DMS ’11: The Next Wave of Deals Is Still Rising

For all the recent negative bluster in the deals space, including one report of its imminent demise, BIA/Kelsey has a decidedly different message for the dissenters: “We still like ’em.”

At DMS ’11, Marketplaces Program Director Peter Krasilovsky painted a sunnier picture of the robust and still-rising group buying industry. Among the notable growth signals are exceptionally big email lists with high (yet declining) open rates, a “no money down” value proposition and the equivalent of free advertising for participating merchants.

Groupon’s Chicago mailing list, in fact, more than doubles the combined lists of the market’s two daily newspapers. This opens up a universe of integrated marketing and promotional possibilities for SMBs far exceeding the deal of the day.

BIA/Kelsey’s recently updated deals forecast reflects our bullish view of the market. VP of Research Mark Fratrik sees the user base broadening. Combined with better personalization and targeting of deals (including mobile and flash deals), the result will be more relevant offers to a bigger audience. The forecast charts revenues increasing at a decreasing rate, ramping from $1.9 billion in 2011 to $4.1 billion by 2015. Mobile integration, specialized niches (B-to-B, for instance) and loyalty/retention tools can amplify the market even more.

Then there’s the evolving role of social signals in driving deal virality. While Facebook recently withdrew its Deals product and Yelp has scaled back, we still see promise in providers that are able to create powerful recommendation and referral loops that tap into social connections and affinity-based buying communities (moms, to name just one).