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Summary:

Groupon says it expects to end the year with as many as 25 million subscribers and $400 million in sales. Chief operating officer Rob Solomon also says the company’s promotional campaign for The Gap was so successful it has been fielding calls from other national advertisers.

Social Networks For 2009 That Web Workers Need To Pay Attention To

Groupon, the web-powered group-buying service, says it’s been growing at an exponential rate over the past six months, and expects to end the year with as many as 25 million subscribers and $400 million in gross sales. Groupon COO Rob Solomon also told Advertising Age that the company’s recent promotional campaign for The Gap was so successful that he’s been fielding calls from other national advertisers clamoring to do similar offerings. “We proved that we can drive traffic in spades,” he told the advertising magazine.

The Gap-related Groupon offer let subscribers buy a $50 credit at the store for $25. Solomon said the offer sold 441,000 units for more than $11 million (the company splits the profit on such deals equally with retailers), and Groupon expects that subscribers who sign up for the group-buying offer will spend more than just $50 in the store, meaning The Gap could see as much as $30 million in sales as a result of the promotion. Groupon says redemption rates for its buys are usually over 80 percent.

Solomon also said that in the last five months, the company has ballooned from 3 million subscribers to more than 15 million, and the number of staff working for the service has increased by more than 300 percent to 1,500. Groupon is now available in 29 countries: growth that has come in part via acquisitions, including the recent purchase of competitors in Japan and Russia. Despite its growth, the company — which earlier this year raised a financing round of $135 from Russia’s Digital Sky Technologies and Battery Ventures — says it has no plans to go public any time soon.

While Groupon is growing quickly, so is the competition: LivingSocial, seen as the No. 2 group-buying startup, raised multiple financing rounds earlier this year, and Liz looked at some of the other competitors that have been popping up in various cities since Groupon started to become a powerhouse. Meanwhile, Yelp today announced that it’s started offering local deals on products and services to users of the recommendation service, starting with a series of deals in San Diego.

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  1. Well, I just signed up for this, and so far I don’t see anything that interests me. I hope I do though, cause I think my neighborhood could just be lame, haha.

    Sounds promising, nonetheless.

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  2. As players keep growing in group-buying space we see an urgent need for a daily-deal-aggregation service, so have launched Urban Spoils (www.urbanspoils.com) for aggregating deals from Groupon, LivingSocial, Tippr, BuyWithMe and others. The service is currently available in 79 U.S. cities – single daily email from Urban Spoils (www.urbanspoils.com) can provide you deals across tens of partners for a city of your choice.

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    1. How are you different from Yipit? Also, do you have relationships with the deal providers or are you planning to make money through ads?

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      1. Great questions, Liz! You must have been following this emerging industry very closely.

        Urban Spoils’ primary differentiator from Yipit is its highly scalable aggregation technology – we have reached 79 U.S. cities within two months of launch and Yipit’s reach currently stands at 9.

        Our presentation and user experience is highly inspiring; after all, social buying is all about inspiring people to try new fun things in their local communities, so there is no place for technical complexities.

        Our repeat customers have provided us strong business validation – just after launch we are attracting over 20,000 unique visitors monthly. Mashable has given us two thumbs up at http://mashable.com/2010/07/29/urban-spoils.

        As far as revenue generation goes, we’ve established relationships with our partners for revenue sharing.

        Advertisements? No, we don’t have any plans yet to make money by advertising since it has an adverse effect on user experience which we value very highly at Urban Spoils.

        Go spoil yourself…

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    2. Thumbs up Urban Spoils…I’m a big fan of both Groupon and Living Social. Just enrolled to try you guys out as well.
      Cheers!!!!

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  3. [...] Groupon’s foray into national brand deals was a home run, earning the company over $11 million in gross revenue with its Gap promotion. The company also acquired competitor sites in Japan and Russia. [GigaOm] [...]

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  4. This company, more than Facebook, is a serious threat to Foursquare. Their power in local advertising is massive compared to Foursquare. Just look at the dueling Gap promo.

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  5. [...] consumers may be the patrons of local bars and restaurants; they may be national GAP shoppers or they may be random consumers who have opted-in to a mobile game/tool/utility that are [...]

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  6. Aggregation has been proven time and again as a consumer need in every vertical – search is aggregation of information ala Google and others, Kayak in travel, Indeed in jobs and the list goes on. It is an inherent part of the ecosystem.

    I completely believe that players like Urbanspoils will be successful and there is a strong market need for this, given the sheer fragmentation in social buying sites. Consistent user experience, personalization will be key.

    I checked out Urbanspoils – love the interface and especially love the fact that I dont have to visit 20 different sites or peruse through as many emails…..Rock on!

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  7. fascinating ====

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  8. I think other than LivingSocial, the main threat to Groupon are sites with large mailing lists. Yelp and newspapers now entering the daily deal market already have a very large following and can set up deals by themselves, or by partnering or buying the smaller players around.
    USA Todaily Deal?

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  9. [...] incentives of Groupon. While Groupn itself has shown how effective it can be in driving one-time sales for local businesses it does also have its drawbacks. Foursquare can help businesses foster the [...]

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  10. [...] one of the fastest-growing startups in decades, is valued at more than $1 billion, and expects to close the year with almost $500 million in revenue. This has gotten the attention of newspaper chains, which used to be the primary conduit [...]

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