Groupon is Affiliate Marketing’s Biggest Success

Rumors are everywhere about the possible purchase of Groupon, the well known group coupon and discount site that was founded less than two years ago. Despite this, some people are saying that If you are to believe the rumors, Google is going to buy Groupon for upwards of 5 Billion, making it one of the biggest success stories of 2010. Analyst are talking about how great this buy out would be, how this is a needed part of the Google infrastructure in its battle against Facebook. However, what those analysist don’t know and what Groupon and probably Google is hiding from them is how Groupon became so successful, so fast, so quickly: Through Cost-Per-Acquisition Affiliate Marketing.

Yes, Groupon owes a great deal of its success to Peformance Based marketing, where they have paid affiliate and CPA networks to promote their product over the internet. For those in our industry, we all known this method: pay for every new person who subscribers to your newsletter. It’s a true and tried way, and can generate enormous success for anyone who wants to grow their business fast. If you spend only $1 per new subscriber through performance based marketing, you could have a company with over 30 Million new subscribers/users for as little as $30M. In the fast paced interactive media industry, any company that suddenly has 30M users from nowhere gets attention, and can have value way over the $30M that was just spent.

They want to hide this, because although much of the market knows that Peformance Based Marketing is one of the quickest ways to get new users, a lot of the media from the NY Times to the Wall Street Journal is ignorant of this method and doesn’t understand that almost any company, with cash can generate enormous value and interest really fast. If Groupon can generate that interest that fast, it means that all of the other Coupon sites that are popping up can easily take a significant part of the market share, very fast. Take a look at companies like Living Social which were launched at about the same time as Groupon – they have taken a very aggressive CPA marketing strategy and traffic charts on Alexa show that on some days they are almost catching up with Groupon. With this realization, this means that Google’s purchase could be worthless in a a year when another company takes it over using the same techniques.

I’m not sure how much money Groupon has spent on CPA Performance Based marketing, but a friend told me confidentially that he has inside information that it was upwards of $150M since the start of the year. He told me that Groupon was being considered a monumental failure until late 2009 when they started to acquire new subscribers via CPA Advertising. A look at Alexas traffic chart for Groupon confirms that they had very little traffic until basically 2010, when they suddenly skyrocketed out of nowhere.

It is my opinion that Groupon is one of Performance Based Advertising’s biggest success stories.

Show More

Pesach Lattin

Pesach "Pace" Lattin is one of the top experts in interactive advertising, affiliate marketing. Pace Lattin is known for his dedication to ethics in marketing, and focus on compliance and fraud in the industry, and has written numerous articles for publications from MediaPost, ClickZ, ADOTAS and his own blogs.

Related Articles


      1. He's in CPA Marketing, he can promote any product He needs to start making his own products however! Build your own business, not just others.

  1. This is a great example of being the business that has people sharing your concept vs. being the company doing the actual CPA marketing.

    If you are a great copy writer you are most likely better off writing for your own product rather than for someone else.

    It is always better to be the owner of the concept.

    Good article. Thank you guys.

    Sam Knoll

  2. The traffic looks non existent when compared to 2010, but traffic was definitely existent in 2009 mid way through the year. I remember seeing them keep on popping up back in July 2009 and they getting some pretty decent traffic, but I di remember seeing in April 2009 it was very low.

    1. Take a look their reach at one point just a month ago almost doubled when they added some more campaigns on Neverblue.

  3. this truely is a great business. i intend to sell my website in a couple of years time for a similar amount of cash, since i will too be getting that sort of traffic soon. lol. In my dreams.

    micheal angelo

  4. I think you leave out one important point – the Groupon idea took a while to catch on. They were one of (if not the first) companies to bring this idea of "group/social buying" to the market, and it took people a while to figure it out.

    I was a member of Groupon for nearly 6 months before making my first purchase.

    It's also worth noting that just looking at their site traffic is not necessarily a way to judge how big they had become – since the concept almost entirely revolves around your email inbox – the growth in membership could be just a blip in terms of page views / uniques, but massive in terms of email subscriptions.

    Overall, I think you are right though, nobody talks about how much Groupon played in the CPA space, and it's a great PR move for our industry.


  5. I saw the owner of Groupon on one of the network morning talk shows. Evidently, Groupon turned down Google's $30 million offer to buy them. The guy was very cagey and wouldn't answer any questions directly. It was sort of irksome to see that. If another coupon company overtakes them, then his caginess won't seem so cute!

  6. I read an article a while back on Groupon that explained how vulnerable it is – so easy to duplicate – the founder even griped about untouchable overseas entities that even stole it's whole look with no worries about groupon coming after them…. I currently get groupon emails, and living social – which popped out of the woodwork so-to-speak, and now for some reason i'm getting CBS – something -something groupon style offers.
    I think google would be wasting it's money buying groupon – akin to the troubles NewsCorp is having in trying to recoup their investment in the dwindling MySpace former goliath.

  7. I think groupon is way to easy to duplicate, with all the new spin offs popping up I would sell it for 5 billion in a heart beat. Take that money and start something new, learn from everything they went through and start something that is not so easy to duplicate. After a year of vacation of course 🙂

  8. A $30 million offer is not much if you are in a lot more debt! It's hard to fly under any radar with high traffic stats but this means that your, or any website business, can be duplicated…. check out how many comparison sites that are out there right now. I am wondering though… the amount of debt it's easy to get into to make you look good is scary and how many other site owners have gone under trying….. probably just before that elusive buy out offer!

    Crazy money out there for crazy entrepreneurs with nerves of steel!

What's your opinion?