Groupon and LivingSocial ‘Sit as Gorillas Among Ants’

The interest in these two social shopping platforms is obviously led by the tech boom created by Facebook, LinkedIn, Zynga, Twitter and others indicating their interest in going public. What separates Groupon and LivingSocial from the other daily deal markers is their aggressive advertising for new customers according to comScore. The theory is grab the new market now before it is all gobbled up by competitors.

Groupon and LivingSocial are predominately the leaders in the daily deal market according to comScore. In 2010, Groupon was reportedly worth $1.5 billion, and months later turned down a $6 billion buyout from Google. With the recent IPO filing with SEC, the social shopping platform value could increase up to $20 billion. LivingSocial appears to be in the same light with its valuation doubling as high as $3 billion and gaining Amazon’s support as a strategic investor.

The interest in these two social shopping platforms is obviously led by the tech boom created by Facebook, LinkedIn, Zynga, Twitter and others indicating their interest in going public. What separates Groupon and LivingSocial from the other daily deal markers is their aggressive advertising for new customers according to comScore. The theory is grab the new market now before it is all gobbled up by competitors.

Both Groupon and LivingSocial have marked out their territories. LivingSocial applies the bulk of its advertising (73%) on display ads at the top five U.S. properties, namely news and email sections. It then spreads the remaining 27% throughout the web. Whereas Groupon’s approach to the market is reverse only delivering 31% to the biggest sites and the remaining 69% spread out with other publishers. The geographic profile is also an important factor to their user base. LivingSocial is prominently in the East with headquarters in Washington, D.C. while Groupon concentrates of the Midwest pushing towards West with headquarters in Chicago.

For practical reasons there are hundreds of regional and national competitors on the internet. They are all trying to get a piece of the action. Sure, there is plenty of action for the bottom feeders while Groupon and LivingSocial remain at the top accounting for “90% of all visits among all group buying websites” according to comScore, “Groupon and LivingSocial sit as gorillas among ants.”

Of course, there is room at the top for a knowledgeable competitor willing to rise up to the top tier and create a hardy threesome. Whoever that may be depends on their ability to forecast the long term value of daily deal making based on customer growth and loyalty.