From the IndustryPace archive. Originally published January 21, 2011. Revisited October 2026.

LivingSocial.com Overtakes Groupon? Is This Because of Questionable Adware?

LivingSocial had a monster week in January 2011. The record shows it came from an Amazon gift card, not adware, and it did not actually pass Groupon.

By Pesach Lattin

The original text of this post was lost when IndustryPace went dark. This page keeps the original headline and date, rebuilds the subject from the public record, and says what happened next.

In January 2011, LivingSocial had the kind of week that makes people suspicious. The question in this headline was whether its traffic surge was real.

What actually happened

Amazon had invested $175 million in LivingSocial in December 2010. The week of January 17, 2011, LivingSocial ran a one-day deal: a $20 Amazon gift card for $10. It sold about 1.38 million of them, roughly $13 million in a day, a company record.

Hitwise data that week showed LivingSocial traffic up about 80% and Groupon's down about 20%. Some outlets ran it as LivingSocial beating Groupon. The figures they cited did not support that: on Hitwise share of visits, LivingSocial drew a little over half of Groupon's traffic, not more.

And the adware?

We found no public reporting that LivingSocial's traffic gains came from adware or toolbars. The documented driver was the Amazon promotion. In 2011, asking the adware question about any traffic spike was a reasonable instinct, because a lot of traffic was manufactured that way. In this case, the record points to a half-price gift card.

How it aged

Badly, for both companies. Amazon disclosed in 2012 that LivingSocial lost $558 million in 2011 and took a $169 million charge on the investment. LivingSocial, once valued around $6 billion, was bought by Groupon in 2016 for an undisclosed price Groupon called not material. The daily-deal war was a lesson the ad business keeps relearning: buying traffic is not the same as building a business, and a discount is the most expensive ad there is.

This page rebuilds a January 2011 IndustryPace post whose original text is not available. Facts come from Fortune, ClickZ and SmartCompany (January and February 2011), and Amazon's later disclosures as reported. No evidence was found that LivingSocial's traffic came from adware; the page says so.