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​Did anyone notice that Groupon took a big step towards more traditional financial reporting last week? Myself I didn’t until today, when LinkedIn’s news digest pointed me to this worthy blog post on Harvard Business Review. In essence, Groupon’s change of metrics means that now it’s easier for every potential investor to see that the IPO-prepping company is still far from becoming profitable.

I personally belong to the camp which argues that Groupon’s business model has attracted far more hype than it would genuinely deserve. Granted, the firm has expanded phenomenally fast, but at the same time it has managed to add awfully little depth to its business model in the past year. And I mean sort of depth that would make it a better deal for its real clients (participating merchants) than it is now. Consider the following:

About 90% of Groupon’s daily emails border on outright spam. They tend to be hugely irrelevant in terms of what they offer and where they offer it. And as long as my experience here in London indicates anything there seem to be nowadays more rather than less of them: I used to receive two (bearable), but since maybe July I’ve received three (a nuisance). By now Groupon should have really learnt a trick or two from my click-through and purchase record, and stop spamming me.

This sort of shotgun approach means that Groupon most likely remains a raw deal for most of the merchants. Groupon is just another form of marketing, and its lack of deal personalization makes it a very badly targeted one. Better specified, more relevant mailing lists would for example allow Groupon to provide merchants with more suitable timeslots and audiences that are likelier to come back after the discount. The shotgun mailing lists must havelong waiting times, so I’d imagine that merchants don’t have any say in when their deals go out. And because targeted audiences are too diverse the whole act resembles a suckers’ rally to the biggest discount.

The main reason why Groupon hasn’t focused more on making itself better instead of simply bigger is probably that suchwould have required money and attention, and thus slowed down the company’s expansion. And a slower expansion would have meant that regional replicas (like CityDeals Groupon acquired in 2010) would have got bigger, possibly better, and certainly more expensive for Groupon to buy out – running advertising mailing lists isn’t that difficult a model to emulate, after all.

The daily-deal businesses do have a future - in offers that are mobile, highly targeted, and oftenreal-time - but until we start seeing signs of it I'd very much avoid investing any money in them.