I get regular emails from SolarCity's (SCTY.DL) IR and PR groups, and I'm a Groupon (GRPN 0.33%) subscriber as well. So when I got an email this morning that read, "SolarCity and Groupon offer first of its kind deal on solar power," I had to do a double-take. Was I awake yet? In all seriousness, it didn't really make a lot of sense at first. I expect Groupons to be half-off at the local Chinese buffet, or an 87% discount on an iPhone case.

But solar panels? 

In short, why in the heck is SolarCity running this promotion? Is it a smart decision, or should SolarCity investors take note, and think about an exit point? What does this say about Groupon? Will the next Groupon be for a new car? Let's take a closer look.


Source: Groupon website

What's the deal? 
The Groupon is worth a $400 discount, and costs $1. As of noon Eastern on May 28, more than 60 people had bought the Groupon, only a few hours after it was first announced. The Groupon is available for the next four and a half days, and must be used by August 27. Customers can only use one, but you can buy up to two more to give as gifts. In all, it's relatively typical of other Groupons, for those that aren't familiar with the service. 

Investing in marketing in the best way 
My initial reaction was, "this doesn't make much sense." But once I got beyond that, it's really a pretty brilliant move by SolarCity's marketing group. Think about it: SolarCity CEO Lyndon Rive made it very clear on the most recent earnings call that they were going to invest in marketing, and this is some of the best marketing you'll find. 

Essentially it's free, except for the $400 discount given to customers that buy, and commissions paid by SolarCity to Groupon when buyers purchase the Groupon. But that's just the tip of the iceberg. This is exactly the kind of marketing that goes viral. After all, this article is just more free publicity for SolarCity, and Groupon as well, right? Then maybe you'll share this article on Reddit or Facebook, or Tweet about it. SolarCity is paying probably less than it would cost to do a local radio spot in Los Angeles, and it's getting national media attention for it, and -- more importantly -- the kind of media that tech-savvy and more environmentally aware homeowners are likely to encounter. 

As P.T. Barnum supposedly said, "I don't care what they say about me, as long as they spell my name right." 

Groupon gets attention, too 
Groupon has really expanded its Groupon offerings over the past year, and is about much more than just the daily deal at your local pizzeria. Working with SolarCity on something that is a durable good -- SolarCity's contracts run as much as 20 years -- will bring as much attention to Groupon as it will to SolarCity. Groupon shares are down around 40% from late February, as the most recent earnings report showed a drop in profitability.

Investors are concerned that competition from peers like LivingSocial and search giant Google will continue to make it harder for Groupon to differentiate itself or offer a unique value versus the competition, and this will further erode the company's profitability. 

Final thoughts: smart marketing a sign of savvy leadership 
Even with growth targets that represent a near-doubling of the business in 2014, SolarCity isn't letting up on investing in further growth. Investors have their own fears about SolarCity's ability to generate profits. As solar prices fall in coming years, this could increase the number of cash buyers versus lease and PPA deals, which are an important part of SolarCity's business model. 

However, with only about 100,000 customers so far, and more than 40 million potential customers (business and residential) in the 15 states the company operates in today, there is a massive amount of opportunity out there. Savvy marketing like partnering with Groupon is a great way to get plenty of buzz about the company, and will expose potential customers to the company -- customers who might not otherwise have even considered going solar. 

It's these sort of savvy, "out-of-the-box" moves that set SolarCity apart from its competitors, and part of why I'm a shareholder. 

And by the way, another 30 or so have bought the Groupon while I was writing this article.