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Amazon Local Leans on LivingSocial to Grow Ad Sales

  |  September 19, 2011   |  Comments

No. 2 deals player is selling Amazon Local, which now appears in 44 markets.

Amazon Local, the e-retail giant's recently launched daily deals initiative, apparently does not count the space's no. 2 player - LivingSocial - as a true competitor.

LivingSocial, which received $175 million in funding from Amazon last December, is selling the majority of the ads for Amazon Local - a platform that's been dramatically expanded in the last seven weeks and now appears in 44 markets.

LivingSocial's national sales force of 700 reps has been the primary driver of sales growth for Amazon Local, according to a source close to the situation. Deals are not repurposed for LivingSocial offers.

For instance, today in Minneapolis, one of the newer Amazon Local markets, the LivingSocial offer is $20-for-$10 for a family-styled Mexican restaurant. Meanwhile the Amazon Local offer for Minneapolis includes the copy, "Sold by LivingSocial", while offering a $30-for-$15 voucher at a yarn store. The yarn offer does not appear in the "Nearby Deals" section that includes four other deals on the LivingSocial landing page for the city. In other words, there is no crossover marketing between LivingSocial and Amazon Local deals, even though the former is selling nearly all of the ads.

So while they are clearly partners, they are also competing for consumer dollars in the space led by Groupon. ClickZ News asked LivingSocial spokesperson Andrew Weinstein on Monday about the unusual competitive circumstance.

"From our perspective, Amazon is one of our closest strategic partners," Weinstein said. "We are pleased with the relationship and looking forward to continuing to roll out their product across the country."

Amazon Local was launched on Aug. 2 in 14 markets before recently adding 30 new ones.

"It has been a gradual rollout, and you will see that continue," an Amazon Local spokesperson told ClickZ today. "Last Thursday, we added Philly, Dallas, and Las Vegas."

Meanwhile, Google continues to shows signs that it's serious about its own three-month-old deals platform, Google Offers. The company has purchased Germany's DailyDeal for as much as $200 million, according to a German-language newspaper based in Frankfurt.

According to a report jointly published last week by academics at Rice and Cornell, Google and Amazon's growing deals initiatives could be well played. The universities surveyed almost 1,000 U.S. online users, finding that consumers who tend to purchase the most daily deals continue to enjoy them. Just 13 percent of heavy daily-deal users agreed with the statement: "I buy daily deals less often than I used to." And only 8 percent concurred with the following notion: "I have lost interest in daily deals over time."

In addition, marketing research firm BAI/Kelsey recently stated that deals will grow to $4.2 billion in 2015 from $873 million in 2010.

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Christopher Heine

Christopher Heine was a senior writer for ClickZ through June 2012. He covered social media, sports/entertainment marketing, retail, and more. Heine's work has also appeared via Mashable, Brandweek, DM News, MarketingSherpa, and other tech- and ad-centric publications. USA Today, Bloomberg Radio, and The Los Angeles Times have cited him as an expert journalist.

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