Google, Amazon Play Catch-Up in Group Buying: Analysis and Reactions from BuyWithMe, Tippr

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deal [sector] is incredibly strategic to the future of local,” says Martin Tobias, founder and CEO of Seattle-based Tippr, which makes a group-buying software platform for publishers and websites, as well as running its own branded daily deals site. “This is the next generation of marketing—basically no-cost, no-risk marketing.” (As opposed to advertising on local TV, radio, or print publications.)

“Google is looking at this as the next generation of ads,” Tobias says. “Amazon looks at it as another inventory item for e-commerce.” (One reason why Amazon might want to form a partnership with LivingSocial instead of acquiring it is to avoid paying taxes on its operations in different states, he adds.)

Tippr, for its part, is positioning itself as complementary to the big consumer brands in group buying. The company, which started in early 2010, wants to own the technology platform that Web publishers and media sites will use to install their own daily deals widgets or sites and connect local advertisers with consumers. The idea is that this could lead to a greater reach than any one consumer brand. Tippr now has about 50 employees around the U.S. (40 in Seattle), and last month its revenues were split roughly 50-50 between its own branded deals site and its platform for publishers, Tobias says. (That’s up from a 95-5 split in favor of the branded site just a few months ago.)

Although it seems like anyone could start one of these deals sites, Tobias sees intellectual property as key to the sector’s future. He has been touting Tippr’s patents for a year now, and last week the startup announced it is offering patent protection separately from its software. “Anyone providing group buying is going to need patent protection,” he says. “Everybody should be worried.” What’s more, he thinks there is room for only two national brands in each city, and one tech platform—Tippr, of course.

Andrew Moss would beg to differ. The founder of BuyWithMe, a New York-based company that started in Boston last year, has been busy building his own group-buying consumer brand—and he thinks there’s plenty of room to grow.

“It’s a very large market, it’s not winner take all,” says Moss, who has a strategic … Next Page »

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Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and Editor of Xconomy Boston. E-mail him at gthuang [at] xconomy.com. Follow @gthuang

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