‘Boots on the Ground’ Strategy Drives Living Social Into 25 New Markets

Raising $44 million in funding since January certainly contributed to a recent growth spurt at Living Social. The Washington, D.C.-based company – which offers daily e-mailed discount packages through a group-buying platform – announced that it has expanded from 27 markets to 52. But marketing director Jon Carpenter suggested another big part of the growth has been a strategy that eschews Internet-born brands.

For a discounts-and-deals platform like Living Social, Carpenter explained, it’s paramount to have boots on the ground wherever the company does business. He said each of the new 25 markets have had at least two staffers establishing relationships with local restaurants, bars, spas, entertainment centers, and so on for the last several weeks.

“We made an early-on strategic decision that we wanted to have a physical local presence,” Carpenter said. “We think it’s really important when it comes to finding high-quality deals and finding the kind of attractions that only people who really live and breathe that city can really understand.”

He later added, “Every market is different and carries with it unique risks and opportunities. This is why [we’re] committed to hiring local experts on the ground in every market… If we operated as a centralized call center, we wouldn’t have nearly the market-to-market insight.”

Living Social’s market expansion includes its first foray into Canada with operations in two big cities: Toronto and Vancouver, B.C. Meanwhile the U.S. additions involve not only densely populated markets like Baltimore, Detroit, Las Vegas, Oakland, CA, Fort Lauderdale, FL, and Buffalo, NY but also mid-sized markets like Omaha, NE, Richmond, VA, Tulsa, OK, Jacksonville, FL, Cedar Rapids, IA, and Baton Rouge, LA.

Jake Maas, CFO and head of business development for the company, said mid-sized cities were ripe with dwellers looking for deals on activities and nightlife. “Collectively, there are a lot of people in these markets and many of them have been asking us to bring Living Social to their community,” Maas explained. “People in Omaha like trying new things in their city at a great value just as much as someone in New York or Los Angeles.”

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Carpenter said that while his company has a “very diverse audience,” it chiefly targets women 25 to 40 years old. For the new cities in play, his marketing team plans to build awareness through geo-targeted ads on Facebook, Yahoo, and Microsoft.

“Whenever the platform allows it, we geo-target,” Carpenter said. “For example, we geo-target for D.C.’s best deals or Baltimore’s best deals…based on IP or whatever they can give us.”

Paid search efforts on Google, Bing, and Yahoo have also been instrumental in Living Social’s past success and will be used to target the new cities, he said. “We have a bucket of keywords that we tend to go to. But in a lot of cases, display tends to be a bigger play for us.”

One of the more interesting display ad buys Living Social uses is on music service Pandora. There, Carpenter said the company purchases displays that accompany 15-second audio promotions playing between songs.

Additionally, a referral system has helped the company grow its e-mail list, Maas said. If a Living Social user gets three friends to buy a daily deal, he gets the same offer free-of-charge.

Carpenter commented, “That’s worked well, and we’ll continue to develop it as we move forward. It’s something people love once they are on the site…and share with their friends on Twitter or Facebook.”

While Living Social has a global audience of 85 million online consumers, the grand majority are not receiving e-mailed daily deals. Instead they are participating via the brand’s Facebook apps, such as “Pick Your Five” and “Visual Bookshelf.”

Meanwhile, from a wider angle, Living Social is the second-biggest collective-buying platform behind Groupon when it comes to traffic. Compete data shows that Groupon had almost 5 million unique visitors in May, while Living Social tallied 4 million. Other competition in the niche entails smaller-but-notable players such as Woot, Bloomspot, and Dealster.

Follow Christopher Heine on Twitter at @ChrisClickZ.

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