While economists declare that the recession is over, thousands of small business owners across the country surely don’t feel this way. With an unemployment rate still hovering over 10%, people across the country have been tightening their budgets dramatically, making it harder than ever for businesses to bring in new customers. To compound the problem, small businesses are reluctant to part with their limited advertising budgets, justifiably opting to use the money to keep their bills paid instead.

Despite the bleak outlook, however, not all companies are suffering. In fact, out of the mires of recession, one start-up business has learned not only how to thrive, but also how to help keep other businesses ringing up receipts, too. What is this magical, recession-proof business? I’m talking about Chicago-based Groupon.

Founded in November 2008, Groupon functions as a sort of city guide for deal junkies, offering its users deep discounts on local deals through the use of a group coupon or “groupon.” Every morning, through one direct e-mail, Groupon subscribers receive a deeply-discounted offer for some service or product (previous offers range from sashimi to skydiving lessons). The key to receiving Groupon’s discounts, however, depends on the deal reaching a “tipping point.”

If enough Groupon subscribers decide to purchase the offer, say 200 people, everyone gets the deal. If fewer than 200 were to make the purchase, however, no one would get the deal, and the advertiser would owe Groupon nothing. When deals do go through, Groupon takes their cut, while the rest of the profits, along with a boatload of new customers, go on to the business.

Through this relatively simple strategy, Groupon has quickly become one of the most talked about companies in the country, earning coverage in The Wall Street Journal, Business Week, and the Harvard Business Review, in addition to recent segments on ”Good Morning America” and “The Today Show.” Groupon’s incredible growth hasn’t escaped the eyes of investors either, culminating most recently with a $30 million round of venture funding from Accel Partners and New Enterprise Associates.

To learn more about the company’s incredible success, I contacted Groupon Founder and CEO Andrew Mason for an interview. Despite his very busy schedule, Mason was kind enough to take some time to answer my questions via e-mail.

Digital Pivot: Groupon is barely a year old, and yet you’ve already expanded to 26 cities across the country and secured nearly $35 million in venture funding. The company is predicted to do $100 million in gross-merchandise sales in 2010. When you conceived the idea for Groupon, did you think it would take off this quickly?

Andrew Mason: No. Once you’ve committed to pursue something, I’ve found that the most productive outlook is to be afraid that your idea is totally stupid, and you are about to fall on your face. We’re amazed and humbled that people have responded so positively to Groupon, and we aren’t taking it for granted; every hour of every day we’re working to make it better.

DP: Groupon relies on the principle of collective action. If not enough people elect to participate in a deal, the deal doesn’t happen. Could you explain why having a “tipping point” is such an important part of your service?

AM: It removes the element of risk. Small business owners have very little to spend on marketing. What they do spend, they want to know it’s going to work, i.e. it will drive customers through the door.

On Groupon, the merchant is guaranteed a minimum number of customers. It works, or they pay nothing. By eliminating the risk of wasting money, great merchants will take a shot with us, even after they’ve given up on traditional forms of advertising.

DP: How do you convince businesses to sign on with Groupon? Are some business owners hesitant to take an initial hit in their profits, even if it means getting new customers?

AM: Like this: ‘If I could promise you a bunch of new customers, will you give me a really good price?’ Merchants understand the trade-off. If you’re getting more volume, you can afford to charge less. Even after the cost of the discount and Groupon’s take, the cost of acquiring a customer via Groupon is still an order of magnitude less than traditional advertising. If a business owner wants more customers, he or she will love Groupon.

DP: One of the criticisms of Groupon is that, while the deep discounts do drive new customers to a business, they may not necessarily be creating loyal customers. How do you respond to that?

AM: It’s a great question – to the contrary, the quality of our customers is one of our best features. Our customers aren’t typical deal hunters – they’re young and affluent people that treat our daily feature like a trusted city guide, and the discount is simply an excuse to try something new. Our merchants tell us they get of tons repeat business (here’s one example). To back up the anecdotal evidence, we run a survey with businesses after 30 days, and nine out of ten are already able to identify Groupon customers among their new regulars.

If it didn’t work, businesses wouldn’t come back (97% of our featured businesses ask to be featured again). It’s not like there aren’t a million other options out there (newspaper, television, and radio advertising to name a few) for them to get customers.

DP: The ability to share deals using social media tools such as Twitter and Facebook is a big part of Groupon’s success. How is your approach to using social media technology different from other Internet companies?

AM: Don’t know that our approach is notably different. What’s different is our product – it’s inherently social, so it’s natural for people to use social tools to share our deals. Most of our customers come via word of mouth, and Groupon couldn’t exist without the social plumbing that’s developed over the last several years.

DP: Where do you see Groupon heading in 2010 and beyond?

AM: If we aren’t in your city today, we will be soon. Beyond that, you’ll have to wait and see!

To join the Groupon e-mail list or to learn more about becoming an advertiser with Groupon, visit the company’s Web site.

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Imagine this scenario: You and your friends head out on the town for a Saturday night. You walk into your favorite spot and sidle up to bar for a drink. As your buddies look over the beer selection, one remarks, “Man. Wouldn’t it be great if you owned your own beer company?” Your other friends nod in agreement while you smile cooly. You look over to the friend who asked the question and say simply, “You’re right. It is great,” and then you order a round for everyone in the bar.

Pretty cool, right? Okay, fine. Maybe that scenario makes you sound like kind of an arrogant prick, but you’ve got to admit, it would be cool to own a beer company, right? Unfortunately, not all of us are high-rolling multi-millionaires who can snap up corporations as easily as you find quarters in your couch cushions. Luckily, that doesn’t matter anymore, thanks to the miracle of crowdsourcing.

Earlier this month, the iconic Milwaukee-based brewer, Pabst Brewing Company (known for stalwart American beers Pabst Blue Ribbon, Old Milwaukee, and Schlitz) went up for sale at a cool $300M. Sensing the opportunity of a lifetime, two advertising agencies, The Ad Store and Forza Migliozzi, decided to combine their powers and create a Web site to help regular people all over the world become part-owners of Pabst. The Web site, BuyABeerCompany.com, asks visitors to “have a beer together,” providing four different pledge types: the Bottle Membership ($5.00), Six Pack Membership ($25.00), Case membership ($100.00), or the Brewmeister membership ($250,000). It is worth noting you don’t actually pay your pledge right now, only after the asking price is reached. At that time, you will be prompted to follow through on your pledge, earning your “very own crowdsourced certificate of ownership suitable for framing as well as enough beer to match your pledge.”

While the logistics of the project aren’t clear yet (Who would own the company? Is a membership like owning a share?) and remain to be seen, it’s an amazing idea, and it shows the considerable potential of crowdsourced initiatives. It will be interesting to see how companies continue to use social media tools to reach out and build positive relationships with their consumers.

To keep up with the Buy A Beer Company project, follow their official Twitter account here. Thanks to AdRants where I first caught this story.

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Advertisers strive for creativity. It is at the core of practically everything we do. Sometimes, however, our efforts fall flat, leading to complete and utter embarrassment. This is an example of what can happen when creative goes bad.

New York City Council candidate Joe Nardiello sought a way to catch up in the polls. Facing long odds, Nardiello and his campaign staff tossed around ideas that could close the gap. In a flash, an idea came: If Nardiello’s opponent was elected, then residents in Brooklyn’s Park Slope neighborhood would see their free street parking come to an end, replaced by a $200 annual parking permit. What better way to inspire the masses than to let them know you’re the guy who doesn’t want to take money out of their pockets?

Perhaps sensing the dynamic of the race needed to be shaken up, Nardiello and his team figured out a way to call attention to the issue in the most creative way possible. Rather than knocking on doors or distributing leaflets, Nardiello decided to call people to action with a more visceral approach. During the night, his campaign workers walked the streets of Park Slope and left flyers on cars (an illegal act, by the way). The catch? The flyers were made to look like New York City parking citations.

The New York Daily News reported the aftermath. “You see a ticket and you run down there with your heart beating,” a woman named Lisa said. “People were very angry. Even if we liked him, we might not vote for him now.”

In this instance, people cared more about the method than the message. Nardiello’s campaign voice mail filled with furious calls. People yelled; they spewed insults. They expressed their feelings in short and punchy words.

There are those who would argue that Nardiello’s parking ticket stunt was harmless and actually a creative way of getting his message out. At first, I was one of them. I asked whether or not people could take a joke. Then, I remembered my reaction the last time I got a parking ticket. Seeing that evil orange and white envelope tucked under your windshield wiper or stuck to your window is one of the most frustrating things that can happen to a driver, especially when you know you weren’t parked illegally. As much as I appreciate Nardiello’s strategic goal, I believe his tactics would have upset me as well.

In our efforts to create effective marketing, we sometimes ignore what makes a campaign work in the first place: the message. If what you’re selling has value, sometimes the best thing you can do is simply share it. Forget shock or humor, just be honest. “Gotcha” marketing tactics seldom attract new customers; they tend to upset people. If your goal is to stir a reaction, fine, but if your goal is to win an election, sell a product, or promote your business, you should reconsider your approach.

Last night, I attended the MarketingProfs Digital Marketing Mixer Oktoberfest Tweetup. It was my first time at such an event. These are my observations and lessons.

1. Eat First, It Calms The Nerves

My friends know that I’m not a shy person. Usually, I love to meet new people. In fact, it’s a personal point of pride that I can sit down with most anyone and talk about most anything without feeling uncomfortable. So, why is it then that before I entered the glass doors of the Hyatt Regency O’Hare I could feel my heart palpitating in my chest? There I was, about to enter a room filled with 100+ people who share my personal and professional interests (many of whom I follow on Twitter), and I’m pacing in the lobby wondering what I’m going to talk about.

Sensing my own nerves, I decided the best course of action would be to move in casually; get a beer from the bar; fill a plate with roast turkey, goulash, and various cheeses; and retreat safely to a table in the lobby where I could  eat, check my iPod Touch (which might make me look cool if someone saw me and assumed it was an iPhone), and strategize. This proved to be a winning tactic. Empowered by the free beer and free chow, I regained the confidence that had momentarily fled my side.

2. Be Yourself

I think part of the reason I was nervous initially was the fact that this was an industry event. These men and women weren’t strangers, they were my peers. I might work with them one day. If I came off sounding like an idiot, I wouldn’t be able to just shrug it off, because I might see the same people at the next tweetup.

After mellowing out with my food and beer, however, I thought to myself, “Hey! I’m not just some guy who stumbled into this party. I’m an experienced blogger and a pretty damn good copywriter and I know some stuff about marketing.” Upon that realization, I decided that I would just be myself. I would talk about the things that I knew and I would listen and learn about the things I didn’t know. If you’re not confident in yourself, why would anyone you meet be confident in you?

3. Seize Opportunities

Since I was only attending the Tweetup and not the entire conference, I was at somewhat of a disadvantage. The majority of the attendees had been together the whole day, so it was natural for them to form into small cliques at the Tweetup. In order to effectively initiate conversation and break into a small group, I had to seize opportunities where I could contribute something of value. As such, I ended up having conversations about Internet privacy, personal branding, and copywriting; areas I know and love.

If you find yourself at a networking event and you feel like the odd man (or woman) out, don’t just mope around. Keep your eyes and ears open for something familiar and seize the oppotunity to demonstrate your knowledge and make a new friend in the process.

All in all, I’d give my first tweetup a solid A. After some initial bumpiness, I hit my stide and got to meet some very cool and interesting professionals. Thanks to Marketing Profs for hosting a great event. I’ll definitely be back for more.

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All across the country, the lingering economic recession has caused businesses of all shapes and sizes to rethink their marketing efforts. More often than not, this has meant cutting overall advertising budgets while investing more heavily in free and low-cost social media marketing.

Even the United States Army has had to cut back on marketing, but not for the reasons you might expect. As detailed in a recent article from the Associated Press, the Army has cut its marketing spending not because it’s been ineffective in drawing recruits, but rather because the recession itself has created so many new enlistees that spending on advertising is superfluous.

While the increase in recruitment is certainly compelling, it is by no means surprising. Since the very inception of the armed forces, the honor of serving one’s country and the lure of steady pay and government benefits have drawn countless men and women to the military. What I find more interesting in the AP story is the type of high-cost marketing efforts the army is considering shutting down.

Last year, the Army began a pilot program for a new immersive marketing initiative called the Army Experience Center. Based in Philadelphia’s Franklin Mills Mall, the Army Experience Center was designed specifically to appeal to teen boys, combining walls of video game consoles with army combat simulators and video exhibits of military life. In total, the program costs $4 million a year to run.

While the marketer in me lauds the Army’s ingenuity, I find myself questioning the ethics of mixing video games and combat simulation programs under the same roof. It’s no wonder that peace activists staged protests against the center, claiming children are being “desensitized to violence.”

On the other hand, I have immense respect for the men and women of the military, and the idea that young men could be duped into enlistment through video games alone is insulting to the integrity of our armed services. In order to visit the center, individuals must be at least 13 years-old. Furthermore, visitors must opt-in to receive information about recruiting from the Army Experience Center, something the majority of teens choose not to do. Are these not sufficient protective measures? If the Army is not allowed to experiment with new marketing tactics, how is it expected to maintain an all-volunteer military?

What do you think? Despite the fact that the recession has rendered the Army Experience Center unnecessary for the time being, do you have a problem with the Army’s increasingly integrated marketing efforts?  Whether the answer is yes or no, I’d love to hear your reasons in the comments.