AOL's Wow Moment

It's better late than never to RSVP to the Groupon wannabe party.

AOL (NYSE: AOL  ) is gearing up to launch Wow.com -- a domain name formerly used to run a site dedicated to fans of Activision Blizzard's (Nasdaq: ATVI  ) World of Warcraft -- as a daily deal website.

"Wow provides you and your family with savings at your favorite local and national locations each and every day," the "coming soon" site promises.

A sample deal on the Wow.com site doesn't look all that different from the half-off dining deals popular on Groupon and LivingSocial.

Someone needs to call the fire marshal, because this niche is getting pretty crowded. Travelzoo (Nasdaq: TZOO  ) , OpenTable (Nasdaq: OPEN  ) , The Knot (Nasdaq: KNOT  ) , and Yelp all announced similar voucher-based initiatives this summer.

The attraction to the model is obvious. Groupon reportedly takes about half of a deal's proceeds -- so the spa offering introductory treatments at 60% off, is really selling it for 80% off. It may seem like a lousy deal for the sponsor, but if it results in repeat traffic or helps fill an empty hotel room, it's a win-win-win scenario.

The model's simplicity and thick margins have propelled Groupon's valuation into the $1.4 billion range. AOL's enterprise value, on the other hand, clocks in at a mere $2.3 billion. Clearly, achieving Grouponesque status would be a sweet deal for AOL investors.

That won't happen, of course, but you do have to like AOL's chances. It already has working relationships with display advertisers, and it reaches a wide enough audience to break down local deals by region. Who cares if AOL isn't first or even early here? If the company takes this initiative seriously -- and once sponsors begin hitting up the sales@wow.com email to load up the inventory of daily local and national deals, consumers will follow -- this could be one of CEO Tim Armstrong's best moves since coming over from Google (Nasdaq: GOOG  ) to attempt a challenging turnaround.

No offense to the regular visitors of the WOW Insider once housed at Wow.com, but to AOL, this is more than just a game.

Do you think Wow.com will work? Share your thoughts in the comment box below.

Google is a Motley Fool Inside Value selection. Google, The Knot, and OpenTable are Motley Fool Rule Breakers recommendations. Activision Blizzard is a Motley Fool Stock Advisor pick. Motley Fool Options has recommended a synthetic long position on Activision Blizzard. The Fool owns shares of Activision Blizzard and Google. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Longtime Fool contributor Rick Munarriz wonders whether AOL will ever party like it's 1999. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy has got mail!


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