The Growth of Daily Deals

As a girl who was raised in the Tennessee country, I’ve been constantly faced with completely new and interesting experiences since I moved to Baltimore earlier this year. Things like “crab cakes” and “public transit” and “major league baseball” have become weekly or daily occurrences, and I am blown away on a regular basis by all the different things to do in the city.

So it comes naturally that I scour my daily Groupon and LivingSocial emails for good deals around the city.

As a marketer, I’ve been paying close attention to the growth and adjustments of these daily deal sites as more and more competitors have started entering the market- and rightly so. CNBC  said in December that Groupon was on track to be the fastest growing company of all time, with revenue projections of $500 million in 2010. The real number was even higher- an internal memo leaked by the Wall Street Journal in February put Groupon’s 2010 revenue at $760 million, a 2300% increase over 2009. Add to this a controversial television campaign that debuted during the Super Bowl and the fact that internet giants Facebook and Google have recently begun their own coupon services, and daily deal services definitely have my vote as “the Next Big Thing.”

So the looming question is: what’s next for Groupon and can it continue to sustain such huge growth now that the market is saturated with competitors? After turning down an estimated $6 billion buyout offer from Google in December, Groupon is expected to launch an IPO in the second half of 2011 (http://www.reuters.com/article/2011/04/15/us-groupon-idUSTRE73E02S20110415) that will potentially value the company at $15-20 billion dollars. However, it is the effect of Facebook Deals that will hold the most interesting effects on Groupon as the rest of the year develops. Can Groupon continue to hold its niche as the internet giant closes in?

So far, the signs point to yes, and the clue is that location-based networking service Foursquare has (surprisingly) continued to see growth despite the introduction of Places to Facebook’s basket of services. Facebook’s gigantic user base notwithstanding, Foursquare has grown by over 5 million users since its main competitor came into existence. As a case study, this seems like good news for Groupon: amid growing concerns of internet privacy and behavioral marketing, consumers just don’t seem eager to see Facebook as the one-stop-shop “WalMart of The Internet.” It therefore seems appropriate that Groupon and Foursquare are expected to make an official announcement soon that they are teaming up to offer highly specialized deals based on current location.

For the moment, it seems the internet is big enough for everyone. How long that lasts, however, is the question of the year.

Author: Laura Brown

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One response to “The Growth of Daily Deals

  1. Thanks, great post. I appreciate it!

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