Chris Brogan, famed communications consultant, author, and President of New Marketing Labs, set the social media world a-twitter (if you’ll pardon the pun) when he non-chalantly shared his consulting day rate in a recent blog post. The number, an impressive $22,000 a day, struck many readers as extremely high, particularly when juxtaposed against another blog post in which Chris solicited an unpaid intern to be a part of a new project he has in the works.

Now, in my opinion, if someone is willing to pay him $22,000 to do what he does, then Chris deserves to earn that kind of money. This is the United States of America baby. If you’re a consultant and you want to get paid big bucks, set high rates and do awesome work. We are all the keepers of our own souls. Do what works for you and don’t sweat it if you’re not at Chris’ level of success.

Of course, I’m not here to ramble on about my thoughts on the issue (I already did that in a comment here), what I’m interested in is bringing together some of the interesting and insightful analysis that sprung up AFTER Chris dropped the bomb. So, without further ado, here are my three favorite blog posts on Brogan-gate! (Is it okay to attach “gate” to this, or am I overreaching?)

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• Does Chris Brogan’s Day Rate “Anchor” the Cost of Social Media Consulting?

In an extremely insightful post over at Incentive Intelligence, Paul Hebert explains how, due to his level of celebrity in the social media sphere, Brogan’s revelation has set an anchor for the high end costs of social media consulting. In other words, though there are those who may charge more, Brogan’s fees are a good benchmark for what the highest earners could be making. Obviously, the majority of consultants don’t make that kind of scratch, but Hebert explains that Brogan’s anchor may still help lower or mid-level consultants earn more money.

Quoting from the post:

“Assume you are a very, very good social media consultant with great references (maybe even Chris himself) but you only charge $1,000 per day.  Congrats – you can probably give yourself a big raise.  Not that you’re doing anything better – just that the anchor for the work you do is now known and you can point to it and say – “hey, I do similar work as Chris and I’m only $10K per day.”  Your clients may now think your $10K rate looks like a bargain. That’s what anchors do.  They provide context for discussion and allow for comparisons.”

• So How Do You Figure Out Your Self-Worth?

In an interesting post at Justin Kownacki’s blog, Justin expounds upon some of the same themes brought up in the Incentive Intelligence post. In essence, Justin says that the reason people were upset over Brogan’s day rate is because they never knew that money like that was a realistic goal. Rather than sulking about how much money you’re not making, however, Justin suggests that you should reconsider how valuable your own services are.

In an excellent six-step strategy, which I won’t repeat here because you really should just read it at his blog, Justin outlines some of the ways that you can accurately determine your own consulting rates.

Quoting from the post:

“Valuing yourself according to other people’s self-estimations is the easiest way to drive yourself crazy.  But valuing yourself according to your own self-estimation is the easiest way to go hungry, because you never truly understand what your assets are actually worth to the people who don’t know what you know.”

• Why Do Price Discrepancies Exist and What Do They Mean For You?

In a wonderfully lengthy and deeply analytical blog post, Mike Myatt, Chief Strategy Officer for N2Growth, explains the important role that pricing plays in all aspects of business, and why some people will pay $30,000 for a Rolex but “feel a Timex isn’t worth more than $50 dollars.”

What I like the most about Myatt’s post is that he carefully explains some of the complex issues that can impact pricing – the strength of your brand, your competition, whether there is a demand for your services –  and how this complexity must be acknowledged in order to fairly assess your own value.

Quoting from the post:

“Bottom line…pricing is not a taboo subject to be avoided, but rather a key metric that needs to be well understood as well as proactively measured and managed. Pricing needs to be dealt with in the most embryonic stages of strategic planning and needs to constantly be evaluated based upon changes in market dynamics”

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Do you have any insights into Brogan-gate that you’d like to offer? Share your thoughts in the comments.

Almost one full year ago, I started a blog called They Are Coming For Us!, a humorous website dedicated to exploring the inevitable robot uprising. The purpose of the blog was two-fold: I wanted to use it as a testing ground for SEO experiments, and I wanted to have an outlet beyond my professional writing obligations to talk about some things that I really enjoyed, namely robots, science-fiction, and other nerdy delights. I even started a Twitter account for the blog, which, for a time, was even more popular than my actual Twitter account.

After a few months of steady updating, however, I found myself visiting the site less and less frequently. There were viable excuses to stop writing on the site, including some work changes and a couple of new marketing-related blogging opportunities that I didn’t want to pass up, but, honestly, it came down to the fact that I just didn’t know what to with it anymore. The project had become a burden to update, rather than something that I actually enjoyed doing, so I let it fall to the wayside.

For months, the disappointment of walking away from something in which I had invested so much mental effort weighed heavily on my mind. Eventually, I realized that I had made a mistake. What use was there in blaming the site for my lack of inspiration? After all, the reason I was uninspired is because I was creating uninspiring content, and there’s nothing worse in the world of blogging than that.

So, taking inspiration from a couple of other go-getters whom I follow on Twitter (including Matt Cheuvront, Tim Jahn, and Brandon Zeman), I decided to redesign They Are Coming For Us! from the ground-up by changing the site from a general blog to a robot-themed web comic with a blog on the side.

Over the weekend, I put in a few hours here and there tinkering with different layouts until I hit on a brilliant Wordpress theme called ComicPress. After installing ComicPress, everything else started falling into place, and I began publishing comics at the end of last week.

Is the website perfect? Far from it. I still have a lot of work to do in fully connecting the site to the vast world of social media.

Is it a good start? I think so.

The truth is, even if what I’m writing isn’t funny, at least I’m enjoying what I’m doing with the site, which is something that hasn’t been the case for a long time. Besides, like everything else, it’s going to take some time for me to figure out what does and doesn’t work. To this point, if you have any feedback on the redesigned site, feel free to leave a comment here or there (or in a message to either Twitter account).

I look forward to hearing your comments, and I hope that They Are Coming For Us! will soon become a must-visit destination during your day.

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By now, the odds are good that you’ve heard about film director Kevin Smith’s recent clash with Southwest Airlines. If you haven’t yet heard the story, or you’re a bit fuzzy on the details, here are the essential details.

Kevin Smith, who is famous for directing Clerks, among numerous other popular comedy films, purchased two tickets for a short Southwest Airlines flight from Oakland to Burbank. When offered the opportunity to board an earlier stand-by flight, Smith took the option. Once on board, Smith seated himself and waited for the flight. At this point, according to Smith, it was determined by a Southwest employee that he required two seats to sit comfortably under Southwest’s “Customer of Size” policy and that he would have to be removed from the plane.

Being understandably embarrassed about the situation, Smith demonstrated that he could buckle the seat belt and put down the arm rests (two key requirements of the policy), but he was told to exit the plane anyway. At this point, Smith turned to his more than 1.6 million Twitter followers. In response to his status updates, many of his followers began lashing out against Southwest, prompting a Southwest employee to tweet an apology from the official Southwest Twitter account, along with an official apology at the Southwest Airlines corporate blog.

While you would think that might be the end of it, Smith still has a bone to pick with Southwest. The reason? As he clearly indicated by passing their test, he isn’t in fact “too fat to fly.” Despite this fact, however, while Southwest has agreed to review their “Customer of Size” policy to make sure that it’s appropriate, nobody has gone on record as saying that Smith was not in violation of the policy, which is all that he wants. Unfortunately, because of all the drama that this incident raised, the moniker of “too fat to fly” will now be a stain on his reputation for the rest of his life.

Kevin Smith on Southwest Airlines

As much as I like Kevin Smith as a director, and as a person in general, I can’t help but wonder if he isn’t responsible for all of this media attention. Now before you get mad at me, I want you to know I’m not blaming the victim. From my understanding of the incident, Smith was not necessarily treated fairly and I’m glad that Southwest is reviewing their policies to make sure nobody else must be embarrassed unnecessarily. However, if Kevin Smith hadn’t taken to Twitter with his complaint, it’s likely that the story wouldn’t have made national news (even the New York Times got involved) and he would still be known as one of the world’s most beloved indie-film directors and not the “too fat to fly” guy.

While social media websites like Twitter, Facebook, and Yelp have made it easier than ever to voice your displeasure over bad service, that doesn’t mean that you should automatically jump onto the web to plead your case. As Kevin Smith found out, when you complain about something, not everyone will be on your side. In this case, the sheer volume of angry, obscenity-laced comments against overweight people that the Smith/Southwest story has brought up is enough to show that perhaps it would have been better for him to suffer in silence, and then work with Southwest behind closed doors on resolving the issue.

If Smith had waited to try and sort out the issue privately, he may have been able to reach a more satisfying conclusion that wouldn’t have led to major media exposure. If Southwest wanted to play hardball, he still would have had the option of sharing his negative experience with the world, but he could have done it in a full-length blog post (like he eventually did here and here) where he might have been able to control the story better. Consider how much more impact Smith’s complaint would have had if he weren’t forced to try and explain the story in 140 character outbursts.

Social media has made it easy to give in to our impulses, particularly when it comes to complaining about something. As such, it is very important for companies to engage in proactive social media monitoring and maintain a full support staff for responding to customer concerns online. However, as consumers, we must also understand that Twitter and other social media sites are not always the proper forum to bring up a customer service issue.

Give the company a chance to respond to your concerns through traditional means of communication before pulling out the big guns. If you play your cards right, the company may offer a more satisfactory resolution to your concern than they would if they were forced to play defense online. Besides, even if a web rant does bring you swifter justice, consider the long-term effects in could have on your reputation. Do you really want the first results about you on Google to be a Twitter tirade?

What do you think? Is social media the first place you turn when you have a customer service problem, or do you use the good old-fashioned 800 number?

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Like most of the marketing community, I was generally disappointed with this year’s Super Bowl advertising (see my post at Beyond Madison Avenue). Generally, I felt they were uninspired, they failed to make a strong connection with their intended audience, and with the exception of the user-created Doritos ads, they lacked originality.

With that being said, one redeeming moment came. Thanks to the good people at Vizio, we now have proof that Gary Brolsma, aka the Numa Numa Kid is alive and well.

If, for some weird reason, you’re unfamiliar with the Numa Numa Kid, check out this Wikipedia article and the corresponding video below. Essentially, the Numa Numa saga is the story of how a Web cam, a super-catchy Romanian pop song, and the power of YouTube turned one nerdy kid into a worldwide sensation.

I remember laughing pretty hard the first time I saw this video over five years ago. It was as ridiculously goofy then as it is now. Of course, that didn’t stop it from racking up tens of millions of views and leading the way for countless imitations, interpretations, and parodies.

In fact, Mr. Brolsma has taken his unexpected Internet fame and turned it into an actual career. Long after I thought the video would have faded away, the dancing doofus (and I say that lovingly) has remained a vital part of our popular culture, and he’s not the only one.

In Vizio’s Super Bowl ad, which touted the Web functionality of the company’s new televisions, viewers were treated not only to Gary “Numa Numa” Brolsma but also the silky baritone voice of Tay “Chocolate Rain” Zonday and the world-famous Dramatic Chipmunk.

While I thought Vizio’s ad was only mildly effective (the peak of both Brolsma and Zonday’s popularity hit several years ago), it really made me think about the nature of celebrity in the Internet age. The things that we do online have never been more important to our real life successes and failures. Post a stupid picture of yourself on Facebook and you might lose your job. Post a crazy video of yourself on YouTube and you might turn it into multiple sponsorship opportunities, two music video appearances, and a spot in a $3 million Super Bowl ad.

What do you think makes an Internet meme go viral, and how long do you think these Web celebrities can keep milking the spotlight?

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In case you haven’t noticed, nerdy is the new sexy.

Don’t believe me? Just look at how much nerd culture has spilled over into mainstream society in the past decade. From movies (“The Dark Knight” showed superheroes could be serious, while James Cameron’s epic “Avatar” showed space opera is a billion-dollar genre) to video games (“Call of Duty: Modern Warfare 2″ recently eclipsed the $1 billion mark) to the widespread adoption of social media technology (if Facebook were a country, it would be the third-biggest country in the world), things traditionally associated with geeks have become mainstream.

The latest example comes courtesy of Adidas. Recently, the company rolled out the Star Wars Collection as part of its ongoing Originals series.

To kick off the campaign, which features a collection of pretty awesome “Star Wars”-themed shoes and apparel, Adidas put out a star-studded commercial featuring professional soccer player David Beckham, rapper Snoop Dog, and famed music group Daft Punk.

You can check out the commercial below.

While I don’t think the spot is particularly effective (What does stickball have to do with “Star Wars”?), I was impressed by the dance remix of “The Imperial March” and the mysterious appearance of Daft Punk at the end of the commercial.

What do you think? Would you buy anything in the Star Wars Collection? Personally, I’m digging those Luke Skywalker kicks.

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Have you heard of Foursquare yet? If you haven’t, expect to soon. In November, Pete Cashmore, the founder and CEO of the popular social networking news website Mashable, predicted in a column for CNN that Foursquare would be next year’s Twitter. Cashmore isn’t the only one high on Foursquare either. In a blog post last September, tech blogger and web celebrity Robert Scoble did Cashmore one better saying “I think this lame little location game is going to be bigger than Twitter.”

What’s so special about Foursquare? First of all, it is a location-based application. By this, I mean that it is used primarily on GPS-enabled smartphones that can trace a user’s location. The goal of Foursquare is to use the application while you’re out on the town to check-in to different venues. Secondly, as you check-in, you earn points and, eventually, a variety of badges for your profile. If you check-in to a place more than anyone else, you become its “Mayor,” which, in some cases, gets you discounts on products or services.

The competitive aspect of Foursquare (it’s fun to oust someone as the mayor of a place) combined with its function as a sort of mobile city guide make it a fairly addictive application when you’re out. Since I started using the site myself, I have been focused on Foursquare more than almost any other social networking application I use.

As much fun as Foursquare can be to use, however, there are some natural privacy questions about the service. For instance, is it safe to tell the world exactly where you are every time you go out? If someone was monitoring your Foursquare profile, how easily could they establish your pattern of behavior? Before Christmas, we advised our readers not to share their travel details online to help protect their homes from burglary. If you’re using Foursquare all the time, doesn’t the same risk apply?

As ReputationDefender CEO Michael Fertik shared in a recent interview with the Financial Times, the dangers of oversharing online are plentiful. Truthfully, effective online reputation management can be a double-edged sword. In order to protect yourself from Internet slander and promote your personal and professional brand, you have to maintain a strong presence online. However, the more you share on the web, the more you have to work at preserving your digital identity.

To this end, the key to using sites like Foursquare (and Twitter or Facebook for that matter) is intelligence and moderation. Consider what you’re sharing before you post it. If you’re late to work because you stayed out late, will you be able to explain it to your boss? Not if they can see that you checked into five bars last night and were out until the wee hours of the morning.

Staying on top of the latest trends in social networking is an important part of proactively protecting your reputation online. Foursquare is a useful and fun tool for finding new places and connecting with friends. As long as you commit to sharing responsibly, you shouldn’t be afraid to try it out.

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During the Great Depression, one criminal caught the attention of the world like no other before him. I’m talking of course about the infamous bank robber, John Dillinger. Over the course of his criminal career, Dillinger robbed at least two dozen banks and four police stations. He also escaped from prison…twice.

By the time he was gunned down in the alley of Chicago’s Biograph Theater at age 31, Dillinger had captured the imagination of the public and secured a legacy that would last for decades. (Not everyone gets to have Johnny Depp play them in a feature film.) Why do I bring up John Dillinger? Because, I believe that we may have our very own Dillinger for the digital age in the form of British fugitive Craig Lynch. If you are unfamiliar with Lynch, allow me to catch you up.

28-year-old Craig Lynch escaped from Hollesley Bay Prison in southern England three months ago. Lynch was being held at the minimum-security facility on charges of assault. Since escaping, however, Lynch has not followed the typical m.o. of a man on the run. Rather than laying low, Lynch carried on his life like normal: visiting old friends, going out to restaurants and bars, and updating his Facebook profile with regularity. One would think that publicly sharing updates online about where he was would have gotten him caught, but, to the contrary, Lynch has been able to evade police with apparent ease.

When the news broke that Lynch was a prison escapee, rather than closing down his Facebook profile, Lynch began to use it to mock his pursuers, sharing images of him enjoying the “free life” and hurling profanity-laced insults at police. As news of Lynch’s Facebook exploits began spreading, the fugitive turned into an unlikely web celebrity. At last count, Lynch’s Facebook fan page has over 26,000 fans from all over the world. While a number of comments on the page express disgust for Lynch and his arrogant taunts, a surprisingly large number of Facebook users are openly rooting for him.

It shouldn’t be surprising that, despite his lawless behavior, Lynch has caught the attention of the public. For some reason, as a culture, we have always romanticized individuals who fight against authority, even if they most often happen to be criminals. The key to Lynch’s popularity, however, lies in the transformative power of social media. In the days of old media, Lynch would have been a mugshot on the evening news and nothing more. Thanks to social networking tools, like Facebook, he is able to reach out directly to the public and augment how the world perceives him. In a bizarre and somewhat disturbing way, Craig Lynch is engaging in a very successful form of personal branding.

Facebook has already said that it will help law enforcement in tracking Lynch down, which is in keeping with the site’s terms and conditions (“We may disclose information pursuant to subpoenas, court orders, or other requests (including criminal and civil matters) if we have a good faith belief that the response is required by law.”) However, as explained in this article at Media Bistro, Facebook representatives have been asked to not reveal how they are involved in the investigation.

At some point soon, I would imagine Lynch will be caught. I just find it hard to beleive that he won’t slip into some kind of pattern that police will be able to detect. That being said, while I abhor Lynch’s actions, it is pretty amazing that he hasn’t been captured yet. It would seem that, thus far, he has figured out how to to lead a public life on Facebook without interrupting his private life.

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“You better watch out, you better not cry.

You better not pout, I’m telling you why.

Santa Claus is coming to town.”

Before I get started with this post, I just want to say that I love Christmas. I love being able to spend time with family, I love giving and receiving presents, and I love all of the cultural aspects of Christmas too (Santa Claus, Rudolph, Frosty the Snowman, etc.) Still, when you look back on some Christmas traditions, it really makes you scratch your head.

Think about it. When we were kids, we were told that an old man named Santa Claus, who lived with elves and reindeer thousands of miles away in the North Pole, was silently passing judgment on our behavior, deciding whether or not we deserved to open toys on Christmas morning. What’s more, there was no hiding from Ol’ Saint Nick, because he could see us while we were sleeping and he knew when we were awake. Talk about an invasion of privacy. It’s a good thing most kids aren’t naturally neurotic, or we’d never have been able to sleep.

Anyway, while I was wondering about Santa Claus and his omniscient gaze, I started thinking about Google. Is there a closer proximation of Santa Claus in the real world than Google? For the first time in the history of civilization, practically all of the world’s collected knowledge is at the touch of our fingertips. From Google, you can find out not just whether someone’s been naughty or nice, but where they live, where they work, what they like, what they hate, how old they are, how much money they make, and much more. If Santa did exist, he wouldn’t carry a long list of paper, he’d just bring a laptop with a wireless internet card (wi-fi gets a little spotty north of Greenland).

The truth is that, thanks to the web, everyone can wield the power of Santa Claus, and not just at Christmas time either. Whether it’s a recruiting manager dismissing a job candidate over a nasty blog comment, or a college admissions officer rejecting an applicant because of an unprofessional Facebook page, we’ve seen the story a thousand times over. It’s about time we realized that how we act online is as important as how we act in real life, if not more so. In the digital age, proactive online reputation management is the surest way to personal and professional success. And for those who ignore it? Well, they’ll be having a Blue Christmas indeed.

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Since unveiling its new and “improved” privacy controls, Facebook has drawn a lot of criticism. By far, the biggest complaint lodged against the company is that, under the guise of offering users more protection, Facebook actually exposed user information by defaulting privacy settings to public sharing. Because of this, many users accidentally shared pictures, links, and wall posts that would have otherwise been kept among their Facebook friends. Even Facebook CEO Mark Zuckerberg seemed taken by surprise with the new default settings, accidentally allowing his private albums to be exposed to the world. (Zuckerberg has since claimed that he opened up the photo albums on purpose, which begs the question, why are they still not publicly available?)

In any case, now that Facebook has worked out the majority of the kinks in their privacy controls (though not all), we thought it would be a good time to walk users through the process of protecting their Facebook profile from the world. Using my own personal Facebook account as an example, check below to learn how to make sure your Facebook profile is seen only by the people whom you want to see it.

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Step 1: Find Your Privacy Settings

The first step in adjusting your privacy settings is to find them. Luckily, this part of Facebook hasn’t changed. When you log into your account, go to the upper right-hand corner of your profile and hover on the settings tab. A list of options will drop down, including account settings, privacy settings, and application settings. Click on privacy settings.

Step 2: Learning What Does What

From this part of your account, you will be able to control who can see your profile (Search), whether or not they can contact you (Contact Information), what they can see in your profile (Profile Information), and how much of your information is exposed to Facebook applications (Applications and Websites). You can also manage your Block List, which allows you to cut all communications with someone on Facebook.

Step 3: Limit Your Profile Information

From the previous page, click on “Profile Information.” Now, you should be seeing a page that looks like the one below. From here, you can adjust who can see certain elements of your profile with a very high level of control. As you can see from my settings, all of my profile information is only accessible to my friends. For maximum privacy, we recommend using this option.

However, as we all know, there are friends and then there are “friends.” Do you really want to share the same information with your college buddies as you do with your boss? If there is someone in your Facebook network whom you don’t think should see your personal info, scroll over to the drop-down menu and select the “custom” option. Using the custom option, you can select specific friends to hide information from.

Step 4: Adjust Who Can Find You

From a business perspective, I understand why Facebook defaulted user settings to be more public. Despite the fact that it has 350 million users, it’s been difficult for Facebook to effectively monetize its website because so much of it is closed off from Google and other search engines. In order to compete with hard-charging public social networking sites like Twitter, Facebook needs to have more information accessible for indexing (and consequently for advertising).

Of course, Facebook’s business strategies don’t mean squat to the good majority of Facebook users, which is why so many people were upset when they saw that some of their information was now accessible to everyone. Luckily, Facebook has made it easy to undo this gross oversight. From your main privacy settings, click on “Search.” From here you will see this screen.

If the box marked allow indexing is selected, click on it to unselect it. Conversely, if you want a limited version of your profile to be accessible in Google, you can click the allow indexing box, but you should make sure that everything you don’t want seen is set to “Friends Only.”

Step 5: Adjust Who Can Contact You

Facebook is great for connecting with friends and family, but that doesn’t mean you want everyone to know how to stay in touch with you. To adjust your contact settings, return to the main privacy settings page and choose “Contact Information.” From here, you will see a screen like the one below.

As you can see, this page allows you to control who can add you as a friend or send you a message. If you’re using Facebook for business networking, it is probably okay to leave this option open to everyone. This way, if someone sees your limited profile via a friend’s profile, they can ask you for more information. At that point, you can make an informed decision about whether to add them as a friend. If you choose to de-index your profile from Google search results, the only way someone will be able to find your profile is through a mutual friend anyway.

Step 6: Find Out What You’ve Shared With Your Applications

Without a doubt, the weakest point of Facebook security is third-party applications. As demonstrated yesterday by the hacking of RockYou, companies that develop third-party applications for the major social networks are not infallible to attack. Despite this fact, however, many Facebook users fail to comprehend how much information they allow companies to take when they install a seemingly harmless game like Mafia Wars of Farmville.

To learn how much information you might be sharing with third-party companies, visit the Applications and Websites section of your privacy controls. Initially, you will see a screen like the one below.

From here, click the learn more tab next to “What you share.” The next screen will look like this. It is essentially an explanation of how applications work on Facebook and the kind of information that they may request. At the bottom of the screen, you can click a link to see what applications you have authorized.

I don’t use Facebook to play games or take quizzes, so my applications list is pretty bare (as you can see below). Nevertheless, I checked through all of my settings anyway to adjust them.

Surprisingly, when I opened up my links application I saw that the default setting was everyone. I don’t know if it’s always been that way or if it was defaulted by the Facebook changeover (I’m assuming the latter), but I made a quick adjustment and now (as you can see from the picture), my default setting for sharing links is “Friends Only.”

Step 7: Control What Your Friends Can Share About You

Finally, we’ve reached the last piece of the puzzle. When it comes to applications, you don’t just have to worry about what you’re sharing with third-parties, but what your friends are sharing with third-parties about you. If you go back to the “Applications and Websites” page (seen below), you will see the option “What your friend can share about you.” Click on edit settings.

You should now be looking at a screen like this with a whole bunch of boxes. If any of the boxes are checked, that means a third-party application downloaded by your friend (but not by you) will be able to see that part of your profile. We recommend unchecking all of these boxes to limit third-party data mining.

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If you have any questions about these privacy settings, or would like more information about how you can control your private information on the web, please do not hesitate to contact us.

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.