Daily Deal Smackdown: Groupon and LivingSocial Trade Barbs, But Are Brands The Losers?

Daily Deal sites are among the fastest growing online vertical. Leaders like Groupon, LivingSocial and Gilt Groupe dominate a category that has attracted $1.6 billion of VC investment this year so far, according to the most recent 2011 Daily Deal Investment Index.

“Globally, there are more than 3,000 total daily deal companies, including more than 1,000 in China, more than 900 in Europe, and more than 600 in South America," according to dailydealmedia.com.

Groupon expects August U.S. sales to rise 12% over last month, with marketing expenses down 20% and declining, as the brand’s focus moves from subscriber acquisition to securing paid customers. Its CEO, Andrew Mason, recently addressed rumors surrounding an imminent IPO: “When I read some of the press this weekend, I realized a rational person could read this stuff and wrongly conclude that we’re in trouble. The irony is hopefully clear: We’ve never been stronger.”

Mason accused competitor LivingSocial.com of “buying gift certificates from national retailers and reselling them to users to give the appearance of a 50 percent off deal,” to which LivingSocial spokesman Brendan Lewis replied: “No Groupon executives have access to our internal revenue or financial numbers, and thus any claims made by such executives should be met with deep skepticism.”Continue reading...