When Amazon made its deal to invest $175 million in LivingSocial, it wasn’t entirely clear how Amazon played in the local deal space. Sure, Amazon has its own non-local deals. And it owns Dallas-based Woot, a product-based deals provider. Still, it wasn’t clear.
Today, we have a better idea how they play together. Amazon put a deal up with LivingSocial where users could pay $10 for $20 of anything from Amazon. Anything — such as a $139 Kindle, they suggested. If you get three friends to buy the deal via Facebook, Twitter or your blog, you get another free one.
The deal has 1,216,872 buyers as of 8:49 p.m., Pacific Time (including me.) What is unusual about the deal is that it is being treated as one giant promotion to join LivingSocial.
In fact, LS has paid Amazon full value for the $20 coupons, according to The New York Times. The 1.2 million coupons that have already been sold will cost about $12 million (although I bet there was some discount involved).
It is surely a different way to spend money on marketing than Groupon’s pregame Super Bowl ad. And it will cost a lot more. But it is getting a lot of attention, and puts the No. 2 player on the map. And it is a healthy way for Amazon to win back a little of its $175 million.
LivingSocial CEO Tim O’Shaughnessy is a featured speaker at ILM East in Boston, March 21-23, along with Gilt City CEO Nathan Richardson and many others.