If you can’t be a major destination site such as Groupon or LivingSocial, the deal exchange space appears to represent the largest revenue opportunity for deals companies. Exchanges, which take commissions from originating publishers for placing deals in additional publications, may prove to be even more important than the other major parts of the deals ecosystem — white-label technology and marketing support for deal sites, and deal aggregation.
Among the earliest to develop Exchange concepts was Chicago-based Local Offer Network, which also operates DealRadar, an aggregator site. LON is run by former Tribune Interactive VP Dan Hess. Launched in the first quarter of 2010, the LON Deal Engine™ aggregates more than 2,000 group buying offers daily from websites in 97 markets worldwide.
Today, the company announced a $1.5 million Series A round led by Illinois Ventures and Matthew Pritzker Co., which is run by the 29-year-old heir to the Hyatt Hotel fortune. The funds will be used to further accelerate the company’s network expansion, product enhancements, client service staff and new business development.
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The development of this part of the deal ecosystem is very predictable and makes sense. I could see a whole network of similar companies syndicating deals everywhere and on every platforms.
Indeed, Matt. And they’re popping up, with Tippr, Adility, and DealOn (recently acquired by ReachLocal) also in the game.
Peter: It will be interesting to see how deal exchanges evolve in relation to aggregation. They’re not direct hits, but seem to serve largely similar purposes (scaled distribution). Jim Moran at Yipit is also bullish on as-yet-unrealized opportunities in merchant and customer services in the “deal stack.”
Deal of the day seems to be the hottest advertising niche going right now.
It will be interesting to see where it grows and evolves from here.