[legendben]

I think the author failed to recognize the advertising effect of running daily deals. Yes you are likely losing money for the deal itself as a merchant, but how do you quantify the advertising effect of having your restaurants featured on a nationally known website. Advertising on Groupon.com should not be free, should it? I agree that daily deals does not magically make a business more successful. I think business should focus on quality and innovation of product and service for long term success.

[stanleydrew]

This is always the stated benefit to merchants. The author didn't miss it.

What's failed to materialize is any ROI on the Groupon "advertising" channel. The ads aren't working. Therefore the merchants are no longer buying.