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Updated 02/08/2012 06:09 PM

Businesses discuss impact of advertising on social media sites

By: Iris St. Meran

Coupons and advertising have a new look. Many businesses and patrons are turning to their computers and the internet for deals. And social networking sites offering discounts on products and services are popping up. Our Iris St. Meran spoke with two businesses about the impact of this latest form of advertising.

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UNITED STATES -- TV and clipping coupons used to be the way to find deals. More recently, they're just a "click" away. Social network sites like Groupon bring the deals to your e-mail.

Back N Touch Wellness Center in Fayetteville has been around for about six years, offering chiropractic, massage, acupuncture and other services. This tech savvy form of advertisement has been a win for them.

Back N Touch Wellness Center Chiropractor Dr. Eli Guterman said, "We did a lot of outreach to our customer base. We have a lot of great clientele, so people refer a lot. A lot of patients and clients know what we do and are able to tell their friends and family, but to try and reach a new, young demographic. That's what Groupon was really fantastic for."

Restaurant Sweet Basil Thai House in Mattydale has only been around for a year. The manager, Stan Chen, got on Groupon, Living Social and similar sites to get the word out. He says it worked, but is not something to be used if you're looking for a profit.

Chen said, "Because, when people come in and use them, the business itself, for restaurants, you actually lose money when people come in using Groupon."

A business offers a percentage off a product or service via e-mail or an app. Once the deal is purchased, the advertising site takes their percentage, leaving less money for the business to take in.

Although it isn't the most profitable way, it's the easiest way to appeal to a broad audience.

"That's the fastest way to reach out to hundreds of people on their cell phones, on their email and most people prefer to be contacted that way now a days," said Chen.

After the deal is done, companies have to figure out not just how to get people in the door, but how to keep them coming through it. That could be through additional specials or even the old school of way of advertising: word of mouth.

Meanwhile, the financial news is mixed for Groupon, itself. The company reported that while revenue rose sharply in the fourth quarter, it still lost money. Revenue was at a little over $506 million, nearly triple the same period last year. But the company reported a loss of almost $43 million.

This was Groupon's first quarter as a publicly-traded company. Shares dropped ten percent in after-hours trading Wednesday as investors focused on the earnings loss rather than strong revenue.