From The Crypt: LivingSocial’s Lessons For ‘The Experience Economy’

Deal-a-day pioneer LivingSocial is being sold to Groupon for a “non material” price. LivingSocial’s eventual failure had been widely anticipated. Amazon, its largest backer, had written off its $175 Million investment in 2013.

The company, once valued at more than $2 billion, had suffered hundreds of millions of dollars of losses due to the high cost of local sales and an inability to prove sustaining value to businesses. Later on, it wasn’t able to reinvent itself as a provider of local targeted marketing for national brands.

For Groupon, there isn’t a lot of water that can be squeezed from the stone here. But Groupon will see some direct benefits from its take over. Namely, an estimated $15 Million per quarter in non-overlapped revenues, and good customer lists for deals, travel and marketplaces.

What else? Groupon has also been looking at getting into Online-to-Offline (O2O) card linked offers for restaurants. Living Social’s Restaurant Plus program for in restaurant dining, which uses Empyr, could complement Groupon’s strategic push into restaurant delivery and other marketing services.

Here’s the bigger picture: Experiences, not goods, represent the big bang for marketers in 2016-17. Groupon (and Living Social) have a great deal of experience curating experience deals. Living Social “experiences” –often sponsored by brands – have included everything from kayaking adventures to hockey festivals to Scotch tastings. They might be something to double down on.

The average value of a travel-related experience transaction is over $400, compared to $200 plus for an ad-based retail transaction. There is also a future angle: experiences are central to the use of virtual reality for marketing – as I saw this week in a Visa Labs demo at Money2020 in Las Vegas. The demo was a lot of fun and easy to explore locations. To make a purchase, all you had to do was point your headset to an onscreen box and complete the transaction.

Groupon and LivingSocial, together, have written some of the early chapters in experience-marketing. They’ve set the mark for putting together exciting travel packages and events. Would a focus on experience marketing bring back some of the excitement in the space?

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Founder Tim O’Shaughnessy, by LivingSocial’s Elevator Door

One thought on “From The Crypt: LivingSocial’s Lessons For ‘The Experience Economy’

  1. Running a daily deal – no matter what site – should ALWAYS be based on creating an EXPERIENCE. I know first-hand. I ran a daily deal for my coffee & smoothie business. If I had run a “typical” deal (ex: $20 for $10) I would have been broke – and I already was – $500K in debt. Instead I repositioned a commodity into an experience – instead of a “smoothie” I sold a “vacation in a cup!” It transformed my business, taking me from $500K in debt to a 7-figure profitable business. So glad to see that the daily deal sites now “get” it – it’s all about experiences!

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