One of the fastest growing online properties is the "deal of the day" website known as Groupon.  Within 2 years of operation, Groupon already has 40 million subscribers, and they generate close to $500 million in revenue. 

CEO Andrew Mason has said that Groupon is the "savior of small business", and based on some of their results, it's easy to see why.  Recently, Groupon launched their first national deal in partnership with The Gap, and sold over 441,000 "groupons" (the name given to their coupons), generating more $11 million!  Pretty impressive!

Although national deals may become more prominent on Groupon, their mainstay remains local "bricks and mortar" businesses.  Groupon offers discounts to group buyers of a particular item.  The level of discount and the length of the redemption period are set by the seller of the item, and revenue is generated when each groupon is sold.  However, given that Groupon typically splits the revenue generated with their small business partners, some question whether there's value in leveraging it as a sales incentive.  Care must be taken if you sell products that have low margins, as you could end up losing money on every deal you sell.  Similarly, if you don't have the ability to handle a large influx of customers, a Groupon deal could be problematic if it generates a response higher than originally forecasted.

But if you view Groupon as a vehicle to drive an awareness campaign  for your small business - it's pure genius.  When compared to the cost and efficacy of a yellow pages or local newspaper ad, Groupon looks like a bargain.  There's no out of pocket or up front cost - you get paid for each groupon sold.  Additionally, not every groupon sold will be redeemed by the buyer - traditional coupon redemption rates usually top out around 30%, so it's a safe bet groupons will follow a similar trend.  If you keep the redemption period short enough, you may well end up making money on the deal, all while raising awareness for your business in ways traditional advertising could never do.