Daily deals startup Groupon plans to significantly reduce its spending on online marketing to acquire new customers to its service, the company stated in a regulatory filing today.
Groupon, which filed an initial public offering in June, makes money when subscribers to its email list purchase online deals offered by local businesses, like restaurants and spas. Those email subscribers are currently Groupon’s best source of new customers to grow its business.
Due to a growing number of daily deals competitors and consumer fatigue, the cost of acquiring new email list subscribers has risen dramatically in the past year — meaning Groupon is getting an insufficient return on its marketing expenses. However, the company said cutting back on marketing expenses won’t negatively impact business with existing Groupon customers.
Many have criticized Groupon for its shady accounting practices and its inability to become profitable after several years. Groupon has consistently lost money every quarter since launching except for one — the first quarter of 2010, when it brought in an $8 million profit. The Chicago-based company recently pushed back its plans for an IPO due to poor stock market conditions.