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MasterCard Prepares to Storm Social Media with Daily Deals

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Not wanting to be left in the dust when it comes to the new world of deals and discounts via social media and mobility, MasterCard has partnered with Chicago company Local Offer Network, an aggregator of daily deal offers. The two of them plan to debut a program called MasterCard Offers Services by the end of this quarter, which will let MasterCard offer its card holders discounts through social media platforms like Twitter, Facebook, and Foursquare and take advantage of daily deals like those offered by Groupon and Living Social.

American Express already has partnerships in place with Foursquare, Twitter and Facebook. The deals they offer through these sites have proved to be wildly popular – after Amex and Foursquare ran a short trial at Austin`s SXSW Festival in March 2011, they went national with their partnership in June due to an overwhelmingly positive response. Cardholders in the trial spent about 20% more than other Amex cardholders. MasterCard, naturally, is eager to get in on the game.

Local Offer Network offers its clients a daily deal feed that they can use to offer special deals to their audiences. They also operate, which aggregates daily deals directly to consumers. Local Offer Network will connect MasterCard issuing banks with merchants and consumers, allowing MasterCard customers to take advantage of the best deals offered each day. Investors Matthew Pritzker and Illinois Ventures fund the operation, which collects deals from over 130 different markets each day.

Familiar Names

If the name Matthew Pritzker sounds familiar, it`s because he`s one of the heirs of the Hyatt Hotel fortune, one of the biggest in fortunes in the world and one that was the subject of a bitter family feud after family patriarch Jay Pritzker passed away. In 2005 Pritzker and his sister were each awarded nearly $500 million in a settlement, and Pritzker is now a real-estate entrepreneur as well as an investor.

The CEO of Local Offer Network, Dan Hess, is the former vice president of marketing and strategy for a subsidiary of the Chicago Tribune. He released a statement saying “Our partnership with MasterCard reinforces the continued value of the deals segment.” That “deal segment” includes companies like Groupon, Living Social as well as industry giants like Amazon and Google. All of them are competing for a piece of the daily-deal pie as the social media market heats up.

Some of the Players

  • Groupon – Groupon, a name derived from “group” and “coupon” was launched in November 2008 with Chicago as its initial market. Two years later, it was active in over 150 markets, offering group discounts based on mass merchant loyalty – meaning multiple users have to sign up to activate a coupon. The company was valued at $1.35 billion in April 2010 but posted losses of $9.8 million in the last quarter of 2011, causing concern among investors.
  • Living Social – LivingSocial members subscribe to an email list and receive a new deal each day. Once it`s purchased, members receive an email voucher and if three of their friends also purchase the deal, the original buyer gets the deal for free. The Living Social app is available for Android, iPhone, or iPad and the platform offers new customers to merchants at no upfront cost. It was founded in 2007 and is headquartered in Washington, DC.
  • Foursquare – Foursquare is a location-based service that allows users to “check in” places via an app on their mobile phone. Users earn points and badges for checking in, and can each check-in awards the user points and other rewards. When users sync their account with credit cards, they can be offered location-specific deals. The site was founded in 2009 and had an estimated 20 million users as of April 2012.

Rolling in the Daily Deal Dough

MasterCard members will want to check out these websites if they are unfamiliar with them, and join up if they haven`t already, so they can be poised to rake in the savings when MasterCard Offers Services starts rolling out the deals later this year.

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