Groupon and similar companies take biggest stake as possible
Local advertising grows but costs continue to rise
Daily deals growth of internet advertising offers a double edged sword
Tuesday, 11th October 2011 by Steve Swallow
The daily deals industry has sparked an area of the online advertising market into life as companies like Groupon look to take as big a stake of the market from their rivals as possible.
Local sectors of the managed pay per click have been boosted by companies such as Groupon. This is because prior to the invention of sites such as this, local search adverts which included towns and cities references weren’t in demand. Now such companies are paying handsomely to track down people interested in neighbourhood goods and services.
Dale Carr, chief executive of online and mobile advertising network Lead Bolt, is quoted by Reuters as saying: “Living Social and Groupon have introduced a new element to local search. Previously this was dormant inventory that would have just sat there and anyone could have bought it cheaply.”
There are fears however that this new activity is increasing costs for any other local advertisers wishing to take out their own ads. It could also spell trouble for the daily deal itself, with the raised cost of acquiring customers for the industry which may put a potential break on rapid growth of the sector.
Chris Wallace, digital marketing agency iCrossing, told Reuters that in his opinion Groupon is the most aggressive when it comes to advertising in this manner closely followed by Living Social and Google, which advertises its own Google offers.
Mr Wallace said: “Once a daily deals aggregator enters a market they’re unlikely to leave. The number of services they offer will likely increase and the number of search terms they bid on will increase.”
Recently, San Francisco Comprehensive Tours successfully sued Groupon in after claiming that the daily deal company had caused a surge in the cost of its paid search advertising.
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