Are you including Groupon in "these sites"? What they offer are essentially promotional deals, just like sales or coupons you get in the mail or from a newspaper or, these days, from online websites. Why not? It draws in new customers who might have been on the fence about trying your product/service, puts butts in seats at restaurants, boosts the sales figures, and gets your name out there. If it didn't work, Groupon would go under.

I suspect Living Social's main problem is that it's a me-too service that doesn't offer much of an advantage over Groupon. Google ended their Offers a year or two ago; also a me-too effort, and I think Amazon Local also shut down.