Groupon’s now infamous TVC during the Super Bowl, for which it paid out many millions to produce and air, majorly backfired on its Chinese business prospects. After watching the story unfold, my own take is that, essentially, Groupon didn’t take into account two key facts about the changed world that we live in.
First, that media content transcends format and borders. When a company runs a TV commercial in the US, that commercial does not live just on TV inside the US and the message does not only reach the intended audience in that media market. Content, especially high-profile Super Bowl commercials, is immediately transferred to different formats - video sharing sites, entertainment blogs, mobile phones, social networks, and links to it are shared on microblogs like Twitter – broadcasting messages to viewers around the world with different worldviews and cultural sensitivities.
Second, that messages that work in one market may not work as well in others. So, it’s all well and good for a company to design messaging for a certain target audience in a certain market. But, in the real, dynamic world of the Social Web, messages have the potential to cross state and international lines in a flash, be received by different groups and impact a company’s reputation. As such, Groupon’s Tibet commercial, which commented on Tibetan culture and celebrity activism, was received very differently by audiences in China than by its intended audience in the US.
Culturally insensitive content aside, Groupon is really guilty of failing to understand these changes in the worldwide Social Web. Multinational companies with operations in China, or those hoping to expand in China, can learn from this example. The time has come for many brands to fundamentally redefine the way they think about “local” communications, creative marketing and brand storytelling. Needless to say, it’s ironic that these oversights came from a Social Web company looking to expand worldwide.
The fallout from this commercial is particularly damaging for a company that has so intently set its eyes on the immensely lucrative Chinese marketplace. Groupon has invested millions of dollars into its China market entry strategy in 2011 and recently announced plans to hire as many as 1,000 employees in China this year.
After the spot went viral on the Social Web, Groupon’s CEO took to their corporate blog to explain the rationale behind its Super Bowl advertisements and to make clear that they did not mean to offend anybody. Then, following five days of criticism from both sides of the Pacific, Groupon announced that it would no longer run the controversial ads and replace them with “something less polarizing”. Some damage control was accomplished by the apologetic blog posts, but whether this was enough damage control to salvage its business prospects in China remains to be seen.
With its technology and funding well in place, Groupon’s fate in China will lie in the strengths of its partnerships. Partnering with Tencent or another Internet major in China is obviously a great move to help gain market access to China’s exploding social commerce sector. Groupon also needs to engage a strategic communications consultancy as a partner - not only as a firefighter in times of crisis - to help build trust among government regulators and engage Chinese consumers in a meaningful way both online and offline.
Once strong partnerships are in place, perhaps Groupon’s principle goal should be to ensure that it remains on the right side of China’s Internet industry regulators. The best way to do this might be by keeping a low profile until it really has something to tell the world about: social shopping deals that roundly beat the socks off its competitors.
- Zaheer Nooruddin is Director and Lead Digital Strategist at Burson-Marsteller Greater China.
Leon Zhang (
