August 2, 2011 1:33 pm

LivingSocial steps up Asian expansion

LivingSocial, the world’s second biggest group discount website by customers after Groupon, has agreed to buy Ticket Monster, a South Korean equivalent site, to strengthen its presence in Asia.

It is the latest acquisition by the US company, which has this year announced three deals to acquire coupon sellers in south-east Asia and the Middle East.

“Ticket Monster is one of Korea’s most recognised and trusted brands in the nascent daily deal industry and we are excited to bring them into the LivingSocial family,” said Tim O’Shaughnessy, chief executive of LivingSocial. The deal will be made through a stock swap and is subject to regulatory approval.

Ticket Monster, which launched in May last year, has about 2m registered users and a market share of about 45 per cent in the country’s increasingly crowded group-buying market: there are more than 500 players and the market is growing rapidly because of the country’s high broadband penetration rates. Competition is expected to intensify, with Groupon recently launching services in the country.

Ticket Monster’s success has underlined how the appeal of online bargain hunting extends to fast-growing Asian countries and is not restricted to weak western economies where cash-strapped consumers are eager to get more for less.”

Both LivingSocial and Groupon charge money for coupons that offer steep discounts for shops and services, often for small and midsized businesses.

The phenomenon of online group-buying has sparked a global frenzy. LivingSocial is seeking to raise about $1bn this year in an initial public offering, after Groupon filed its own IPO this year to raise about $750m.

Facebook and Google have launched their own offerings, as have a range of start-ups such as Foursquare and diversifying media and telecoms companies including Telefónica’s O2 and magazine publishers Time Out and Gannett. Twitter is also hoping marketers will use its “promoted tweets” ads to sell leftover perishable stock or unsold tickets.

The daily deal craze reflects not only consumers’ appetite for a bargain in difficult times but a new push by internet companies to tap local advertisers and small businesses for marketing dollars.

The acquisition of Ticket Monster will bring the total number of countries in which LivingSocial operates to 23. The US company already operates in Asian countries such as the Philippines, Thailand and Indonesia.

Groupon, meanwhile, entered China in February. In the world’s largest internet market – with 485m online users according to government statistics – the group-buying business has attracted a flood of imitators.

According to the aggregator site Tuan 800, which collects online coupon deals from as many group-buying sites as possible to offer to users, the number of coupon sites in China increased by 168 in June alone, reaching 4,678. The monthly transaction volume on the country’s 17 largest sites in the 40 largest cities hit Rmb762m ($119m) in June, up from Rmb380m in January.

This crowded marketplace has triggered cut-throat competition that has also been a challenge for Groupon. Under a joint venture with Tencent, the internet company that operates the world’s largest instant messaging service and some of China’s most successful social networking products, Groupon is building a local coupon site business. But Ouyang Yun, chief executive, has said that margins are lower than in the US.

“Joining LivingSocial will give Ticket Monster the resources, scale and reach to bring our business to the next level across the region,” said Daniel Shin, chief executive of the privately held Korean company. The value of the acquisition was not disclosed but analysts estimated it at about Won300bn ($286m).

Ticket Monster’s 600 employees will be retained by LivingSocial.

Additional reporting by Tim Bradshaw, Kathrin Hille and Barney Jopson

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