Bonjour! LivingSocial Goes After Groupon In France

LivingSocial has made two new acquisitions as it tries to catch up to market leader Groupon.

Often known as the second-largest daily deals company in the U.S., LivingSocial wants to own that title in France, too.

The Washington, D.C.-based company is announcing two acquisitions this morning: French daily deal site Dealissime.com and Socialmedia.com, a marketing company focused on social networks.

Based on some calculations, France just happens to be Groupon’s strongest European market.

In May, Groupon had five million members in France, who generated revenues of about $35 million, according to a French daily deals aggregator. Groupon acquired German-based Citydeal to enter Europe more than a year ago.

“Groupon is doing really well there,” said Jake Maas, LivingSocial’s SVP of business development. “It’s a big market for them, and there hasn’t been a strong No. 2 player emerging in France.”

Put another way, there are two main ways LivingSocial can catch up with Groupon: Through geographic expansion or customer acquisition. These company acquisitions address both fronts.

LivingSocial operates in 13 countries and says it is adding roughly 1.5 million new users a week.

Even with the acquisition of Dealissime, LivingSocial still may fall short of being the second-largest deal site in France, said Maas. It might be closer when the analysis factors in the email distribution list it has been building on its own in anticipation of launching there.

Dealissime was launched in April 2010 and is currently offering deals in Paris, Marseille and Lyon. Soon it will launch in Lille and Bordeaux. Dealissime also offers members access to family-friendly deals, similar to LivingSocial, with its Dealissime enfants site launched in March.

Maas said LivingSocial will use a mix of acquisitions and organic growth as it expands globally.

For instance, LivingSocial started from scratch in the U.K. and Ireland, but it acquired a company called Let’s Bonus to add Spain, Italy, Portugal and parts of South America. So far, it’s acquired seven companies, including the two today. Not all of them have been related to getting into new markets.

Maas said it’s unclear how many markets it will be in by the end of the year, but it’s a model that can be repeated around the globe. “We think the model works everywhere and we are going to try and be in all the places where it makes sense.”