We recently talked about why we prefer Living Social’s social incentives over Groupon’s, the slowly fading market leader. But is it even possible to predict what this daily deals market landscape will look like a year from now?

While Groupon was the real first-to-market leader, the truth is that Groupon’s retail partners aren’t thrilled with the results they’ve been getting. Not that they haven’t gotten foot traffic from their partnership with the daily deals leader. But, the fact that this traffic isn’t profitable. They usually take a hit on the deal itself, and aren’t retaining this swarm of new customers. Facebook is already discontinuing their deals offering, probably somewhat because their check-in service hasn’t truly taken off yet.

This isn’t to say that Daily Deals are dead in the water. But that they are likely to evolve into a better win-win situation over time. Google Instant‘s move to day-of deal delivery is probably closer to the winning strategy. Limited time offers to increase foot traffic immediately. The deals aren’t extravagant – which means they’re more profitable for the retailer. It’s just a nice little incentive to try a new local retail restaurant nearby, on a day when they’re looking to fill tables.

Groupon deserves credit for creating the formula, and for teaching their competitors some “what not to do” lessons. Unfortunately, they’re probably not going to be the company that reaps the rewards in the long run.