Daily deals site Groupon announced plans to reduce its marketing costs in the latest regulatory filing for its upcoming initial public offering last Friday, October 7, according to The Chicago Tribune.
Groupon’s turbulent IPO experienced its first major controversy when it introduced its own accounting metric with its first regulatory filing that discounted the costs of advertising and adding new memberships. With most of the site’s costs tied up in these activities, the metric reflected healthy growth, but many objected to the practice.
Eventually, Groupon decided to reduce its use of the metric before doing away with it altogether. Now Groupon hopes to eliminate the need for the metric by reducing its advertising costs “over time,” largely because the company feels that certain markets have become saturated and further returns are likely to be limited.
Another reason for the move could be concerns about continually rising costs. Reuters reports that the introduction of daily deal sites into the local online ad market has dramatically increased prices for such ads, pushing out smaller local businesses and leading to a spike in advertising expenses.