Groupon reins in marketing spend as it reports loss of $42.7m

Groupon has cut its marketing spend by nearly $50m in the three months to 31 December 2011 and reports a net loss of $42.7m (£27m) in its first set of financial figures since it floated last year.

Groupon: daily deals service cuts back on marketing spend
Groupon: daily deals service cuts back on marketing spend

Groupon cut marketing spend from $200.9m (£126.3m) to $156.4m (£98.4m) in the quarter, compared to same period in the previous year.

The cut came despite the voucher company launching its first UK TV ad campaign in the period, as it moved to up the ante in the daily deals space.

The marketing spend reduction can be attributed to its decision to focus on encouraging existing customers to make repeat purchases, rather than attracting new customers.

Groupon also today (9 February) revealed it is working on features to make the deals it sends to customers more personalised.

The company's results show that it reported a net loss of $42.7m (£26.9m), compared to a net loss of $378.6m (£238.1m) for the same period the previous year.

Revenue increased 194% to $506.5m (£381.5m) for the quarter, compared to $172.2m (£108.3m) the previous year.

Groupon did not break out revenues by region, but its revenues for its international operations, which include the UK, were $83.8m (£52.7m), up 279.2% from the previous year.

The company attributed the net loss to the costs associated with its new international operations

Last year, Groupon made headlines when it made the largest IPO by an internet business in the US since Google in 2004, which at the time was valued at nearly $13bn (£8.2bn).

According to reports the market was disappointed with the results, with concern mounting over Groupon's growth.

Groupon also reported a 275% year-on-year increase in active customer numbers, taking it to more than 33 million, for the fourth quarter ended 31 December.

Andrew Mason, chief executive of Groupon, said: "We will continue to invest in new services and tools that help our merchant partners be more successful and drive local commerce around the world."

Mason reportedly announced on a conference call to investors that Groupon would be rolling out more targeted deals in the first half of this year, which will be based on gender and interests, rather than simply location.

He said: "It allows us to say, 'Please stop sending me pole-dancing lessons'. That's been a much-requested feature." 

Mason's comments come in the same week the company announced it had bought data personalisation start-up Adku, for an undisclosed sum.

Follow Sarah Shearman on Twitter @Shearmans