Story By Rolfe Winkler | The Wall Street Journal

Not so long ago, Groupon GRPN +0.92% was supposed to be at risk of collapse. Bears growled about its gigantic marketing budget and lack of barriers protecting its business.

Times change. The stock leapt 12% Friday after Deutsche Bank DBK.XE +0.09% published a report recommending investors buy. Now up almost threefold from its all-time low last November, Groupon has clearly put the biggest fears to rest.

Yet, at $7.65, Groupon gets too much credit for a return to peppy growth when it still has much work to do.

Groupon’s initial public offering price of $20, some six times forward revenue for a then-unprofitable company, was absurd. But the Internet-coupon company deserves credit for its staying power.

When Groupon filed documents to go public in 2011, marketing costs absorbed more than half its revenue. By the first quarter, they ate up just 8%. Such shrinkage has hit growth but not caused the tailspin some feared.

Moreover, Groupon actually does have barriers to entry, including its big user base and a world-wide sales force of over 4,000. Granted, labor isn’t as valuable a differentiator as technology. But Groupon’s most formidable long-term rival for local ad dollars, Google, GOOG +1.50% would prefer merchants buy its ads on their own. The truth is, most merchants need help, and relationships with them should prove strategic over time.

The question is whether Groupon can maintain growth while hitting long-term margin goals. The top line has been hampered by the company’s messy international segment, which Groupon is still trying to integrate after several deals.

Still, a flip in Groupon’s business model to make it more useful for customers should reignite momentum. It now keeps deals active on its site for longer so customers can get the ones they want, when they want them. That is preferable to the email blasts it has long relied on.

Groupon has set a long-term operating-profit-margin goal for its “indirect” business, mainly coupons, of 25%-30%. Evercore Partners EVR +2.39% estimates it was 15% in 2012. For the newer “direct” business, selling products, Groupon aims for roughly 8%, up from an estimated negative-18% last year

These are ambitious targets. But assume Groupon hits them by 2016, while sales grow at a healthy clip of 12% a year. The resulting free cash flow, discounted back at 10%, implies a value of $9.70 a share.

That is 27% above Friday’s price—not bad, but Groupon is still far from delivering on all those fronts. Take its direct-product business, which Evercore estimates will generate 35% of 2013 sales. Rival Amazon.com AMZN +2.08% doesn’t curate deals like Groupon does, but it sells many of the same products while offering unmatchable shipping time.

Assume that, instead of hitting its targets, Groupon merely gets most of the way there, increasing revenue by 8% a year and getting margins of 20% in the coupon business and 4% in the direct-sales business by 2016.

On that basis, the implied value is $8, only a bit higher than Friday’s close. Groupon’s discount model lives. But the stock is no bargain.

Read the full article at The Wall Street Journal

Story By Alexei Oreskovic | Reuters
June 12, 2013

SAN FRANCISCO (Reuters) - Facebook Inc, the world’s No. 1 social network, is adopting the “hashtag,” one of the most recognizable features of its younger rival Twitter, in a move to position its Web service as an important complement to television, sporting events and breaking news.

Facebook said on Wednesday that it will begin to roll out the feature on its social network, making it easier for users and advertisers to find hot spots of user activity around specific events or topics.

The hashtag, which appears as the # symbol and was first popularized on Twitter, enables users to follow specific topics of conversation within a social network’s ever-changing stream of user comments.

Facebook users will now be able to group comments on the same topic by typing the hashtag alongside a keyword – such as #election – at the end of a post.

The hashtag has proven to be a handy system for social networking users to join online conversations as events unfold in real-time, such as political debates, television shows and sports. And it provides an easy way for advertisers to reach a particular audience.

“Between 88 and 100 million Americans log in to Facebook every night during prime time TV hours, which represents a significant opportunity for broadcasters, advertisers and our other partners,” Justin Osofsky, director, platform partnerships and operations at Facebook, said in a blog post on Wednesday. A recent episode of the Game of Thrones series on HBO generated 1.5 million mentions on Facebook, he said.

Until now, however, Facebook said in a separate blog post on Wednesday, its service lacked a “simple way to see the larger view of what’s happening or what people are talking about.”

Whether conversations about events on Facebook will have the same level of activity and comments as on Twitter is not clear. Unlike tweets, which are public and viewable to all users, most comments posted on Facebook are only viewable to a user’s circle of friends.

The company said that hashtags were the first of several new features that will be introduced to highlight discussions about events on Facebook.

The company is rolling out hashtags to roughly 20 percent of its users on Wednesday, with a full global launch expected in the coming weeks.

(Reporting By Alexei Oreskovic; Editing by Steve Orlofsky)

Read the full article at Yahoo News

Story By MarketingCharts Staff
May 22, 2013

Some consumers are noticing brands’ attempts to promote their social presences in advertising, with some media channels more likely to elicit a response than others, according to results from a Burst Media survey of more than 2,500 US online adults. Respondents reported being most likely to notice brand-related social accounts in online banner ads (27.2%), but a relatively high number also notice them in TV (24.1%) and print (21.1%) ads. Among those who recall brands promoting their social assets in digital ads, about 6 in 10 say the efforts are very (29.4%) or somewhat (31.6%) effective in prompting social interaction with those brands. A similar percentage (58.7%) feel the same way about social cues in TV ads.

Combining the percentage who recall social cues in ads with the percentage who find them effective yields a relative assessment of the effectiveness of different advertising media in prompting social interaction with brands. In descending order of effectiveness, the media are ranked as follows:

Digital ads – with 16.6% of respondents overall noticing cues in these ads and finding them effective in prompting social interaction with brands (27.2% noticing * 60.9% finding them very or somewhat effective);

• TV ads – with 14.1% of respondents noticing the social cues and finding them effective (24.1% * 58.7%);

• Print ads – with 11.1% noticing the cues and finding them effective (21.2% * 52.4%);

• Radio ads – with 4.7% noticing cues and believing them to be effective (11.4% * 41.5%); and

• Outdoor ads – with 3.7% recalling cues and finding them effective (9.5% * 39.4%).

Overall, 54.2% of female respondents and 48.6% of male respondents have performed some sort of brand-related social sharing activity as a result of seeing something on or in an ad. The study notes that such activity could include “liking a brand’s Facebook page, using a brand’s Twitter hashtag and/or posting a brand-related picture to Instagram.” Some demographic segments are more active than others in response to social cues in ads. They are: women aged 35-44 (65.3%); respondents aged 18-34 (56.9%); and men aged 18-24 (59.8%).

Other Findings:
Respondents aged 18-34 are especially more likely to see online ads (67.6%) than TV ads (60.6%) as effective in driving social interactions (among those who recall seeing brands’ social cues in those ads).
Women aged 18-34 are the most likely to see online ads as effective in this regard (73.9%), with fewer finding TV ads to be effective (59.1%).
About the Data: Burst Media conducted its survey in March 2013.

Users Need to Get More in Return, so Brands Can Reward Best Customers

Story By Glenn Engler | Ad Age Digital
May 31, 2013

Foursquare launched in 2009 at SXSW amidst much fanfare. It was all the rage, with predictions galore that it was going to be “the next Twitter” or “the mobile proof-point.” Users dove in and began “checking in” everywhere they could. Prime destinations quickly became a badge of honor. The office. The best bar in town. The favorite restaurant. There was a battle to claim Mayorship.

Ah, the Mayor badge. Foursquare users took pride in the battles, and happily showed off their winnings, until the next few hours or days went by and someone else claimed the prize. Seeking Mayor status, Foursquare users began posting their check-ins on Facebook or Twitter every time. Avid users loved the gamification and the ability to gloat. “Look where I am” took on new meaning.

But as Facebook’s news feed has become more and more cluttered, and our Twitter stream flies by faster and faster, check-ins are becoming increasingly annoying. That check-in at the resort in the Caribbean, while we’re up here in a snowstorm? Annoying. Checking in at work? Why? At home? Why are you sharing that? The coffee shop? I don’t care. The car wash? Ditto. Checking in at the airport, when you go through security, when you arrive at the airline club and when you are finally at the gate? Annoying, all of them. And did you really hope to stand out by checking in at the general SXSW check-in?

Foursquare reports that it has over 30 million users, and 3.5 billion check-ins, and over 1 million merchants who are Foursquare partners (“Foursquare by the Numbers”, January 2013). A small percentage get targeted discounts, and the promise is there to integrate more closely with brands like American Express and Visa, and expand their Yelp-like ratings to fuel ad retargeting for more and more brands.

This is where we have a problem. The value exchange is fundamentally flawed. Foursquare users are checking in to earn points, but the offers aren’t there. Retailers want a more targeted advertising base, but the customers are not immersed enough to be a highly valued “eyeball.” And the masses are left with an increasing percentage of the “noise” being filled by largely useless check-ins.

There is a way to change this dynamic. Flip the value exchange on its head. Fuel more automatic check-ins, or methods to provide immediate value to the user. I’m a Starbucks lover, and I love their iPhone mobile app. Combine this with a check-in to receive free drinks, free merchandise, or even have my drink waiting for me when I walk through the door? Now we’re talking. Expand this mindset to hotels and airlines upon arrival and throughout the journey. Take it one step further and integrate the check-ins into the loyalty programs for immediate and longer-term value.

Individuals will engage if they see the value and a positive trade-off, and brands will hop on board if it’s a way to differentially treat their best customers. Foursquare will finally be immersed into a sweet spot, vs. trying to be part-Yelp, part-LevelUp, and part-Instagram.

When brands and Foursquare users begin to share this value exchange, the story becomes more appealing to everybody else. And perhaps that news feed starts to have less noise, and more usefulness.

Read the full article at Ad Age Digital

‘Lead Generation Card’ Comes Pre-Filled With Email, Name, Twitter Handle

Story By Michael Learmonth | Ad Age Digital

Twitter announced a new kind of Tweet today designed to allow marketers to easily collect personal information from Twitter users, if they chose to provide it.

The format, an expanded Tweet called the “Lead Generation Card,” includes a button that with one click allows the user to provide their name, email address and Twitter handle to the marketer as a request for a deal, more information or further communication.

The format is designed to help businesses collect leads — those interested in more information about a product or a service. It’s the latest “Twitter Card,” an expanded Tweet that contains content far beyond the 140-character limitation of Twitter messages, including images and video.

Any advertiser can use the “Lead Generation Card,” but that card can also be turned into a “Promoted Tweet” or an ad in the form of a Tweet. Like all Twitter ads, advertisers pay when there’s an action: a re-tweet, favorite, reply or, in this case, a click or conversion.

Until now, marketers wishing to do this would include a link to a landing page, a layer of complexity that turned away prospects. “We are bringing the landing page into the Tweet and it’s essentially pre-filled,” said Twitter senior director of revenue products Kevin Weil at Luma Partners’ Digital Media Summit in New York City.

The first advertisers to give this a try are Priceline, which is offering travel deals and the opportunity to receive email updates, a software company New Relic, and for-profit university Full Sail. A host of business marketers are using the format to allow users to sign up to receive white papers.

Mr. Weil said a number of startups had used the service as a means to recruit beta testers.

Right now the format is only available to Twitter’s managed ad clients but will soon be available to small and mid-sized business that use Twitter’s self-serve ad platform.

Read the full article at Ad Age Digital

Story By Daily Mail Reporter
May 22nd, 2013

Stores cannot be sued if they hide the fact that an item isn’t actually discounted as much as they have advertised.

The new ruling came in California where a judge overturned a class action suit against Kohl’s department store.

Now, if consumers find out that they paid more than the advertised discount price on something that they thought was on sale, they can sue the retailer for a sizable payout.

The Los Angeles Times reported the change, which only applies in California at the moment.

The issue stems from the legal complaint made by Antonio S. Hinjonos, who argued that he would not have purchased as many items from Kohl’s if he knew that there was not as significant of a discount as advertised.

According to the paper, he bought Samonsite luggage because he thought that it was 50 per cent off it’s original $299.99 pricetag and he thought he was getting a 39 per cent markdown on polo shirts from the higher price of $36-per-shirt.

In both cases, those original prices were determined not to be the case, so the discount was not a fair reflection given the true full market value.

Courthouse News Service cites the court filings where Mr Hinjonos said he ‘would not have purchased (these) products at Kohl’s in the absence of Kohl’s misrepresentations.’
‘Price advertisements matter,’ presiding judge Stephen Reinhardt wrote in the finding made by himself and two other judges.

‘When a consumer purchases merchandise on the basis of false price information, and when the consumer alleges that he would not have made the purchase but for the misrepresentation, he has standing to sue.’

‘Here, Hinojos specifically and plausibly alleges that Kohl’s falsely markets its products at reduced prices precisely because consumers such as himself reasonably regard price reductions as material information when making purchasing decisions,’ the judge wrote.

Originally the case was dismissed but that ruling was overturned by the 9th Circuit on Tuesday.

Read the full article at Daily Mail Reporter

Photo Credit: ©Alamy – Targeting customers: A California judge ruled that Kohl’s cannot show false ‘original’ prices in hopes of getting customers to think that they are receiving a better deal on the item

Story By FoxNews.com
May 14, 2013

An ad posted on Craigslist under the New York City section is seeking to hire people to write fake Yelp reviews for restaurants to help boost their ratings.

The ad, discovered by the website Eater, states someone is looking for well written reviews for $25 a pop.

“Many of these restaurants have a bi-polar review history (mostly positive 4′s and 5′s but a couple unfiltered 1′s dragging them down, either from competitors or disgruntled ex-staff) and need a few 5′s to rebuild their rating back. If this is something you’d be interested in, let us know.”

For an extra $25, you can “cut and paste the same review onto a couple other social media websites.”

Eater dug up emails from a totally real “reputation management firm” that charges restaurants $500 to increase their social media scores on review sites that your parents use, like Urbanspoon, Yelp, and TripAdvisor.

Yelp has said it is cracking down on businesses like this. It’s using a computer filter to help uncover companies that purchase fake positive reviews and slapping them with a consumer alert.

But some small business owners are increasingly becoming fed up with Yelp.

FOX-5 San Diego spoke with Michael Schenk who owns Sliders Burgers in Mission Beach, Calif., who said he gets several people a week who tell him they wrote a positive review and it was filtered out.

Yelp spokeswoman Kristen Whisenand told FOX-5, “The automated review filter helps minimize the amount of guesswork that may go into determining whether a review is legitimate or not.”

The Federal Trade Commission recently released more than 700 complaints against Yelp, for everything from the company filtering good reviews to harassing businesses to buy advertising.

Read the full article at FoxNews.com

Story By Salvador Rodriguez | Los Angeles Times | Business
May 7, 2013

Adobe is altering the way it does business, announcing this week that it will no longer make and sell a boxed version of its Creative Suite software and will instead charge users a monthly subscription to use its cloud-based version.

Although it will continue to sell boxed Creative Suite 6 products, Adobe said that going forward, it will focus on its Creative Cloud service. That means new versions of its software will be available only to users who pay for the monthly subscription service.

“Focusing development on Creative Cloud will not only accelerate the rate at which Adobe can innovate but also broaden the type of innovation the company can offer the creative community,” the company said in a statement issued Monday.

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The Creative Cloud service has been available since last year and includes most versions of the company’s software, including Photoshop, InDesign, Illustrator, Dreamweaver and Premiere Pro. It comes with 20 gigabytes of cloud storage include.

“By focusing our energy — and our talented engineers — on Creative Cloud, we’re able to put innovation in our members’ hands at a much faster pace,” David Wadhwani, senior vice president and general manager of Adobe Digital Media, said in a statement.

Users who purchase Creative Cloud will be able to download it onto up to two computers, regardless of whether they are PCs or Macs. The programs, however, cannot run at the same time. Previously, the boxed versions of the software let users install the program on two computers with the same operating system and have them run at the same time.

For users accustomed to buying their software at a store and installing it using a CD, the switch will take some getting used to, but it could save some customers money.

Previously, paying for a boxed version of an Adobe application typically cost hundreds of dollars. Adobe Photoshop CS6, for example, costs $699, according to Adobe’s website. With Creative Cloud, users can get access to the program for $19.99 a month, or about $240 a year.

Collections, or bundles that include multiple programs, also cost more than $1,000 in a box, but Creative Cloud customers can access all of Adobe’s program for $49.99 a month, or about $600 a year, if they commit to a year of service.

In order to ease the switch, Adobe said it would offer existing customers who own Creative Suite 6 a year of the cloud subscription service for $19.99 a month. Users who own any of Adobe’s versions ranging from Creative Suite 3 to Creative Suite 5.5 can get their first year of the cloud subscription for $29.99 a month. That’s also the price Adobe will charge students and teachers.

The company said it was also offering groups and companies special pricing to use the cloud-based software.

Read the full story at Los Angeles Times

Story By Tom Barrabi | International Business Times
April 26, 2013

A new study suggests that Facebook “friends” are worth a lot more than a bunch of social media posts.

Syncapse, a social intelligence company, conducted new research that suggests that each individual “like” or “friend” a brand receives generates about $174.17 for that brand, Business News Daily reports. The number represents a 28 percent increase over the 2010 value.

In the study, Syncapse observed more than 2,000 Facebook users who had liked or friended a brand. By analyzing dynamics such as product spending, loyalty, page recommendations, media value acquisition cost, and brand affinity, the company was able to determine that the average Facebook friend, or “fan,” was worth $174.17.

Fans of a particular brand were found to spend $116 more on the company per year than nonfans, as well as 43 percent more within the brand’s industry, Business News Daily reports.

According to the study, the key to cultivating a successful Facebook fan base is identifying “key customer segments.” By determining which offers and campaigns will appeal to a specific group of users, a company can reap greater returns in terms of revenue and brand loyalty.

Furthermore, Facebook users who think their opinion plays a role in shaping a particular brand are far more likely to react positively in a social media setting, the study suggests. As such, brand managers should seek the input of its social media community to determine which of their methods are generating positive feedback.

Users are equally likely to share any bad experiences that they have with a particular brand, making accurate assessments of a Facebook community’s opinions that much more important, the study warned.

“The increase in average fan value is driven by fans’ tendencies to be superconsumers,” the report said. “Not only do they tend to be brand users first, they spend more, engage more, advocate more and are more loyal. The significant and increasing value of a Facebook brand fan affirms past social marketing investment and mandates deeper commitment and accountability in the future.”

In other words, Facebook likes are like money in the bank.

Read the full article at International Business Times

Story By Alistair Barr | Reuters

SAN FRANCISCO — LivingSocial, the second-largest daily deal company behind Groupon Inc, said on Friday that it was hit by a cyber attack that may have affected more than 50 million customers.

The company said the attack on its computer systems resulted in unauthorized access to customer data including names, email addresses, date of birth for some users, and “encrypted” passwords.

LivingSocial stressed that customer credit card and merchants’ financial and banking information were not affected or accessed. The company also does not store passwords in plain text.

“We are actively working with law enforcement to investigate this issue,” the company, part-owned by Amazon.com Inc, wrote in an email to employees.

Read the full article at Inland Valley Daily Bulletin