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OFT Investigation, Groupon Apology & Advertising On Groupon Milton Keynes And In Your City

It's Buyer Beware If Advertising on Groupon Milton KeynesIf you are a small local business thinking of advertising on Groupon Milton Keynes or in whichever city you are based, then I recommend that you take a moment to read my post entitled “What You Should Know Before Advertising On Groupon Milton Keynes“.

The reality is that by far the majority of businesses that run advertising on Groupon Milton Keynes and elsewhere will do so at a significant loss. The initial objective for many business owners is simply to get the business through the door and hope to gain some new long term customers or upsell these customer on other products or services in order to make it profitable in the medium to long term.

However, for small or new local businesses that I neither the marketing expertise nor the financial muscle to carry a large loss for any considerable period, advertising on Groupon Milton Keynes and in other local towns and cities can be a very risky marketing exercise.

Unless you have a sophisticated and well tested marketing sales funnel that includes capturing your customers’ contact information and thereafter developing a relationship with these customers, in the vast majority of cases, businesses will see little long term benefit, if any benefit at all. There are all manner of challenges facing businesses attempting to convert Groupon customers into new long-term customers for your business, which I discuss in detail in my blog post that I mentioned above.

The idea of advertising on Groupon Milton Keynes or in your local town or city may at first seem attractive. For all intents and purposes it has huge brand recognition and more importantly it has a very large consumer following. So without question, Groupon has the clout and the wherewithal to drive a lot of traffic to your business and that alone can be very enticing especially for younger businesses desperate for customers.

However, Groupon is an aggressive player, how else could a company have achieved a multi-billion dollar valuation in just 2 or 3 short years. And as you may have picked up in the news recently, it also looks as if Groupon may not have been playing strictly by the rules.

Back in Nov 2007, the Advertising Standards Agency (ASA) referred Groupon to the Office of Fair Trading (OFT), the UK consumer protection body, after it found that Groupon had regularly broken advertising regulations in 2011, in fact 11 complaints were upheld and another 37 were informally resolved.

Groupon has since come out with a formal apology.

 It’s Buyer Beware If Buying or Advertising on Groupon Milton Keynes

… the company has apologised “To the Groupon customers who have experienced the negative side of our growth…”

The Advertising Standards Authority (ASA) in the UK referred Groupon to the OFT in December 2011 for repeated breaches of the Advertising Code. The ASA showed particular concern about the following:

Failure to conduct promotions fairly, such as making clear significant terms and conditions
Failure to provide evidence that offers were available
Exaggeration of savings claims

In an announcement today, the ASA is pleased that some changes are being made. Groupon is cleaning up its act and now says it will:

  • Make sure that reference prices (prices against which a sale price is compared) including savings, are accurate, honest and transparent
  • Carry out accurate, honest and realistic assessment of a merchant’s ability to provide goods or services in the quantity or time frame suggested
  • Products will be displayed clearly, prominently and on the same screen or before purchase with all the limitations which apply to any deal.
  • Reasonable steps will be taken to ensure that health or beauty product claims are supported by adequate substantiation
  •  Terms and conditions will be fair
  • Groupon will apply refund policies and cancellation rights in accordance with the Distance Selling Regulations

So for both advertisers and consumers it’s a clear case of buyer beware, not really surprising when retailers’ are having to sell their products and services are below bargain basement prices in order to qualify for listing on Groupon and after factoring in Groupon’s own commission.

Businesses ought to undertake an honest assessment of the likely return on investment and likelihood of being able to win over of Groupon customers in the medium to long-term, who are in the main customers of Groupon first and foremost, by advertising on Groupon Milton Keynes and in other geographical locations. In other words the quality of the traffic that a business gets from buying traffic from Groupon is likely to be questionable, and the life time value of that customer to a local business is likely to be low also.

Businesses would be well advised in the circumstances, to invest in their own business by developing their own marketing sales funnel in order to increase the branding value of their own business rather than advertising on Groupon Milton Keynes or wherever your business is, that simply adds value to Groupon’s brand recognition.

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