company. If the government doesn’t let them have their money, they will walk away, Mr. Liddy says, and nobody else will know how to clean up their mess.

We’ll get to the merits of his argument in a moment, but it’s first worth considering the damage that the current system of corporate pay has wrought. The potential windfalls were so large that executives and bankers had an incentive to create rules that would reward them no matter what. The country is now living with the consequences.

Read the rest of the story: http://mobile.nytimes.com/art/347782/19?smsredirect=true