Closely Blog

Crumbling Silos: Daily Deal Distribution in Transition

The distribution of Daily Deal offers to consumers has grown up through opt-in email lists. While social sharing plays a supporting role, the mainstream model is pretty simple and self-contained, and drives a healthy spend on display advertising to feed email list growth.

Today, GroupOn’s strategic advantage centers on the scale to which it creates an audience for an offer. They have amassed an email list hovering at 40 million consumers, whose attention is tuned exclusively to review and acting on “advertising”. This is indeed a commerce gem.

However, I expect we’ll look back on 2011 as the year that distribution of offers started to become more dynamic and dispersed. A major shift will happen as the industry expands and refines itself.  The world of Daily Deals will increasingly connect into the existing search, discovery and promotion ecosystems.

Works in Progress

Real-time, organic search and ad network shifts are underway, and they all expand how consumers will discover and consume offers in the future.

1. REAL TIME: Expansion of Live + Mobile

Daily Deals are just beginning to morph from featured daily offers towards the bold new world of “Live Deals”.  Mobile will lead the charge in driving the industry in this direction.  It will pressure deals to be published for instant action, expanding from today’s primary use case of email > print > offline redemption.

We are already seeing Mapping and LBS applications adding Offers as shopping-related content and tools. Facebook’s Deal approach is check-in centered and designed for live discovery via mobile interaction. Live local search and Daily Deals exist in parallel universes today, but they are on an unmistakable path of convergence.

Live marketing brings the promise of better matching between supply and demand for businesses with perishable inventory. The migration from sporadic lead generation campaigns to local business yield management is a heady transition, but the impact promises to be profound.

2. ORGANIC: Offers in Search and Shopping/Discovery Applications

The more deals get published, the more consumers come to expect offers, and the more the content will be drawn into the search ecosystem.  As search embraces real-time content, and as Twitter and Facebook embrace search, offers will become increasingly integral to shopping behavior.

Today, most offers created by deal suppliers or businesses are tweeted and/or posted to Facebook.  These posts are indexed by search engines continually – we’ve observed over 20 live index bots hitting Twitter whenever an offer is posted.  While the content of the tweet/post is indexed, the offer details are not, nor are the offers connected to the originating business.

Two parallel standards initiatives provide mechanisms for placing offer content from businesses more squarely into the mainstream web and real-time worlds. Open microformats, actively supported by Google and Twitter’s annotations both aim to capture better structured content.  Additionally, an industry group sponsored by Tippr is working on an open deal format model to promote better exchange of offer content, focused primarily within the Daily Deal ecosystem. Closely is active in all of these initiatives.

3. AD NETWORKS & DEAL FEEDS: Deal Content in Traditional and New Channels

The local advertising industry is coming to view Daily Deals as a powerful new performance ad product. With a continual downward pressure on traditional display and search ad products,  the shiny object of Daily Deals is becoming a source of active development.

You’re seeing Ad Network operators experiment with Deal-based ad content with new price models. While existing ad channels embrace Deal-based Ads, a new generation of  deal aggregation channels is also rapidly in formation.

Products such as DealExchange and OfferEx present first generation examples. You also see a growing array of deal feeds finding their way into distribution on local search sites, providing exposure to consumers while they are initiating local business queries. Last time we counted there were over a dozen “deal aggregators” independently collecting up deal content and creating portals and distribution-centered business models.

Silos Shift to Ubiquity

These trends have motion, so it is obvious that Deals are on a path to significantly expand how they are discovered by consumers.

The implications for small businesses are favorable.  New choices for getting offers to more and different consumers will bring more opportunity to the business’ doorstep.  Of course, choice also increases complexity, and small businesses will need more assistance to simplify and take advantage of the opportunity underlying these shifts.

These shifts also add an opportunity for traditional media companies to participate in new ways in the industry without simply copying the GroupOn model. At the end of the day, GroupOn’s incredible value is anchored in the ability to bring an offer to an audience. We’re on the cusp of an exciting set of new ways for this same value to be expanded and reinvented.

We’ve been building ahead of this curve for some time, and it’s exciting to see the industry rapidly opening up and redefining how business promotions connect with consumers.

3 Responses

  1. Mike Flanagan

    I’m going to bookmark this post because I think you are 100% correct Perry. I can’t wait to see everything play out in this space. Keep building ahead while others try to catch up.

  2. Jeremy Hill

    I think this whole industry is moving towards a DIY model like MySalevent.com . Time will tell.