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Daily Deals – Passing Fad Or Strategic Lead Generation

A recent study release by BIA/Kelsey shows that despite some turmoil in the daily deals business, the US spending in this component of social media advertising is expected to grow faster than previously expected.

According to the study the US spending on daily deals advertising will grow from $873M in 2010 to $4.2B by 2015.

The daily deals segment has clearly been a focus in recent months with a Groupon in the works, out of the works and then back again.  Earlier today Groupon restated 2010 revenue by nearly half in response to urging bythe SEC in light of a planned IPO.  Groupon failed to disclose the 50/50 revenue share and characterized the full price of the daily deal as revenue.  With a valuation at $20 billion, Groupon was moving ahead on a  $750 million IPO, until earlier in June it was discovered from S-1 filings that it had nearly $400 million in net losses.

Groupon’s troubles aside the daily deals concept clearly resonates with consumers and the question is who will emerge as the premier provider in this space.  Demand for daily deals continues at a fever pitch though some segments are starting to see fatigue.

Daily deals typically target small businesses as a means of driving loss-leader or break-even traffic with the expectation that a positive experience will turn daily-deals bargain hunters into retail paying customers.  The problem for small businesses is that there are so many daily deals participants that there is no incentive for consumers to pay retail price when they know a daily deal is available.

The daily deals businesses are getting mixed reviews from small businesses for the significant reduction in revenue that accompanies these types of advertising.  So lets hear from your small business, are you embracing daily deals marketing and how are you incorporating this into your marketing mix?

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