BIAKelseyMarch2011

Groupon And Other Deal-Of-The-Day Sites Booming

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The deal-of-the-day sites that have proliferated on the Internet over the last year or so are poised on the edge of a major expansion in US traffic, according to a study released today by BIA/Kelsey. Gross revenues are projected to grow from a current $873 million to $3.9 billion by 2015. Optimistic projections range up to $6.1 billion (adding in expansion to more cities and increases in number of transactions, users, offers, value of offer) to more conservative figures of $2.1 billion. Even the most conservative figure would mean a 19.7% increase in compound annual growth rate (see chart below).

With an estimated 102 million people in the US served by current deal-of-the-day sites in 178 cities as of March 1, 2011, this is an attractive market for local media spending. The increased volume that will build over the next couple of years will lead to improved targeting opportunities by demographics within geographic boundaries. Even as the early adopters become less enthusiastic in the wake of increased number of offers and sites, the uptick coming from increased exposure to new markets should not only compensate for any drop-off, but also result in a spread into more general demographic groups. This, in turn, will lead to more types of businesses considering entering the space, once they see that their target markets are starting to sign up for deal-of-the-day offers.

Cupcakes, anyone?

All 3 Cases: Deal-A-Day US Revenues

Source: BIA/Kelsey’s Deal-a-Day Forecast, 2010-2015 (March 2, 2011)

About the Author

Frances Krug has worked in market research since graduating from UCLA with an MA and CPhil in Latin American history. As an editor and online content provider for the last 7 years, she currently is Associate Editor at iNET Interactive, where she also directs Search Marketing Standard's email marketing program.

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2 Comments

  1. I definitely agree on the growth trajectory, but where this market will head is largely unknown. Are deal of the day sites here to stay? Will they be commoditizied down to irrelevance? Will market pressure reduce their margins as some are already doing to compete with Groupon? Or is this truly a new wave of pure pay-for-performance advertising that's here to stay? These are all the questions swirling around my head as I'm watching the growth of this market and my own Milwaukee-based deal of the day site.

  2. I definitely agree on the growth trajectory, but where this market will head is largely unknown. Are deal of the day sites here to stay? Will they be commoditizied down to irrelevance? Will market pressure reduce their margins as some are already doing to compete with Groupon? Or is this truly a new wave of pure pay-for-performance advertising that’s here to stay? These are all the questions swirling around my head as I’m watching the growth of this market and my own Milwaukee-based deal of the day site.