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The Humble Coupon Joins Social-Media Web

By Nancy Trejos
Washington Post Staff Writer
Tuesday, September 1, 2009

Katie Temme lost her job as a television producer recently, but that didn't keep her from buying herself a bouquet of flowers the other day.

She wouldn't have done it, however, had she not found a coupon through What's the Deal, a D.C.-based Web site that persuades merchants to offer discounts by guaranteeing a certain number of customers. Temme got $20 worth of flowers for just $10 at A Little Shop of Flowers in Adams Morgan.

"I lost my job a few months ago, so this is kind of up my alley," she said.

The recession has bred a new type of coupon: the group coupon. In recent months, several Web sites have launched in the District and nationwide giving customers discounts on restaurant meals, sporting events, spa treatments, golf outings -- pretty much any expenditure that many people give up during economic downturns. The catch is that the coupon only applies if a certain number of people use it.

Since launching a month ago, What's the Deal, which can be found at http://dc.sowhatsthedeal.com, has drawn 1,500 customers. Groupon, which started in Chicago in November and has spread to 13 cities, has 50,000 subscribers in the District alone. Yesterday, LivingSocial, the D.C. social media developer behind the Facebook application "Visual Bookshelf," announced that it is expanding its group coupon program to New York. The company launched a pilot program in the District a month ago and sold thousands of deals.

"I think it's really kind of a win-win all around," said Tim O'Shaughnessy, chief executive and co-founder of LivingSocial. "From our perspective it seems to be a real paradigm shift in the amount people are saving, and their behaviors and habits are shifting a bit. People are more cognizant in wanting to take part in a deal . . . Local merchants are thinking of how can we bring customers into the doors. We marry those two together."

Some coupon critics and financial advisers, however, caution against coupons.

"A consumer who is not discerning about these things can certainly buy an item he doesn't need," said Matthew Tilley, co-chairman of the Promotion Marketing Association's Coupon Council.

But, he said, prudent consumers could end up enjoying an "affordable luxury."

"It's kind of this natural progression of the Internet and being able to bring people together," said Rob Schutz, vice president of partnerships for What's the Deal.

LivingSocial and others like it take commissions from the merchants. But Bharet Malhotra, co-owner of restaurant Co Co Sala in downtown Washington, said he didn't mind that so much when he agreed to have LivingSocial offer customers $50 worth of food for $25. In just one day, about 100 people signed up. "People want to go out. They want to be somewhat selective and they're getting name brands," he said.

Coupon use in general has increased since the economy soured. But the growth in popularity of online coupons has been particularly significant, Tilley said. In the first half of 2009, he said, Internet coupon redemption grew 300 percent.

The online coupon companies have built followings through social networking sites Facebook and Twitter. The group coupon Web sites typically send subscribers e-mails about daily deals then advertise them on the networking sites.

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