Doug Miller, senior vice president of new business initiatives, characterized the newfound emphasis on events as part of an ongoing shift that, though largely void of discounts, doesn’t depart from the firm’s mission of connecting people with experiences in their community.
In 2011, the company paid big bucks to renovate a historical building at 918 F St. NW where it now hosts cooking lessons, art classes, music performances, celebrity chef dinners and other small-scale gatherings.
But LivingSocial has more recently introduced events where attendees number in the thousands, such as a glow-in-the-dark 5K run and dance party, and a day-long beer festival. Those activities, along with a Japanese-inspired evening of sake, sumo and sushi, are currently traveling to about 10 cities around the country.
LivingSocial sold 561,469 vouchers during the first quarter for adventures and events in the United States, including its own events and those created by others. That’s up from the 59,071 it sold in the first quarter of 2012.
The company also announced plans for its largest event to date earlier this month: A New York concert featuring Aerosmith and Joan Jett — as well as food, beer and wine.
“LivingSocial members are in search of experiences as much as they’re in search of value or deals,” Miller said. “When I talk to members and they tell me stories about LivingSocial, what they speak of is the trip they took or the scuba lessons they’re finally about to take late in life.”
And LivingSocial’s legacy business provides one advantage over other event promoters, Miller said: A roster of more than 70 million subscribers who initially signed up to receive daily e-mails for price cuts at local merchants.
The company has tapped that same audience to promote travel getaways, food delivery and household products. Now, it will stuff their inboxes with information about upcoming events and ticket sales.
“Connecting that audience to this production arm is something that very few companies in the world can do,” Miller said. “We’re using our capabilities to market our own events, and it’s very different than [what] any other event producer can do.”
In that vein, Miller said most of the events that LivingSocial promotes to subscribers will be those created by third parties. Sometimes tickets will be discounted, but more often they’ll be part of a special promotion, such as a voucher that includes a concert ticket, program and T-shirt.
“There is a huge space of third-party producers out there who are still looking for new ways to reach local audiences,” Miller said.
In many ways, the events business could help separate LivingSocial from its main rival, Chicago-based Groupon, and an identity it has wanted to shed as a site for bargain-seekers who prefer cost savings to unique experiences.
“They’ve really seen a very different business model that allows them to home in on a brand identity of fun, interested people who are willing to spend money and aren’t driven mostly by discounts,” said Peter Krasilovsky, an analyst at BIA/Kelsey in Chantilly.
“I do think this is what they’re trying to be known for even if other parts of the business still bring in more money,” Krasilovsky added.
Other analysts aren’t so bullish. After all, the industry is already congested with local and national companies whose core business is to host or promote events.
“I don’t know what they will be able to bring to the table that other events promotion companies currently don’t other than the fact that they do have a wide subscriber base,” said Kevin Culbert, senior analyst at IBISWorld.
“If they are successful in it, Groupon is going to be able to move directly into that space as well,” Culbert added.
There’s also the nagging reality that LivingSocial will need to go public or be acquired for a sizeable sum if its financial backers hope to see a return on their investment, which has been reported to range from more than $800 million to more than $900 million.
The events and promotion business has a handful of heavyhitters — Live Nation Worldwide holds the largest market share, according to IBIS World — but it’s unclear whether the business can propel LivingSocial into the mammoth firm executives originally envisioned.
“I think it could be very profitable, but I’m not sure how it fits against the debt that LivingSocial has incurred and whether other parts of their business are going to reinforced by this,” Krasilovsky said.