Consumer Deals Spend to Hit $4.2B in ’15

September 13, 2011

bia-deals-sep-2011.JPGUS consumer spending on deals (including daily deals, instant deals and flash sales) will grow from $873 million in 2010 to $4.2 billion in 2015, representing a 36.7% compound annual growth rate (CAGR), according to a September 2011 forecast from BIA/Kelsey. Deals spend is expected to reach $1.97 billion this year, about 2.25 times the 2010 total.

In March 2011, BIA/Kelsey had predicted 2015 deals spending at $3.9 billion, with a 35.1% CAGR. This revised forecast increased the 2015 total by almost 8%. However, revenues for 2011 have been revised upward significantly, by about 64%, from the $1.2 billion originally estimated in March.

More Registrants, Specialization among Driving Factors

BIA/Kelsey analysis indicates a bigger increase in the number of registrants for deals services is one of the key factors driving heavy growth in consumer deals spending. Market leaders Groupon and LivingSocial have expanded quickly and many more participants have entered this arena, including vertical sites and local media companies, either in cooperation with Groupon and LivingSocial or through white-label firms.

In addition, BIA/Kelsey cites greater specialization of deals sites (both vertically and by neighborhood), better targeting capabilities and continued marketing of these services as all leading to more activity by registered users.

Other key deals spending growth drivers include:

  • Growth in the number of registered users who are “active” (e.g., buying coupons).
  • Increase in the average number of transactions, resulting from more efficient providers of these services and expansion of the types of products and services being offered (e.g., more travel deals).
  • Rise in the average price per transaction, owing to general inflation and the attempt by some providers to offer more valued services at higher margins.

Groupon, LivingSocial Lead Deals Pack

BIA/Kelsey says Groupon and LivingSocial will continue to lead a growing marketplace of 600-plus players, which include destination sites, white-label providers working with local media such as directory companies, newspapers, and radio and television operators; vertical players; mobile/location-based providers; flash sales sites; exchanges; and aggregators.

“It’s worth noting that the deals market continues to grow, despite the recent departure of Facebook and others that may not have been well-equipped to invest the time and money necessary to participate in such a crowded market,” said Peter Krasilovsky, VP and program director, Marketplaces, BIA/Kelsey. “We expect to see local media companies leverage their existing promotional, sales and other local assets to play a significant role in this industry, alongside today’s deals leaders Groupon and LivingSocial.”

More information about the different players in the daily deals market is available at MarketingVox.

RetailMeNot: Discounts Promote Online Loyalty

Eight in 10 (82%) online shoppers say they are more loyal to businesses that offer regular discounts than to businesses that offer occasional discounts, according to data released in August 2011 by RetailMeNot.com and Harris Interactive. Despite this high preference for discounts, only 27% of online shoppers use coupon sites, while 22% use daily deal sites.

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