The Download

New online coupon site adds twist of making targeted donations for sales

By Steven Overly
Monday, September 20, 2010

Joshua Hoffman and Harrison Miller knew consumers like to save money, but the District natives thought they should help save the world, too. That was the impetus behind their start-up, Deals for Deeds.

An online coupon site, Deals for Deeds serves up a new offer every day. On Thursday, it was a $20 coupon for a guided bike tour of Old Town Alexandria, a 50 percent discount. The site then allows the buyers to select what local charity should receive 5 percent of the sale.

The site is one of a array of coupon sites that are taking off, all seeking to replicate the success of pioneers such as Chicago-based Groupon and District-based LivingSocial.

Many of these newcomers are trying to appeal to niche audiences. Deals for Deeds thinks its wrinkle, adding in a contribution to charity, helps it attract a socially conscientious clientele that Hoffman said separates it from competitors.

"We knew if we try to offer the same services to the same businesses and same people, we'll never be able to compete with the LivingSocials," Hoffman said. "What we have tried to focus on is make social good part of the model and attract a different kind of user."

The vouchers seem to serve all the players: A business-hungry merchant offers a steep discount if enough customers agree in advance to use the deal. The merchant makes money. The customer saves money. And as the middleman, the Web site collects a fee.

Making the offers more relevant is where smaller shops hope to find a sweet spot in the market.

Bethesda's Certifikid partners specifically with merchants that appeal to parents, such as maternity boutiques, party vendors or music instructors. Creator Jamie Ratner, formerly of law firm Williams & Connolly, devised the idea from her own experience.

With children ages 1 and 3, Ratner said coupons to fancy restaurants or luxury spas just weren't practical. Yet families with kids are just as keen for bargains online.

"It's such a hot field right now, everyday new things are popping up, and I think it's actually changing the world and how people are going about doing their activities," she said.

Ratner formalizes a partnership Monday (Sept. 20) with Washington Parent magazine, further entrenching herself in the local market. But there's always a new competitor right around the corner. Indeed, LivingSocial has launched its own family-oriented deals.

Jake Maas, LivingSocial's chief financial officer and head of business development, said the company also decided earlier this month to try more localized deals in Washington and New York. Users can now subscribe to bargains in Montgomery County, Northern Virginia or the District, and the average number of coupons purchased per user has since climbed 44 percent, the company said.

"It's really just a question of what's the right formula," Maas said. "There is room to go even more hyper-local than what we've done. But at the same time, there are deals that people are willing to travel greater distances for, so there is a balance to be struck."

The company, which enjoys financial backing from Vienna's Grotech Ventures and former AOL co-founder Steve Case, moved into 25 more markets last week, bringing its total footprint to 89.

But even as LivingSocial looks to cater to niche audiences, Maas said densely populated areas that are ripe with retail, restaurants and consumer services can support several coupon purveyors.

"We believe the idea of local, performance-driven marketing [is] a really big concept, and there is probably room for lots of players to participate in the space in various niches and various forms," he said.

GrubLife, a New York start-up, builds coupon networks around existing communities at large universities with active sports programs. It recently unveiled a site aimed at the University of Maryland at College Park.

"Groupon and LivingSocial were the trailblazers in the business in general, and God bless them," said co-founder Adam Brown. "They've really showed the world a business that works. We're just fine-tuning it and making it really local."

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