What's the Deal with Daily Deals? How Many Do We Need? How Long Will They Last?

Daily deals websites are all over the headlines today.  One article says that traffic for these sites dipped dramatically last week which may indicate that the market has become over-saturated with these vehicles.  To further make that point, another told how Facebook and Yelp have both scuttled their daily deals programs.

I remember when someone first told me about woot.com.  It was years ago and it was unique.  Was it the first daily deal site?  I don't know.  But it was out there early, still out there, and its very similar to these sites.

Today there are hundreds of these sites.

The play is dominated by Groupon who has nearly 50% share of the market.  Living Social comes up next with nearly 30%.  That leaves all the rest operating in 20% of the market place which makes you wonder who is making money here.  Some of those operators are huge corporations too.  My former employer, Gannett, is in the process of rolling out "Deal Chicken" in many of its media markets.  I understand they have big plans, and big budgets, hinged upon the success of Deal Chicken.  But they are pretty late coming to the game.  They currently have only 0.6% of the market and that number (along with the others I just shared with you) comes from a USA Today article, a newspaper owned by Gannett.  

There are other huge media companies getting involved in daily deals as well.  It's a simple idea that seems simple to implement so everybody jump in!  But it's also another case that proves that true innovation rarely comes from the big corporations.  It comes from the start-ups who are nimble and can take risks.  And if the idea seems to work then the "Gannetts" of the world sweep in and try to stake a significant claim.

So I guess the question I have, as we look at how crowded this market has become, is this:  Will the start-ups like Groupon and Living Social be able to hold off the giants and hang onto their dominant market share? 

Remember the old adage:  It's better to be first than it is to be better.

I think those innovative start-ups will be just fine.  Gannett tried to take a run at Google several years ago by acquiring a small search company called Planet Discover.  It floundered rather quickly after being rolled out in several of Gannett's major markets.   And Groupon seems to be taking the situation seriously as it prepares for it's IPO.  That should give them quite a war chest. 

I think advantage always goes to the original innovator as long as they are a strong marketing organization (that's where woot.com came short).  Large competitors like Gannett will give it a brave fight.  But as the market continues to be so bloated and we see site traffic continue to splinter and fluctuate providing unreliable forecasting, I predict they will also be quick to bail out. They just don't have the passionate, all-or-nothing, entrepreneurial drive as the original company.  They'll bail. 

Just like Facebook and Yelp. 

— Pete Nikiel combines 20 years of marketing experience with clear, forward thinking.  He is available to help out companies and agencies in a number of different ways.  Think of him as your utility player on call.  If you need any sort of help in marketing, branding and advertising contact Pete.  Freelance.  Project work.  Part time.  Work.