I love a screaming deal. And for those of you like me this is our heyday as deal-of-the-day sites explode offering us insider prices on everything from cocktails to photo books and Pilates classes.
At just two-years-old Groupon, the leading daily deal coupon site (despite their disastrous Super Bowl ads) is valued at as much as $25 billion. This coming just months after they turned down a measly $6 billion bid from Google. Today Groupon has 70 million users in 500 markets and from the looks of their job board has no intention of slowing growth.
LivingSocial, the much talked about runner up is a fierce(ish) competitor with 662,994 daily visitors and roughly $50 million in revenue per month. They just secured a $175 million investment from Amazon and are making big claims to leave Groupon in the dust this year. Beyond the estimated 320 daily deal sites the web kingpins are rumored to be plotting to join the market too, Google with Google Offers and Facebook with the expansion of Deals.
The U.S. daily deal market is predicted to reach $3.9 billion in 2015 and grow by as much as 138% this year alone. But analysts question the true valuation of these companies and also raise concerns about the longevity of the market. Will we get daily coupon fatigue? Will the competition crumble the market? Will retailers rebel? Will daily deal startups be able to maintain the high revenue-generating model? My guess would be no, no, no and probably not, but only time will tell.
Consumers will eventually weed out the failed piggy backers or the leaders will swallow them up one by one. But the fittest will also be forced to evolve. What group deal services lack now is a fully social experience. Deal-of-the-day services need to take some tips from Facebook and Yelp and let me know, “Hey Robin, six of your friends are buying this deal, three of your friends love this business and Morgan says she is in if you are.” Elevate the experience for potential consumers and make the decision to purchase that much easier.
It looks like LivingSocial got the hint to expand upon the social aspect as they have purchased SocialMedia.com, a digital advertiser that leverages people’s social relationships in ad units, for $3 million in stock. One thing is for sure — it will be interesting for us as consumers and PR pros to see how this market continues to grow.
You can follow me on Twitter @RGDwyer