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ASIAN CASE RESEARCH JOURNAL, VOL.

18, ISSUE 2, 401 428 (2014)

ACRJ
Going Local or Global: The Case of
This case was prepared by Dr.
Seongmin Jeon of Gachon Uni Online Daily Deal Company
versity and Dr. Byungjoon
Yoo of Seoul National Uni TicketMonster
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

versity, Korea, as a basis for


class discussion rather than
to illustrate either effective or
by MONASH UNIVERSITY on 05/18/15. For personal use only.

ineffective handling of an It was late in the evening in June 2011 when Daniel Shin,
administrative or business sit CEO of Korean online daily deal company TicketMonster,
uation.
gathered his management team at his house. The large house
Please address all correspond belongs to the grandmother of Shin and is used as an accom-
ence to Assistant Professor
Seongmin Jeon, Global Busi modation for the companys founders and a workplace for
ness Track, Business School, them at the same time. When all the team have seated in
Gachon University, Korea. E-
mail: smjeon@gachon.ac.kr the living room, Shin began to explain the strategic options
that the company have at the moment. One option is to take
3rd round investment from venture capitals and the other is
to transfer the ownership to LivingSocial, the No. 2 online
deal site in the United States after Groupon. Since its incep-
tion in May 2010, TicketMonster, South Koreas largest daily
deal site, had offered daily and instant deals, travel packages,
and discounts on events to more than two million members
in Korea and Malaysia. The companys rapid development in
South Korea from $18,000 in monthly revenue at the start
of May 2010 to more than $20 million in 2011 translates
into a spot among the worlds top five online daily deal firms.
During the meeting, Shin and his team weighed
the pros and cons of continuing the companys expansion
into other Asian markets in addition to Malaysia, which
TicketMonster had previously entered through the acquisi-
tion of Everyday.com.my. Another option for the company
was being acquired as part of LivingSocials global strategy
of snatching upmarket leaders in target countries in order to
compete more effectively with local and global competitors,
which in Koreas case included Groupon whose entry into the

2014 by World Scientific Publishing Co. DOI: 10.1142/S0218927514500151

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Korean market months before was undertaken as a wholly-


owned company.
As the management team considered their options,
all agreed that Koreas increasingly competitive environ-
ment for online daily deals could not be ignored. In less than
a year and a half, hundreds of online daily deal sites had
sprung up despite the presence of the big four, namely
TicketMonster, Coupang, WeMakePrice and Groupon Korea.
From the very beginning, Coupang had gone head-to-head
with TicketMonster in Korea, while another local player,
WeMakePrice, had established a strong presence with nation-
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

wide promotions. Although Groupon Korea had hopped on


the online daily deal bandwagon as a relative late-comer, it
by MONASH UNIVERSITY on 05/18/15. For personal use only.

ran a massive promotional campaign to boost its customer


base.
In mid-2011, LivingSocials offer to buy TicketMonster
was motivated by the value the management of LivingSocial
saw in TicketMonsters brand power. Soon after, negotiations
on TicketMonsters valuation and the terms of acquisition got
underway.

BACKGROUND

Having graduated from the University of Pennsylvanias


Wharton School, Daniel Shin had a vision: To build a new
online daily deal business that served the Korean market.
While several US-based companies in this burgeoning field
were beginning to expand internationally, the 25-year-old
Shin felt strongly that a local player should be established to
target the masses of IT savvy Koreans and take advantage of
the countrys high Internet penetration rate. Shins goal was
to identify a business model that had proven successful in
the United States and which would be easily transferable to
Korea.
Born in South Korea, Daniel Shin migrated to the
United States at age nine. As an undergraduate, he had
already established a track record as an entrepreneur with
the founding of Invite Media, a display advertising and
exchange bidding company, which was eventually acquired

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 403

by DoubleClick Inc., an Internet ad service owned by Google


Inc.
Following a two-year stint at McKinsey and Company,
Shins ideas for business opportunities directed at the Korean
market ranged from a Mexican restaurant to Internet-based
commerce. It was then that the idea of a deal-of-the-day
coupon site came to mind. The attraction for Shin was that
the online daily deal business had already proven to be one
of the most successful e-business models in the United States.
The success of Groupon demonstrated that the Internet
served as an ideal venue to get advice on goods or services
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

and locate said goods and services and then purchase them.
The social networks that spread this advice were found
by MONASH UNIVERSITY on 05/18/15. For personal use only.

to increase a customers trust in one retailer over another.


Secondly, Shin realized that the daily deal concept fit well
with Korea.
Although the country has a lot of small and medium-size
enterprises such as restaurants, cafs, bars, spas, nail salons
and travel agencies, there are no marketing services for
SMEs. With few small-scale newspapers and broadcasters,
small- and mid-sized businesses chiefly use printed fliers,
signage and word of mouth to market their goods and
services.
Together with four friends two Wharton School
graduates and two students at the Korean Advanced Institute
of Science and Technology (KAIST) Daniel Shin founded
TicketMonster with $5,000. The companys daily deal coupon
sales grew far faster than he expected. In May 2010, Daniels
vision became a reality when TicketMonster launched its first
online daily deal. Initially, TicketMonster was well received
by Korean consumers. Word-of-mouth marketing and pro-
motions campaigns via Twitter and Facebook drove users
to the site and the number of transactions grew quickly. By
September, TicketMonsters daily sales had increased to
more than $100,000 and cumulative transactions surpassed
$2 million. At the same time, competition was heating up
as Coupang launched its site in Korea just weeks after
TicketMonster had. Shin and his team knew they needed to
move quickly to grab an advantage in the exploding market.

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Financial Partners

On the back of this success, Shin and the TicketMonster team


considered the next step and their plans to raise funds. They
came to realize that not only significant amounts of capital
would be needed in future financing rounds, but also that the
capital they raised had to come from sources whose network,
reputation and expertise would help the company secure a
competitive advantage.
Two factors influenced TicketMonsters ability to
secure this type of financial backing. First, Shin contacted
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

Chester Roh, an individual who had founded several com-


panies including TNC, a blogging platform developer like
by MONASH UNIVERSITY on 05/18/15. For personal use only.

WordPress, which was eventually acquired by Google in


2008. Convinced of TicketMonsters potential, Roh invested in
the company and helped Shin expand his personal network
and background on entrepreneurial best practices in Korea as
an angel investor.
In addition to the investment by Chester Roh, venture
capital companies were also attracted to the potential of
online daily deal sites due to the explosive growth in sales
volume. TicketMonsters Shin succeeded in raising around
10 millions of dollars in 1st and 2nd fund raising from South
Koreas Stonebridge Capital and Insight Venture Partners of
the United States, a company which had previously invested
in Twitter. The funds were immediately put to use to acquire
Dailypick, the then No. 3 daily deal coupon site in Korea,
with TicketMonster consequently securing the market lead.
At the time, TicketMonster accounted for 45% of the Korean
online daily deal market, having attracted nearly 2 million
users in just over a year and 7.6 million daily page views on
average.

GLOBAL MARKET ANTECEDENTS

Online Daily Deal Explosion in the US

In November 2008, Groupon launched its first offer a half-


price deal for pizzas at the restaurant located on the 1st floor

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 405

of its building in Chicago. Soon after, the company expanded


to Boston, New York City and Toronto. From January 2010,
for one year, Groupons monthly revenues in the United
States had grown from $11 million to $89 million, while total
2011 US revenues were estimated at $460 million. For the
whole of 2011 to date, Groupons estimated revenues are in
the $34 billion range, according to start-up focused blog
Techcrunch.
As the business model is relatively simple to emulate,
online daily deal competitors around the world soon num-
bered over 500. Even giant players like Google took a stab at
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the online daily deal action just after its $6 billion proposal
to acquire Groupon was rejected, while Facebook also began
by MONASH UNIVERSITY on 05/18/15. For personal use only.

testing a model of its own. Despite the efforts of such com-


panies and their deep pockets, however, only one compet-
itor, LivingSocial, could be considered a serious competitor
to Groupon, raising a $175 million investment from Amazon.
com. LivingSocial offered its first daily deal on July 27, 2009,
a meal at Zengo, an eatery in Washington DCs Chinatown,
and has grown to over 40 million members. One of the sites
renowned successes was a deal on January 19, 2011, when
Amazon.com offered LivingSocial subscribers a $20 gift cer-
tificate at half price. The deal recorded 1.4 million purchases.

Expansion to International Market

Groupon runs numerous international operations, most of


which originated as deal-of-the-day services similar to the
original model, subsequently rebranded under the Groupon
name after being acquired. As of March 2011, Groupon
served more than 175 markets in the US and 43 countries
including but not limited to Singapore, Brazil, Germany,
France, Puerto Rico, the United Arab Emirates and South
Africa. Toward the end of 2010, Groupon entered the
Japanese market by acquiring start-up Q:Pod. In February
2011, Groupon started operations in mainland China, as
Gaopeng.com, a joint venture with Tencent, Chinas largest
Internet company by revenue. Some of Groupons other
acquisitions are Beeconomic.com in Singapore, Darberry.ru

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in Russia, GroupsMore.com in Malaysia and SoSasta.com in


India. In Hong Kong, Singapore, the Philippines and Taiwan,
UbuyiBuy started offering daily deal services under the
Groupon name.
Groupon, of course, was not the only online daily
deal company trying to gain global market share through
the acquisition of local market leaders. In January 2011,
LivingSocial acquired a majority of shares of LetsBonus, a
partnership which boosted LivingSocials rapid international
expansion in Spanish and Portuguese speaking countries
such as Spain, Portugal, Argentina, Uruguay, Chile, Colombia
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

and Mexico. In November 2010, LivingSocial acquired a con-


trolling stake in Australian social shopping site Jump On It,
by MONASH UNIVERSITY on 05/18/15. For personal use only.

a move which propelled LivingSocial to become the online


daily deal player in Australia. In October 2010, LivingSocial
announced its acquisition of social adventure company Urban
Escapes, which led to the launch of LivingSocial Escapes and
LivingSocial Adventures. LivingSocials expansion through
acquisition kept going in Thailand, the Philippines, Indonesia,
UAE, Egypt, Lebanon and Jordan. LivingSocial operated in
more than 550 markets in 21 countries in total.

Success Factors

The sudden and explosive growth of companies like Groupon


and LivingSocial begged the question: What drove their
success? In a Harvard Business School study, the online
daily deal business model was defined as providing discount
coupons for the purpose of price discrimination and to attract
consumers that would not normally patronize a business
without major price advantages. Such coupons would benefit
merchants as a marketing tool informing consumers about
a merchants existence via e-mail. As a promotion tool, dis-
count coupons are expected to be most effective for small and
medium businesses which are comparatively unknown and
have relatively low marginal costs.

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 407

THE KOREAN ONLINE DAILY DEAL MARKET

South Koreas Internet infrastructure is one of the most


advanced in the world. South Koreas high Internet pen-
etration rate is widely attributed to a series of state-led ini-
tiatives implemented since the 1990s. The governments
rationale for this policy of nationwide promotion of informa-
tion technology is that a country with few natural resources
like South Korea must move quickly toward a knowledge-
based economy. As of 2009, there are an estimated 39 million
Internet users in Korea, comprising about 80% of the popu-
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lation. According to the National Bureau of Statistics, over


80% of households had broadband access to the Internet
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as of December 2010. The country has not only the highest


number of broadband connections per capita in the world,
but also the worlds highest rate of Wi-Fi hotspots per capita,
with 55,000 hotspots. Several factors have contributed to
the countrys high level of Internet connectivity. First, high-
speed connections are relatively affordable. Most residences
have connections of 100 megabytes per second with a cost
of about 30,000 won ($28) per month. Second, the popula-
tion is extremely concentrated in urban areas. Approximately
70% of South Koreans live in city areas with high apartment
buildings facilitated with fiber-optic cables. Third, the Korean
government has carried out programs to expand Internet
infrastructure and access, providing subsidies to low-income
groups.
With regard to Koreas mobile Internet environment,
there are 50.8 million mobile phone subscriptions, a figure
which exceeds the countrys total population of 48.9 million.
More than 56% of these users access the Internet from their
mobile phones. Overall, smartphone ownership in Korea has
grown exponentially, with average traffic per user on smart-
phones at 271 MB/month, the worlds highest and 2 to 3
times higher than the global average.
E-commerce is highly developed in the nation, as well.
As an illustration, all South Korean banks offer online- and
mobile-banking services, which are becoming increasingly
sophisticated. Banks, credit-card companies and wireless car-
riers are developing several types of virtual currency based

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on integrated-circuit and wireless telecoms technology. The


companies backed by chaebol, or Koreas conglomerates, are
the dominant players in the business-to-consumer (B2C)
e-commerce market with offline legacy advantages.
Online daily deal is growing quickly in South Korea
as is true elsewhere, and a handful of local start-ups have
become sizable enough that they are holding their own as
competitors from the US move into the market. In only one
year since the first online daily deal site in Korea named
Wipon launched, more than 300 similar service providers
have gone into business. The online daily deal market in
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2010 was estimated to be worth approximately $44 million,


with 2011 projections expected to be four times higher at
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$176 million.
A unique aspect of the Korean online daily deal
market is that roughly half of the South Korean population
is focused in Seoul and the surrounding Gyeonggi Province.
Consequently, most of the newly-opened online daily deal
sites provide discount deals within Seoul, thus resulting in
severe competition that has led to lower commissions and
steeper discount deals made possible by subsidies from the
online daily deal websites themselves. As of September 2011,
the industry average for commission collected by Korean
online daily deal companies was around 10% as opposed to
the 50% collected by Groupon in the States.
In addition to the online daily deal sites themselves,
sites which aggregate deal sites also began to emerge soon
after the daily deal trend caught fire in the nation, thus
making repeated checks of various online daily deal sites
unnecessary. The aggregator sites, or meta-sites, were estab-
lished to play a hub role for the online daily deal sites.

TICKETMONSTER.COM

Services

TicketMonsters basic business model had employees search


for businesses to take part in such deals as a marketing

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 409

strategy, with the company subsequently advertising the


deals to its member base.
Although TicketMonsters long-term goal was to
promote the products and services of small and medium-
size businesses on its website and mobile apps by allowing
individuals to purchase good deal coupons 24 hours a
day, 7 days a week, the management team determined that
providing daily deal coupons on their website first which
allowed local businesses to sell highly discounted deal
coupons as an alternative promotional channel, would be the
more appropriate model.
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The online daily deal concept where a daily deal


coupon is sold at a discount as long as a certain number of
by MONASH UNIVERSITY on 05/18/15. For personal use only.

individuals agree to purchase said coupon during a given


period of time one day captivated both Korean con-
sumers and small businesses alike. The TicketMonster team
knew that in the short run, the website would be appropriate
for promoting new services of existing businesses, or new
businesses themselves, to a demographic of young Internet-
savvy consumers. By integrating a model which appealed to
both service providers and potential buyers, TicketMonsters
Daniel Shin felt the company could offer a wider array of
products, increase future revenue streams, and in the short
run, reduce the risk of the expansion related with sales areas
and time due to the attention economy. In order to address
the distinct needs of local businesses, TicketMonster devel-
oped a specially designed web template specifically for mer-
chants. The main area of the services introduction section
was similar to a blog site, where TicketMonsters merchan-
disers could post descriptions of the products or services they
offered along with pictures.
In contrast to Groupon, TicketMonster initially dealt
with tickets to performances and exhibitions. For example,
on June 12, 2010, 2,000 half-price tickets for the art exhibit
Pop Art Superstar Keith Haring 2010 sold out in minutes
on the TicketMonster website. Such a reaction by the general
public contributed significantly to the brand recognition of
TicketMonster.

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Business Model

Generally speaking, the online daily deal model combines a


mix of group-buying and advertising with a sales commis-
sion that, based on Groupons experience, was expected to
generate revenue amounting to 25% of the original price of
the product or service. In the case that a certain number of
people signed up for the offer, then the deal would become
available to all. If the predetermined minimum were not met,
which rarely happened, the deal would then become unavail-
able to anyone for that particular day. Such a model reduced
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the amount of risk for merchants, who treated the coupons


as quantity discounts as well as sales promotion tools. In the
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case of Groupon, it splits the sales revenue with merchants.


For example, a $40 restaurant coupon could be purchased
by the consumer for $20, with Groupon and the retailer then
split the $20. Simply put, Groupon would receive $10 for the
restaurants coupon valued at $40. Additionally, the model
was scalable to other areas, while daily deals could be split
into hourly transactions for mobile consumers and extended
by a number of days for steady selling products or services.
After subscribing to one or more of its 240 or more
markets, users received a daily e-mail from TicketMonster
presenting the citys deal for that day. In general, members
were able to save 5090% on products or services in their
respective areas. In Korea, TicketMonster focused primarily
on regional expansion to capture as much market share as
possible. Aside from Seoul, other metropolitan cities including
Daejeon, Busan, Incheon and Bundang were targeted.
TicketMonsters plan to optimize its market leader
position was two-pronged. With the largest customer base,
the companys sales agents easily persuade merchants into
accepting the promotion with TicketMonster. Furthermore,
with the sharp rise in both domestic and international com-
petitors, TicketMonster could secure first-movers advantage
with a nationwide presence.

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 411

Organization

As TicketMonster grew at a rapid pace, Shin and his team


thought about which organizational structure would best
support their efforts. While TicketMonster aimed to be a
global company, management wanted to ensure that they
have a strong organization which could lead the companys
expansion into new markets. To do so, TicketMonster set out
to hire experienced sales managers in each region and decen-
tralized the sales and marketing functions on the basis that
while their business model would be scalable across regions,
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they needed to develop local sales people who would be able


to pitch to merchants in each region. TicketMonster was thus
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faced with the challenge of recruiting talented sales people


and manage region sales. Given the fast-pace of growth in
the online daily deal sector, TicketMonster needed sales per-
sonnel who could make quick decisions and understand the
rapidly changing environment. The company also needed
people who were intimately familiar with the local culture
and an appropriate approach which would give confidence
to potential small businesses TicketMonster targeted. Finding
the search for such individuals more difficult than expected,
TicketMonster established an internship program for college
students and recent graduates. He has also established an
internship program for college students and recent gradu-
ates, to teach young business leaders and help expand his
operations. He has also established an internship program for
college students and recent graduates, to teach young busi-
ness leaders and help expand his operations.
I wanted to give more chances to people, Shin said.
A company cannot exist without people. Employees are not
just part of a giant machine, but have the power to build and
lead the company.As TicketMonster grew, the company also
had to seek managerial and technical personnel. Although a
number of qualified applicants were interviewed and hired,
there were not enough people with managerial and technical
skills to go with the companys culture.

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Marketing

TicketMonsters overall marketing objective was to position


the company as the market leader with whom consumers
could find the best deal in their preferred area. TicketMonster
believed that developing a strong, well-recognized and
unique brand would serve three key objectives: 1) to bring
local businesses to the site by attracting current web users;
2) to position the brand in the minds of millions of potential
future users; and 3) to increase the loyalty of existing users.
In February 2011, TicketMonster started terrestrial TV
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advertising emphasizing the companys top position in the


domestic Online daily deal sector. Competitors Coupang
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and WeMakePrice soon followed suit with their own TV


advertisements. In particular, more so than other compa-
nies, Coupang appealed to female consumers with an easy
to understand and interesting storyline. Well-known Korean
entertainers Hyun Joong Kim and Na Young Lee made
appearances in ads run by Coupang. Demonstrating the
amount of importance online daily deal companies in Korea
placed on advertising, in May 2011 alone, TicketMonster
spent 907 million won (roughly $800,000) on TV spots while
WeMakePrice.com spent 778 million won (roughly $700,000).
In addition to television ads, Internet ads as well as banners
placed on buses were utilized as promotional tools by both
companies.
The feverish pace at which online daily deal compa-
nies in Korea were expanding and spending to promote
themselves led to concerns by industry experts regarding
excess competition and unprofitable business due to too
much money being spent on advertising, as well as doubts
regarding the dwindling role of social media in promoting
the online daily deal business model.

Technology

In the case of TicketMonster, at first the company out-


sourced IT services, but soon realized that in order to succeed
in Koreas online daily deal sphere, it was crucial to have

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 413

control of its technology. The company thus hired an internal


IT team to develop a robust, scalable, proprietary technology
in order to deal with large volume of traffic.
TicketMonster CEO Daniel Shin believed that having
advanced technology would be a key competitive advantage
for several reasons: 1) it would give the company flexibility
to expand to new markets; 2) it would allow for sustaining
upgrades in response to users feedback; 3) it would allow
the company to provide customized solutions to partici-
pating merchants. Moreover, TicketMonster embraced the
growth potential of the mobile sector by applying location-
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based services to magnify both their presence and profit. For


smartphone users, the number of which has surpassed 15
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million in Korea, the company launched smartphone applica-


tions utilizing location based services in July 2011. The apps
provide information on discounts offered at shops located in
proximity to the user based on his or her whereabouts, thus
encouraging more effective targeted advertising. Merchants
would then be able to attract potential customers at a time
they could specify.

COMPETITION

By September 2011, competition in the online daily deal


sector in Korea had escalated as local, regional and interna-
tional players vied for consumer awareness and loyalty.

Coupang.com

Coupang.com, founded by a group of graduates from


Harvard Business School, was TicketMonsters fiercest com-
petitor in Korea. It succeeded in raising about $27 million
from US venture capitalists. At present, Coupang.com has
over 500 employees and more than 5 million registered users.
The company offers more than 70 new deals each day and
monthly sales that work out to about $300 million annually.

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WeMakePrice.com

WeMakePrice.com, founded by one of the co-founders of


Neople, Min Hur a success story in the countrys online
game industry got its start in Koreas online daily deal
sector with funding from the beginning totaling a massive
50 billion won (roughly $45 million). Hur, former student
body president at Seoul National University, earned over 200
billion won (roughly $180 million) by selling his Dungeon
and Fighters online game. WeMakePrice.com broke the
record for daily sales by selling $1.2 million worth of entry
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tickets to Everland Koreas most popular amusement


theme park to 150,000 customers on its opening day. To
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date, WeMakePrice.com has attracted 1.2 million registered


users and 1.6 million daily visitors.

International Competitors

Groupon proposed M&A to TicketMonster around September


2010 right after they merged Qpod, the biggest online dis-
count site in Japan. Groupon would control the compa-
nys governance and acquire shares with cash gradually as
the expected sales targets are met. However, at the end of
October, the negotiation ended in vain. Groupon launched
Groupon Korea on March 14, 2011. The site planned to offer
deals to eat, do, see and buy to consumers in the Korean
megalopolitan cities like Seoul, Gyeonggi Province, Busan
and Daegu, in addition to 11 other cities. In an interview
with BusinessWeek, Rob Solomon, president and chief oper-
ating officer of Groupon, said, The collective buying space
in Korea is exploding. There is a huge opportunity for
Groupon Korea to emerge as a leader, leveraging the best
practices weve pioneered around the world to bring a higher
quality of local daily deals and better consumer and merchant
experiences.
Groupon Korea promoted its business with so-called
Mega Deals which enabled customers to amass mileage
points that could be accumulated upon making a purchase
or inducing friends to register on the website. With coupons

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 415

valued at the equivalent of several dollars which were imme-


diately redeemable at discount outlets, throngs of users
visited the site to benefit from Mega Deals, thus enabling
Groupon to grab the overall lead in terms of user volume in
Korea by May 2011.

International Expansion

From the beginning, it was clear to the management team


of TicketMonster that the companys success would depend
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on its ability to establish a presence as quickly as possible


in other Asian markets. TicketMonster possessed a roughly
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50% share of South Koreas online daily deal market after one
year of operation. Daniel Shin believed that Asia represented
the most logical market for TicketMonster to grow in, and
hoped to make acquisitions or open up branch operations in
Singapore, Vietnam, the Philippines and Japan within a year.
This strategy was described by Shin in an interview with the
Wall Street Journal: We kind of accidentally found ourselves
in the top five on the strength of South Korea alone. We
thought we not only could expand in Asia, we should.
High online penetration in North Asia has helped
fast-track the development of e-commerce in markets. Daily
deals services are particularly well-suited to Asian mar-
keting landscape, where tactical sales drives and loyalty pro-
grams are especially prominent. Even though it was evident
that TicketMonster grew faster than any other online daily
deal sites in Asia, the competitions were getting tough for
this fastly growing markets. In Singapore, Groupon was very
aggressive with online advertisement from online display,
search engines to social networks. Deal.com.sg and BigDeal.sg
are active in Facebook and Twitter to secure customer base.
LivingSocial got into the market by differentiating their ser-
vices by introducing Family Edition deals, focusing on family-
friendly activities such as visits to zoos, aquariums, and art
classes. Prominently, All Deals Asia is a Singapore-based
site which aggregates deals from prominent daily deals sites
across the Southeast Asian region including Singapore, Hong
Kong, Thailand, Philippines, Malaysia, Taiwan and Indonesia.

07_S0218927514500151.indd 415 2/2/2015 3:16:44 PM


416 ACRJ

On top of these services, hundreds of local daily deal sites


were on sales.
In Hong Kong, for example, the local arms of digital
media companies like MSN, Sina and Yahoo offered daily
deals, in alliances with companies such as Groupon and
BeeCrazy. Traditional media such as CNNGo and South
China Morning Post entered into the market by providing
more targeted services. Other than these major players, they
had tens of small local copycats starting their sales with the
easily copyable online daily deal business model. According
to an Experian Hitwise report, the Hong Kong market has been
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

valued at over US$60 million.


In Malaysia, Groupon entered the market by acquiring
by MONASH UNIVERSITY on 05/18/15. For personal use only.

the local site named Groupsmore in early 2011. After that, the
trend of shopping online with the coupon has really trending
up. Groupon Malaysia is said to be the countrys biggest
daily deal site pulling in more than $1.55 million in rev-
enues for August 2011. Everyday, which ranks second, took
in $580,000. The site of Everday collected 400,000 subscribers
and was targeting to achieve RM10 million of annual revenue
by the end of 2011.
Indonesian daily deal market was exploding as well.
Since going online in mid-2010, such popular websites as
Disdus, Evoucher, Dealkeren and Ogahrugi offer daily deals
online from steaks and lavish haircuts to international hotels.
Thailand was also filled with plenty of clones are
starting to emerge to have the bargain customer base. It was
unique that all of the daily deal sites in Thailand abandoned
the minimum interest policy and instead set a time limit for
each deal due to the government regulations. Ensogo, the
biggest group site in the Thailand, received a US$2 million
in fresh investment from Europe. Ensogo had a big following
with more than 10,000 Facebook fans and a regular pipeline
of deals. The site with the name of O.ffer.us provided higher
value than other sites with neither the minimal user interest
policy nor time limits with its offers.
Even though a number of Groupon copycats existed
in this emerging market, the industry experts expected that
there is more room to grow. Almost every county in Asia
came to have a number of online daily deal sites, which

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 417

shows how lucrative these markets were. However, the


opportunities of window to enter into the markets were
expected to close in six months to a year time period when
we look at the cases in Korea. Moreover, the acquisition is the
common way to enter the skyrocketing markets in a timely
manner. TicketMonster would have competive advantages
if they enter one of those Asian markets in that they have
experiences to grow their businesses in a short time period.
However, as they need sales force networks to have the deals
attractive to the online shoppers and circulate discounted
vouchers, they would require massive size of funding and
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

resources for international expansions to win over rapidly


catching-up global and local competitors in remote battle
by MONASH UNIVERSITY on 05/18/15. For personal use only.

fields. The teams capabilities to manage global operations


were also questionable, though they have experiences to
expand the serviced regions within Korea.
On June 1, 2011, TicketMonster acquired Malaysias
Integrated Methods Sdn. Bhd., the first step of what execu-
tives said would be a rapid expansion across Asia. The man-
agement team of TicketMonster took Malaysian market a hub
to jump in the markets such as Thailand and Philippines.
With its acquisition of Integrated Methods, Malaysias one
of the largest online discount company, TicketMonster took
control of Everyday.com.my, which offered both daily deals
and other forms of e-commerce, competing head-to-head with
Groupon Malaysia.

LivingSocials Takeover Proposal

LivingSocial had yet to establish a presence in Korea. In April


2011, LivingSocial showed the intention to participate in the
3rd round investment that TicketMonster was attracting
through Barclays. For LivingSocial, TicketMonster would stra-
tegically provide a critical home base in North Asia while
Groupon took over Qpod in Japan. LivingSocial is expected to
follow Groupon and file for an IPO.
The conditions for the takeover proposal of LivingSocial
are through the format of stock swap, not cash out.
Furthermore, the current management team would keep their

07_S0218927514500151.indd 417 2/2/2015 3:16:45 PM


418ACRJ

control of the company. July 2011, the news that Barclays


Bank facilitated a takeover of TicketMonster led one stock
trading firm to value the company at $280 million.

THE DECISION

During TicketMonsters initial planning phase, company


management led by Daniel Shin had made the decision to
expand the scope of TicketMonster beyond Koreas borders
with the aim of taking on other Asian markets. However, it
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

was believed that simply competing in markets across Asia


would not enable TicketMonster to claim sufficient market
by MONASH UNIVERSITY on 05/18/15. For personal use only.

share in light of the international expansion of Groupon


and LivingSocial. With this in mind, in June 2011, the four
TicketMonster executives began to outline their options for an
expansion strategy to be carried out over the next six months.
In response to the takeover proposal from LivingSocial,
the question remained as to whether the best solution for
TicketMonster would be to continue its expansion throughout
Korea, enter another Asian market or join LivingSocial
whose resources, scale and reach could take TicketMonsters
business to the next level across the region. Shin and
TicketMonster knew that the right decision was inextricably
linked to the actions of the companys fast-growing competi-
tors. In order to secure the domestic market leaders posi-
tion and simultaneously explore opportunities overseas, the
management team debated the dependency on LivingSocials
IPO, as well as the risk of competing with Groupon both
domestically and in the global market. The alternative was for
TicketMonster to focus on deepening its presence in markets
in which it had already established a foothold. One by one,
Shins team began to lay out the advantages and disadvan-
tages of each of the different options which lay before them.

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 419

REFERENCES

1. Discounters Make Deal Aimed at Asia, June 1, 2011, Wall Street


Journal.
2. Exclusive Data On Groupons U.S. Revenues And February
Falloff, March 23, 2011, TechCrunch.
3. Benjamin G. Edelman, Sonia Jaffe and Scott Duke Kominers,
To Groupon or Not to: From Student Council Leader to Internet
Wizkid, July 14, 2011, The Korea Times.
4. For More Indonesians, Finding Deals Means Going Online, http://
www.thejakartaglobe.com/lifeandtimes/for-more-indonesians-
finding-deals-means-going-online/474772.
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

5. Groupon: The Profitability of Deep Discounts (June 16, 2011).


Harvard Business School NOM Unit Working Paper No. 11-063.
by MONASH UNIVERSITY on 05/18/15. For personal use only.

6. Groupon acquires Indias e-commerce portal SoSasta.com. The


Times of India. http://economictimes.indiatimes.com/tech/ites/
groupon-acquires-indias-e-commerce-portal-sosastacom/
articleshow/7305268.cms. Retrieved January 17, 2011.
7. Groupon Malaysia Earns 3x More Monthly Revenue Than
Competitor Everyday, http://www.techinasia.com/groupon-
malaysia/.
8. Google Plots Move From Search to Sales, December 1, 2010, The
Wall Street Journal.
9. Groupon 10-K, Edgar Online.
10. Groupon and its Competitors in Singapore, http://www.incitez.
com/blog/daily-deal-websites-singapore.
11. Groupon China Launches after Rumors of a Bumpy Start,
February 28, 2011, VentureBeat.
12. Groupon Expands in Southeast Asia, now Offering Deals in
Malaysia, January 25, 2011, Businesswire.
13. Groupon Launches in South Korea, March 13, 2011, BusinessWeek.
14. Groupon Goes International, Buys Japanese and Russian
Clones, Mashable. http://mashable.com/2010/08/17/groupon-
international.
15. Groupon.com.
16. Korea Internet Statistics, 2009, Korea Internet & Security Agency.
17. LivingSocial, based in D.C., raises $400 million as it vies with
Groupon, April 5, 2011, Washington Post.
18. LivingSocial Close to Acquiring Turkish Daily Deals Site
Grupfoni, August 4, 2011, TechCrunch.
19. LivingSocial Expands into Australia with 5m investment in jump
on it, April 13, 2011, Socialtimes.

07_S0218927514500151.indd 419 2/2/2015 3:16:45 PM


420ACRJ

20. LivingSocial to Buy Koreas TicketMonster, August 1, 2011,


Reuters.
21. LivingSocial to Buy South Koreas Ticket Monster, August 2,
2011, Wall Street Journal.
22. LivingSocial.com.
23. Meet the Fastest Growing Company Ever, August 30, 2010,
Forbes.
24. Retail Marketing Segmentation Daily Deals Shopper Insights
powered by AudienceView, An Experian white paper, June 2012,
Experian Hitwise.
25. Social Commerce Going Global, August 4, 2011, The Korea Times.
26. Social Commerce Gone Completely Awry, July 1, 2011, The Korea
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com

Times.
27. The rise of Thailands Groupon clones, http://www.cnngo.com/
by MONASH UNIVERSITY on 05/18/15. For personal use only.

bangkok/shop/rise-thailands-groupon-clones-104460.
28. TicketMonster.co.kr.

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 421

Exhibit 1

Ticketmonster.co.kr Website
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

Source: TicketMonster: www.ticketmonster.co.kr

07_S0218927514500151.indd 421 2/2/2015 3:16:45 PM


Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

Exhibit 2

Financial Statement of Groupon


422ACRJ

GROUPON, INC.

07_S0218927514500151.indd 422
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)

Year Ended December 31,

2009 2010 2011


               
      

 
     
 

    

     

     

    

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Exhibit 2 (Continued )
    
Year Ended December 31,
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 2009  2010  2011

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Source: Edgar OnlineGroupon Form 10-K
   

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 423

 
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424ACRJ

Exhibit 3

Financial Statement of LivingSocial


Note 5 EQUITY-METHOD INVESTMENTS
Our equity-method investments include a 31% interest in LivingSocial. Summarized condensed financial information for
this investee, as provided to us by LivingSocial, is as follows (in millions):
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

As of December 31, 2011, the book value of our LivingSocial investment was $208 million. The summarized financial
information is included for the periods in which we held an equity method ownership interest.
Source: Edgar Online Amazon Form 10-K

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 425

Exhibit 4

Market Share in the South Korean Online Daily Deal Sector


Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

Source: Discounters Make Deal Aimed at Asia, Wall Street Journal, June 1, 2011

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426 ACRJ

Exhibit 5

Korean Internet Users Statistics


Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

Source: Korea Internet & Security Agency, www.kisa.or.kr

Exhibit 6

Monthly Changes in Unique Visitors to Online Daily Deal Sites in Korea

Unit 1M UV groupon coupang


ticketmonster wemakeprice
Mega Deals

TV Commercial

*source: Nielsen Koreanclick Behavior Data (2011.05)


UV: Unique Visitors
Source: Nielsen Koreanclick Behavior Data Press Release
http://nielsfootman.com/study-groupon-korea-coupang-winning-the-hits-race/

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GOING LOCAL OR GLOBAL: THE CASE OF ONLINE DAILY DEAL COMPANY TICKETMONSTER 427

Exhibit 7

Distribution of Visitors to Online Daily Deal Sites in Korea during a 24-hour Period

Unit 100,000 UV groupon ticketmonster

coupang wemakeprice
Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

*source: Nielsen Koreanclick Behavior Data (2011.05)

Exhibit 8

Demographics of Online Daily Deal Consumers in Korea

Above 50

40s

30s

20s

Under 19

groupon coupang ticketmonster wemakeprice

*source: Nielsen Koreanclick Behavior Data (2011.05)

07_S0218927514500151.indd 427 2/2/2015 3:16:47 PM


428ACRJ

Exhibit 9

Mode of Entry for Online Daily Deal Sites in Korea

E-mail Community Search Direct


Asian Case Res. J. 2014.18:401-428. Downloaded from www.worldscientific.com
by MONASH UNIVERSITY on 05/18/15. For personal use only.

coupang groupon ticketmonster wemakeprice

*source: Nielsen Koreanclick Behavior Data (2011.05)

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