Magazine article Marketing

The Marketing Interview: Roy Blanga, Groupon

Magazine article Marketing

The Marketing Interview: Roy Blanga, Groupon

Article excerpt

The daily deals site's managing director has had to deal with questionable results and an OFT investigation. Now, the brand faces increased competition.

After a tough year for Groupon, it seems reasonable to assume that the daily deals site would be on a major charm offensive.

That's not the case, however, when Marketing meets UK managing director Roy Blanga, who appears to find the interview process a tad irritating Perhaps this is because his grilling takes place on the day after Groupon reported its second-quarter results; its stock took a hammering, dropping almost 80% since its IPO last November. Or maybe Blanga is feeling frazzled from having to constantly defend the UK business this year after the Office of Fair Trading (OFT) found 'widespread' breaches of consumer protection laws, following a long investigation.

Whatever the reason, Blanga is not in the mood for pleasantries, answering some questions curtly. It's a shame, because the story of Groupon, which was founded in Chicago four years ago by its chief executive Andrew Mason, is one worth telling with enthusiasm. The business, which sells coupons for a merchant's product, service or experience at a steep discount, is one of the pioneers of a rapidly-growing sector.

Groupon is, arguably, the brand that brought daily deals commerce - not to mention fish pedicures - into the mainstream, tapping into cash-strapped consumers' desire to dig out a bargain. For a while, it seemed it could do no wrong; the business grew rapidly and expanded into international markets, garnering praise from Forbes as the world's 'fastest-growing company' along the way.

In the UK, however, its growth spurt led to many merchants being unable to cope with the extra business, claims of unfair pricing, and complaints about misleading terms and advertising.

Things came to a head when the OFT launched an investigation into the company in July 2011, while last December, the Advertising Standards Authority (ASA) referred Groupon to the OFT over 'serious concerns' after it broke UK advertising regulations almost 50 times in less than a year. This March, the OFT forced Groupon to change its trading practices and it fell to Blanga to publicly admit to customers who had 'experienced the negative side effects of our growth' that 'we've messed up'.

Blanga, an Italian with a sales and consultancy background, is equally frank when discussing the subject five months on. 'At the beginning of last year, the company had evolved so rapidly, in an industry that didn't exist before. We had to anticipate all the challenges it would face and in some instances, we haven't been as good as we should have been,' he says.

In the early days of the business, adds Blanga, when a merchant would sell an average of 10 to 20 coupons per deal, capacity was not a problem. When the brand grew to having hundreds of thousands of deals going through its site every month, however, it faced an entirely different situation.

'But we've learned from our mistakes and put things right,' he says, claiming the company now has a 'strong compliance culture' and an enhanced vetting process for deals.

Blanga, who has worked at Groupon since its UK office opened in June 2010, after the company's acquisition of German rival CityDeal, is keen to stress that operational changes were under way before the OFT ruling. 'The ruling pushed us to accelerate the level of change we had planned,' he says.

To hammer this home, he takes Marketing on a tour of the UK headquarters, which houses more than 800 staff. Based in the City of London, it is just far enough from the capital's burgeoning Tech City to feel disconnected from the digital scene. The majority of the workers here are sales people; with three other sales offices in London and a network of regional offices across the UK, they form the engine of the business.

As Blanga walks past the various teams he explains that every merchant goes through a series of checks before a deal is arranged. …

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