News: How Does Groupon Define “Subscriber”? And Why It’s Important for the Industry

groupon It sure has been interesting watching Groupon explode over the past two years – they have used their nearly $1 billion in VC funding to help grow amazingly fast. I still remember sitting with Groupon CEO Andrew Mason at the Cosmic Diner in Manhattan three years ago as he explained the concept of The Point to me. I left thinking that The Point was an interesting idea but wondered if it had real potential because of the hoops involved in getting a program to be funded. Obviously the concept of daily deals/group buying is a much easier sell to merchants and retailers than social causes were to individuals. It’s also been great to watch Groupon grow from a headquarters location outside the valley.

Today the company filed a S-1 form with the SEC to move the company public under the symbol GRPN. You can read Mason’s press release on nearly every tech blog so I won’t repeat it here.

I only have one question for the Groupon team — how do you define a “subscriber”? The announcement notes that the company has 83 million subscribers as of today. But what exactly defines a subscriber?

And this definition of subscriber is critical not just for Groupon but for the industry as a whole so that merchants can create valid comparisons.

Back during the mid-2000s, I managed email lists with tens of millions of subscribers and we would have internal and external debates about what exactly defined a subscriber.

For example, if a person puts in an email address into Groupon’s system just to see the deal for today, are they counted as a subscriber immediately? This is the most important question since Groupon requires that you enter an email address just to see today’s deal. I probably have 25 emails “registered” with Groupon (all fake) just so I could see the different daily deals before I decided to make a purchase and create an account.

Or do they need to receive one email successfully to be considered a subscriber? What happens if the email bounces? How many times does an email need to bounce before the person is no longer considered a subscriber and is purged from the list?

Clearly the power of Groupon’s mailing list is a tool they use to signup merchants which makes me believe the question about subscriber definition is important.

I can’t find a subscriber definition in the S-1 document, but did find a couple of interesting nuggets around subscriber acquisition:

“Each day we email our subscribers discounted offers for goods and services that are targeted by location and personal preferences. Consumers also access our deals directly through our websites and mobile applications.”

“In 2010 and the first quarter of 2011, we spent $241.5 million and $179.9 million, respectively, on subscriber acquisition. We acquired 48.8 million and 32.5 million subscribers, respectively, during those periods”

I have other questions regarding fraud and affiliate/referral payouts but for now I will stick to the subscriber question.

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