Tag Archives: Deals

Strong Holiday Outlook for Deals

Black Friday and Cyber Monday for holiday shopping are bed rocks of the nation’s economy. Where do deals fit in?

As Bloomberg reports, Yipit Data forecasts that U.S. consumers will spend $80 million to $100 Million on daily deals gifts between Thanksgiving and Christmas, up from $15-$20 Million in 2010. A separate poll of 10,000 Yipit users found that more than 90 percent said they were likely to buy a daily deal as a gift this year.
Our gut also tells us that deals will be attractive for the holidays.

• They are fun and not stigmatized as “cheap”
• National brands account for roughly 15 percent for major sites, and will have some very attractive deals set for the major destination sites
• Social deals that give a free deal for three or more buys lend themselves naturally to the holidays.

The sites seem like they are prepared. As the Bloomberg article notes, Groupon expanded its Grouponicus holiday site to more than 40 cities, up from 20 last year. It also added more deals involving unique experiences, including tickets to Ellen DeGeneres and a half-price helicopter ride in New Jersey.

Deals are prominently featured at ILM West Dec. 12-14 in San Francisco, with cutting edge data from BIA/Kelsey and Local Offer Network; major media companies such as CBS and Belo talking about their experiences; and next wave providers including Thrillist and Scoutmob. Register here.

Rethinking Deals after Facebook and Yelp Pullbacks

Facebook and Yelp are downsizing their separate deals initiatives after launching them with some fanfare. Facebook is now limiting its deals to users that check-in to businesses; and Yelp is sharply reducing the number of deals that it features, while continuing to support self-serve efforts that are integrated with other Yelp ad products.

Are these pullbacks a sign that deals are collapsing even before Groupon’s IPO? I don’t read it that way at all (and quickly note that Google, Amazon, AT&T and others are still ramping up their “Groupon killers.”)

To me, Facebook and Yelp are mostly following former GE head Jack Welch’s edict to always be among the Top 2 players. As Welch famously said, “When you’re number four or five in a market, when number one sneezes, you get pneumonia. When you’re number one, you control your destiny.” In the case of both companies, they can buy their way in later.

Let’s look at Facebook first. Conceptually, there has been much to admire in Facebook’s prospects in deals. It had strong potential to target users based on their FB posts (i.e. proclivity to go to happy hour, buy discounted travel, and attend jazz concerts.).

It also has been poised to use Facebook messaging to lessen reliance on email overload – a real advantage if one accepts the idea of email fatigue. The site’s ability to ramp up Facebook Credits as a transactional agent also loomed large for closing the loop on sales.

But as Facebook realized, none of these conceptual advantages were really ready for prime time. Moreover, during the four months that it was in the deals market, its ability to source deals from other players resulted in nothing special and inevitably, in an “also ran” status.

Perhaps Facebook can come back via a smart acquisition –including some feet on the street. Meanwhile, its local efforts continue to smartly build via Ads, Pages and Sponsored Stories.

Yelp, similarly, saw a ripe opportunity to highlight local deals when it entered the marketplace a year ago. It also, ambitiously, was seeking to source deals via a ramped up local deals sales force – taking on the big players directly. In June, it integrated its deals into its smartphone apps in more than 20 markets.

But Yelp may have been a little out of context in the deals space – it has such a strong identity for its local business reviews. And the requirement to highlight a daily deal for a site that might be a less regular habit ended up watering down the deals quality. According to data from Yipit, Yelp’s deal revenue was down from $30,000 a deal at the beginning of the year to $10,000.

Yelp now says it will focus on fewer deals that can get more attention. Weekly service deals featured on sites such as Angie’s List and Kudzu have done well in this manner.

So — what conclusions can we draw from these pullbacks by Yelp and Facebook? Some of the press thinks it means that deals are going down, having already peaked. This is supported from Yipit data, which shows that 38 daily deal companies have recently quit the business, while just 36 jumped in. (a point of trivia which means nothing at all, really.)

But here’s another thought: what if the pullback shows that there really are, perhaps, barriers of entry after market leaders have been established. This is what Groupon board member Ted Leonsis cryptically suggests.

But I would suggest that there are other signs of vulnerability – for the big guys as well. I think there is little doubt that deal quality –and the positioning of deals –has really suffered. In my market of San Diego, the same deals are being repeated, and uninspired merchants are being featured. Indeed, hardly anything has tempted me (or amused me) for months.

It is probably a reflection of my personal interests, but the only deals site that consistently engages me is Marketsharing, a B2B site that constantly comes up with fresh takes on B2B offerings (messenger delivery, cleaning services, copier discounts). In the end, it might be the interesting niche sites with highly curated offerings that really end up driving this thing.