via @forbes

MySpace Moment, sooner or later, is going to enter the Merriam-Webster’s Collegiate Dictionary alongside crowdsourcing, bromance and cougars. It is a fact that once seemingly invincible brands can inexplicably decline in popularity so let’s give this depressing phenomena a name so we can say, oh, I don’t know, Groupon may be nearing a MySpace Moment.

Which it may be.

Something is amiss: The Securities and Exchange Commission frowned upon – and legions of accountants mocked – its Adjusted Consolidated Segment Operating Income metric in its first filing. It inflated the company’s worth by ignoring marketing costs. Groupon subsequently amended its filling.

It posted a net loss in the second quarter (although much of that was related to the hiring of more than 1,000 employees).

Now Experian Hitwise is reporting a significant drop-off in Groupon traffic this summer, nearly 50% since its peak in the second week of June 2011 compared to last week.

During the same time, Living Social has achieved 27% growth in visits to its site.

These are just two data points, of course, and they ignore the formidable assets that Groupon does have – namely its email mailing list, which CEO Andrew Mason pointed out in a recent internal memo to employees (the only way the company has to defend itself now that it is in a quiet period) and head start in this market and name recognition.

It has also been pushing into real time mobile offerings with Groupon Now.

And it’s not that other sites don’t dip in traffic every now and then – or even fail to turn lagging initiatives around. Remember Google’s social media efforts pre-Google+?

Or eBay’s diversification away from the auction model

Are Daily Deals Sustainable?

In fact eBay is a good company to point to right now. Ten-fifteen years ago, it was auction-everything thanks to eBay’s wild popularity at the time. To be sure, there is still a market for that business style but as eBay itself has shown with its emphasis on fixed-pricing, it is better to diversity into other categories as well.

So may it be with the daily deal model. Doubts are growing whether its current form is sustainable – by that I mean, will there be enough consumers to fuel the 400 plus daily deal offerings in the long run? Or merchants, for that matter?

One point made by Experian Hitwise that does not bode well for Groupon or the model is that overall visits to a custom category of Daily Deal & Aggregator sites were down 25% for the same time period.

Also, it noted PriceGrabber released results from its Local Deals Survey in June, stating that 44% of respondents said they use or search daily deal Websites. “However, 52% expressed feeling overwhelmed by the number of bargain-boasting emails they receive on a daily basis.”