LivingSocial cuts off daily deal aggregators

Are sites like Yipit becoming too popular for LivingSocial's comfort?

LivingSocial isn’t feeling so social today.  As of Friday, the company is cutting off all daily deal aggregators from its affiliate program, which means that LivingSocial deals will no longer appear among the deals aggregated by Yipit, Dealsurf, and others. The San Francisco Chronicle broke the news late Thursday.

LivingSocial could not be reached for comment, but the email reportedly sent out to aggregators is as follows:

Hello all,

As of Friday, January 7th, 2011, the LivingSocial Affiliate program will discontinue its relationship with all daily deal aggregators (any website that features a collection of daily deals as its primary content). LivingSocial has determined that your site falls into this category, meaning you will lose access to affiliates.livingsocial.com at the aforementioned time; all remaining payments will be processed in mid-February.

If you feel that your site has been inappropriately labeled, feel free to reply to this email. Otherwise, please respect that this decision is final.

It sounds nice enough.  But why the hatin’?  Could it be that the aggregators’ business models have become so efficient and lucrative that LivingSocial now considers them competitors?  One source at a daily deal aggregator told the San Francisco Chronicle that they were informed by LivingSocial that it didn’t want its money reinvested in the same keywords that LivingSocial advertises against.

What seems more likely is that the daily deals industry is evolving towards a more open, aggregated, multi-deal platform and LivingSocial is digging in its heels. 

Groupon clones are popping up by the barrel-full and with such an easily duplicable model, more than enough merchants looking to get in on the action, and even more consumers looking for deals, individual sites like Groupon and LivingSocial are going to fade into the crowd.  Consumers want more than one deal at a time, in more than one category, and merchants don’t want to wait months to get their businesses featured. 

Groupon has been tracking the situation and has made efforts to adapt accordingly, such as by offering deal personalization over the summer.  Currently, the company is working on its new feature called Groupon Stores, which will allow merchants to post their own deals in a deal feed whenever they want and as often as they want.

But there’s something so simplistic and alluring about Yipit.   There’s no clutter, just deals that you can filter by category, price range, etc.  I did all of my holiday shopping on Yipit and didn’t even end up purchasing any deals offered by LivingSocial or Groupon.  I think what makes Yipit so cool is that it doesn’t try to claim the space or take ownership of the deals—the platform is open, which is what projects like Tippr’s Open Deal Format and DealOn’s OfferEx are working towards.

On Thursday, LivingSocial announced its new CFO, former Wal-Mart executive John Bax. In an interview with TheStreet, LivingSocial CEO Tim O'Shaughnessy said that the company believes it will double its market by next year.

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