I think Groupon is brilliant. The retailer can always cap the deal, so they basically spend what they want. It's a very targeted form of marketing/advertising - the only money the company spends is on people actually interested enough to try their products.
Look at television advertising - the costs are probably astronomical in comparison and unaffordable to a lot of businesses. Plus you're essentially spending money on a bunch of people that will never actually use your product. With Groupon, everybody who buys one will use your product - and if they buy and never show up, you just got paid for nothing!
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