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Groupon's Hidden Influence on Reputation

A Groupon deal might boost sales but, it can also lower a merchant's reputation as measured by Yelp ratings, say computer scientists who have analyzed the link between daily deals and online reviews.

kfc 09/12/2011

• 5 Comments

via www.technologyreview.com

As my friend Tyler tweets, 'Correlation is not causation, but it sure is a hint.' Some fine men at BU and Harvard studied up on merchants who had offered a Groupon and those merchants' subsequent Yelp ratings. Let's see... a burst of reviews coincident with the offer, much higher mention of Groupon in the reviews and a pretty drastic ratings drop. Again, this doesn't show a causal relationship but it certainly merits consideration.

Certainly not trying to pick on the Groupon crew who have built an amazing machine. But merchants have to think long-term about the best way to generate sustainable demand.

Read all about it.

Groupon & Adam Dunn?

You would have to be nuts to exclude marketing costs, for example, when evaluating a company’s operational performance. The only thing helpful about this metric for investors is that it might help the company’s current owners someday flip their shares to the masses. Adjusted CSOI is a public relations gimmick, not a legitimate financial-reporting tool. If Groupon’s bosses want to keep citing it, they should describe it that way.

quite via www.bloomberg.com; image via battle for ohio

Jonathan Weil does a number on Groupon's claim that “adjusted consolidated segment operating income" (or CSOI) is the right metric on which to judge it's business. He deftly compares it to Adam Dunn's B.S Batting Average ("Before Strikeouts") which would have him batting .292 "before strikeouts" instead of the sub-Mendoza .162 that he currently owns. Baseball and consumer tech... these are a few of my favorite things!

Hey, if you think judging Groupon without its customer acquisition costs, stock-based comp expense and acquisition expenses is the right way to do it then CSOI is for you. Maybe there's a Billy Beane Moneyball lesson in there for us?

Investor Beware.