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There’s been a lot of media coverage surrounding Groupon and other online discount sites recently and the majority of it has been bad. It’s amazing how a company has gone from being a global leader in local deals to what one might call a PR disaster.

I’ve sat in on brainstorms before where the idea of using Groupon for a client has been brought up, this was before all the bad publicity and at the time it was seen as a great tool to get your business in front of hundreds of thousands of people who otherwise would be none the wiser to the services you offer.

The thing with Groupon is it wasn’t very well thought out. Yes it’s a discount site and recession or not, we consumers love a good bargain. However, retailers only like to give away a bargain of the Groupon kind during tough times, making the business immediately unsustainable.

Once the recession passes, companies won’t want to use sites such as Groupon. With the site taking 50% of sales revenue the profit margin is so low, if not non-existent, that there’s no point.

There’s also the perception that going on Groupon can damage your brand. If you scour the deals, 95% of the time you won’t have heard of the salons offering ultrasonic-liposuction or the beauticians offering teeth whitening or the restaurants offering £30 of food for £7.

These small businesses will most likely be thinking that an online discount site sending out a mailer to the masses is a brilliant marketing tool for attracting hundreds of new customers who will hopefully turn into repeat customers.

What they don’t see is that as soon as you associate yourself with any type of discount scheme, to most people that says ‘we’re in trouble’, which can be extremely damaging to a business or brand.

If you’re not in trouble then why do you need to offer a heavy discount to get people through the door? And if your business is in trouble, why? Is quality of what you offer not very good?

Also, how will your usual, loyal customers feel when they see that they’re paying full price for a service that a new customer is only paying a fraction of the full price for? Its risky business managing the perception of the value of what you offer whilst also keeping your loyal customers happy and satisfied.

Small businesses need to recognise that there are a number of free tools that are already out there which could help build your brand without having to resort to mass mailer sites such as Groupon to try and get people talking about their business.

A good social media strategy can help you educate and excite the general public. You can also optimise loyal customers and brand ambassadors using tools such as Twitter, spreading the word and building your reputation far and wide.

Hopefully small businesses will wise up as discount website – related horror stories spread. It seems that as Groupon’s head of PR quit after just two months, so is everyone else.