Thought I’d do some liveblogging of Jim’s talk at ILM East.
First a couple of Deal-a-Day forecast nuggets from Bobbi Loy-Luster
Volume will increase but growth rates will taper off.
$873MM in 2010 daily deal revenues
Low forecast = $2B in 2015. High forecast=$6B.
Now to Yipit:
Yipit aggregates daily deals from a variety of providers. About a month ago they started selling data.
Yipit has found over 400 daily deal sites which means there are low barriers of entry.
TravelZoo and OpenTable – public companies whose market caps have gone up substantially partially thanks to daily deal initiatives.
There are high barriers to scale. If you have a bigger list, you can sell more deals, and spend more in marketing and sales in a virtuous circle.
Moran thinks the biggest opportunity is in Merchant Services.
Top 20 Markets for Feb 2011:
Groupon offered 2116 deals and sold 730 for $39,007,032 revenue and $18,584 per deal.
LivingSocial was #2.
DealFind in Toronto was the top February offer. The Butchers offered 69% off. sold 11,404 and DeaFind got $600K in revenue.
Hair removal is the most revenue generating category
Food & Grocery is #2
Most frequent offers tend to be lower generating because more consumers will find the interesting.
Major players price offers for either volume or revenue. For example a $1 movie ticket will generate a lot of volume but not much revenue.
Breakage rate is <= 20%. As days since promotion gets longer the more deals get redeemed, but initially the breakage is around 45%.
Profitable at 19% Retention – I need to get that slide.
According to a Yipit phone survey of 80 merchants from summer 2010, 93% said they would do another daily deal, 43% said they will shift ad spend from current channels to daily deals.
The biggest surprise is that LivingSocial is closing in on Groupon and new players were able to come into markets and do well.
Location is a big driver of retention so that as personalization increases and deals get more targeted to your location, retention will increase. Everyday services like hair salons seem the best candidates for this.