LivingSocial ropes in SocialMedia.com for $3 million

A couple years ago, SocialMedia.com came out of the gate as one of the first companies to build out an effective ad framework and model that was working and raking in the cash. They were one of the first companies to integrate friends' photos into Facebook Ads. Eventually Facebook had tried acquire SocialMedia.com (the company) but after being turned down, Facebook went after them legally for privacy policy violations.

While they definitely have one of the most written about/searched for terms in today's business landscape as a domain name, it'll be interesting to see where this goes next. With Facebook now charging up to 40% more for their own built-in targeted advertising, the heat is definitely getting turned up in the social advertising space.

Will companies like LivingSocial be able to compete in the short and long-term with Facebook on it's own turf or will they eventually die off as Facebook works towards a more robust advertising platform? I have a hunch that Facebook is building out the B2B side of their business with more retail partners, targeted messaging, and policies that will make it tough for outsiders like LivingSocial to do real business inside Facebook where Facebook is their competitor AND their platform.