Groupon plans MORE losses next quarter: Will lob wads of cash down marketing's maw
Voucher bazaar's expensive bet
That brief period where it looked like voucher bazaar Groupon might actually make some money could be over already. The site has forecast a quarterly loss for its next financial results as it turns to advertising to try to keep its fortunes on track.
Groupon said it was going to use a swathe of its money on advertising its online marketplace, one of the new bits of its business that are supposed to make up for the poor returns in its daily deals peddling, leading to further losses in the first quarter.
Marketing costs had fallen by seven per cent in the fourth quarter, but Groupon is expecting to spend around $25m in additional marketing to promote its new Pull marketplace. Pull allows people to search for and buy deals in their area instead of being forced to buy a deal from a daily email that expires if they don't jump on the offer, but many Groupon users don't know about it.
"The majority of our customers in North America still have no idea they can come to Groupon and search among our 80,000 deals in real time," Chief Executive Eric Lefkofsky said on a conference call with analysts.
Groupon's local deals business is pulling in around a third of its revenue, beaten only by its Goods segment, another side business to bolster daily deals that offers discounted products for sale. However, the two weren't enough to get the firm over the line and into profit.
Once again, the company had a net loss for the quarter, this time of $81.2m, which was nearly the same as the net loss it made in the fourth quarter of 2012. Its losses for the full year were $95.4m, a further fall from the previous year's $67.4m net loss. ®