LivingSocial CEO: Our Business Isn’t ‘Daily Deals,’ It’s Ad Dollars

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Tim O'ShaugnessyLivingSocial CEO Tim O’Shaughnessy knows his company is dramatically shifting a lot of its focus away from the daily deals space and he’s fine with that.

“We realized with the asset base that we had that we should be able to do other things and leverage it into new areas,” he said during a conversation with Street Fight CEO Laura Rich at the 2013 Street Fight Summit on Thursday. “I think that’s where we’ve been spending a lot of time focusing. How do we take the hundreds of thousands of merchants that we work with, the tens of millions of customers that we have, this big salesforce, and a technology team and figure out new ways to get customers through the doors of merchants. That’s really what our business is about. People think its about daily deals, but it’s advertising dollars.”

The plan includes forays into many different areas including an increasing focus on automation. The executive said that his company needs to make between $500 and $600 in profit to cover the cost of a sale by a salesperson, but the economics don’t work out for some SMBs. Enter automation.

“There are some merchants out there who might only want a handful of customers a month,” he said. “We need to build automated tools and get them on the platform because the business model doesn’t work if you need a salesperson.”

LivingSocial is also looking to take advantage of the opportunities presented by sites like Facebook to grow: “Facebook initially was the reason that we and others in the space got big,” he said. “You could put a dollar into Facebook’s advertising platform and get two dollars back from those users you signed up in a pretty short time. That really drove a lot of the expansion.”

The company will continue to focus on social marketing networks to drive users. O’Shaughnessy believes similar type of inefficiencies can be located and exploited.

“I think we look at where are people,” he said. “Pinterest has achieved enough scale that you have to pay attention to how you interact with them. How do you start to get some of those eyeballs to do things you want them to do?”

Furthermore, he said, the death of daily deals has been exaggerated.

“The business is pretty big,” he said. “I think that we thought it would be a little bit bigger than it was, but that doesn’t mean we have changed our perspective on it. That doesn’t mean that it can’t be a profitable business. … [Daily deals are] a very, very powerful marketing tool, but they shouldn’t be our only marketing tool.”

The next step for LivingSocial is continuing to grow and find new avenues of business. It’s all about battling the competitors. O’Shaughnessy knows his targets.

“Your competitors are those who have the dollars that you want. There’s a little of that from Google, but I think that in the local advertising space, you look at Yelps, but you also look at TV broadcasters, radio broadcasters, and the yellow pages. There’s still billions and billions and billions of annualized revenue in each of those categories. And that’s where we view our competition. We want to build products to steal those dollars,” he said.

The company and the executive have taken their blows for sure, but he’s looking forward to the future: “In my mind, it’s more of the fun time. You can make a business. People don’t have these massive expectations but you also don’t have this worry of ‘does this business exist?’ You can figure out how to grow up. We’re going to see a lot more long-term product strategy.”

Noah Davis is a senior editor at Street Fight.

For more coverage of Street Fight Summit, click here…