Will Groupon Ever Be Profitable?

Image: Getty Images via @daylife

Forbes examines whether Groupon has any merit at all in coming to IPO. It asks whether Groupon meets these 3 criteria:

• "Value Creation happens when customers use a product because it meets their needs better than the competition’s. An example is Netscape’s Web browser. For much of the mid-1990s Netscape was the market leader.
• Value Capture is when a product’s price exceeds its makers’ costs to design, produce, sell and ship it. Since Netscape gave away its browser for free, it succeeded in creating value but failed at capturing it.
• Value Renewal occurs (rarely) when a company adapts to new technology, changing customer needs, and upstart competitors. Steve Jobs renewed Apple’s (AAPL) value brilliantly starting with 2001′s iPod introduction and kept doing so with iTunes, the iPhone and the iPad."

They have a really good point with Value Capture. It seems many internet companies are creating value, but failing to capture or monetise it. Twitter and Facebook comes to mind. In fact, I wonder whether anyone has done a survey to figure out how much money is paid by advertisers to advertise online, and how much revenues those advertisements bring.