Groupon: Daily Deals Site Toots Its Own Horn In An Internal Memo

Groupon may be in a quiet period as it gears up for its IPO, but it has been the subject of many a story questioning its business. Now, a leaked internal memo shows that its CEO is determined to let people know that the best deal in town today is Groupon itself.

The memo, first reported by AllThingsD, was written by Andrew Mason, Groupon’s co-founder and CEO.

Although the company is in a quiet period leading up to the IPO, Mason writes that he was motivated to compose the memo when his threshold for bad Groupon press went from “negative” to “hilarious”, after reading an article about the company questioning its cash position. “I’ve never been more confident and excited about the future of our business,” he wrote to counter that claim.

But this is no ordinary, short staff memo rallying tired workers’ spirits and inviting them to a company barbecue. It runs to nearly 2,500 words and feels more like a well-thought out defense of the company, covering areas like accounting practices; revenue projections (12 percent growth expected this month over last month); and even an explanation of why Groupon is spending 20 percent of its revenue at the moment on marketing.

(That last bit is particularly messy — even Mason admits that his explanation is difficult to understand. Only time will prove if it’s a lot of puffery or a significant and new approach to how to grow and then maintain marketing businesses.)

Given the quiet period rules, WSJ points out that the “leaked” letter may well have been a simple and indirect route to bigging up the company at a time when it isn’t allowed to speak about itself publicly, for fear of influencing its IPO, even as others are allowed to say whatever they want to about the company:

“While we’ve bitten our tongues and allowed insane accusations…to go unchallenged publicly, it’s important to me that you have the context necessary to brush this stuff off,” he tells his staff — and maybe the rest of us would-be investors, too.

The negative press, however, does appear to keep coming. Just today, Experian Hitwise released its latest figures assessing traffic going to Groupon and its biggest competitor, LivingSocial.

Notably, it says that Groupon traffic as of last week has dropped off by nearly 50 percent since its peak in June 2011, while LivingSocial saw growth of 27 percent during the same period. But overall, the daily deal / aggregator category of sites had 25 percent fewer visits in that period. (These numbers cover web-only traffic and do not include mobile or app-specific traffic, the researchers note.)

One thing that Mason doesn’t touch on in his memo is the quality of the service that Groupon is offering. Hitwise says that a survey of users in June found that while 44 percent said they use daily deal websites, 52 percent said they felt overwhelmed by the number of bargain-boasting emails they receive on a daily basis. Hitwise further suggests that the more recent drop-off in usage is the result of “deal fatigue” and/or a lack of relevant deals.

Appropriately enough, the Groupon memo came to light on the same day that one of Groupon’s competing services, Facebook Deals, was canned by Facebook — no specific reason given for the cancellation, but it’s not the brightest message to give out for the daily deals sector, either.