In true McLaughlin Group style, Greg Sterling moderated the final session at Deals 3D — “Deals: The Next Stage” — more as a rapid-fire roundtable than a traditional panel. He dished, they debated. So, consistent to the theme, here are samples of how Closely’s Perry Evans, Wantsa’s David Strebinger and Deal Current’s Jimmy Hendricks see the next 12 to 18 months in deals shaping up.

Where are deal provider/merchant margins headed? Is compression inevitable?

Evans: “Deals, offers and specials are on a collision course, morphing into a seamless stream of promotions. Merchants won’t pay 50 percent to get people to walk across the street.” Margins will only remain at a reasonable ratio for deal providers that create a solution that “businesses feel can become an everyday tool.” The numbers: 15 percent to 20 percent to market to your own network; 25 percent to 30 percent for high-quality lead generation.

Hendricks: The bigger question is “what else can we offer so that we’re not relying on one leg?” This could include email management and other marketing platforms, both of which could move group buying companies from touting a one-off trick to taking a more central position in the merchant CRM dashboard. The number: Presuming this occurs, then 20 percent to 25 percent is fair.

Strebinger: Speaking of bigger questions, Strebinger asked “20 percent of what? The market can’t work off of percentages the way it has. It has to move toward a marketplace where publishers get paid based on the actual result for the merchant [a.k.a. cost per acquisition, varying by business segment].” Call this the “fair market value,” or true performance, model.

What, if anything, creates merchant loyalty to deals providers?

Evans: “At the end of the day, it’s the merchant’s proposition that breaks through.” In other words, the fight to be affiliated with better brands is raging.

Hendricks: “Loyalty is to the merchant, not the deals company.” This is especially so with big-box deals companies — Groupon, LivingSocial, et al, that are marketing across multiple industries with little perceptible differentiation. The brands that break through will be those that “offer integrated services — two or three different products and analytics that convert customers into repeat visitors.” The outlook could be better for niche sites with targeted audiences that trust in the value they deliver.

Groupon’s Forecast — Sunny or Stormy?

Strebinger: Stormy. “It’s very difficult for any first mover to pick the exact perfect platform. Groupon doesn’t think the way that LivingSocial or Google thinks in terms of how to make things more relevant or social.” It’s the fundamental difference between “innovation and replication.” He thinks Groupon is doing the latter.

Evans: Potentially sunny, with this disclaimer/recommendation: “Groupon post-IPO should buy OpenTable, Yelp and Foursquare so it’s not just a one-trick pony.” Its “huge checkbook” will open doors to strategic acquisitions that could diversify the brand.

There are 500+ deals sites (and that may be conservative). When will we see consolidation, and how much?

Hendricks: Consolidation will also mean diversification. Larger players “won’t just buy deals site for email lists, but will look for content buys and lifestyle buys.” With that being said, “lots of small-to-medium players that serve a purpose in small, niche markets will do very well.”

Strebinger: “Private equity firms, venture capital groups and public companies are all looking at roll-ups. The number will be “cut in half in the next 18 months.”

Evans: Don’t forget about the potential consolidation of the enormous group buying sales engine. “There’s a whole new sales force being created on the back of this industry.”

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There are already many types of deals and a plethora of deal providers. And all signs point to even more growth and variety.

To peer a year or two ahead, moderator Matt Booth led a discussion with four seasoned players in the deal space on Tuesday afternoon. He asked them for their predictions of the key developments in the deal space over the next couple of years. A summary of their comments:

* Charles Dyer, Director of Business Development, Advertising Publishing Solutions, Microsoft Advertising. Dyer predicted improvements in deal payment systems, better CRM solutions and better targeting.

* Nancy Law, Director, Local Advertising, NAVTEQ. She said “location and opportunity” (i.e., meeting immediate consumer needs) will take on a greater importance in the deal space.

* Terry Kukle, VP Business Development, Metroland Media (a traditional media company in Canada with some 600 sales reps). Kukle opined that having a variety of deal types will be a key to success.

* Samuel Yam, Founder and CEO, ChompOn, a white-label deal platform. Notwithstanding ChompOn’s focus on platform and technology, Yam believes there still needs to be “a level of curation” to selecting deals for distribution. (An intriguing sidebar: Yam has modeled the value of designations on Facebook. He has determined that the average value of a Facebook “like” is around $8, and the average value of a Facebook “share” is around $14. Of course, these values vary considerably by category. Also, his analysis indicates that a “share” on Facebook converts at three times the rate of a tweet, by way of comparison.)

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For Part Deux of the Mobile Meets Deals series, host Mike Boland continued his dialog with segment leaders.

First up was Brian Knapp, VP of Business Operations, Loopt.

Knapp presented Loopt’s new u-Deals program, launched a few weeks ago on Android and the Web. He said u-Deals “Puts the power of the crowd in charge of deals.” It works as follows: Users create a deal, share it with their friends and submit it to the target business. If the business approves the deal, the deal “tips” and everyone can redeem it. If the business doesn’t approve the deal — well, better luck next time.

Although this “roll your own” approach is highly unusual in the deal space, Knapp said there’s nothing loopy about it. It seems to be taken seriously by both consumers and merchants. As a model, Knapp said, “This fundamentally changes the conversation with merchants.” He continued, “This harnesses the passion of customers,” and incidentally, helps mitigate Loopt’s need for a sales force to sell the program.

Next, Alistair Goodman, CEO of Placecast, talked about the deals offering of this location-based mobile marketing company. He noted that Placecast provides the platform for many deal providers, including O2 (U.K.), AND AT&T (which announced its daily deals program at the Deals 3D conference yesterday — also blogged by yours truly).

A key uniqueness to the Placecast program is that it works without needing an app on the consumer’s phone — it’s embedded in the network. Because of this, Alistair said “Placecast is built for scale,” truly an all-star approach. Placecast can offer unique tools because the platform is imbedded in the network. These tools include the ability to tailor the same promotion to dynamically adjustable geo-fenced locations.

Goodman showed the user-friendly GUI and performance dashboard (which can also be used to dynamically adjust the ad/deal campaign). Placecast also provides a deal self-serve capability for the merchant.

Finally, Mike introduced Perry Evans, CEO of Closely. (Although Evans is a seasoned veteran of the local space, he doesn’t yet have any visible signs of PTSD.)

Evans depicted Closely’s business model with this metaphor: “We provide the remote control on the deals that a business offers.” The Closely platform sits on top of APIs of social media (Facebook, Twitter, Place Page on Google, and Deal Map among others — and also links to the merchant’s own website).

The business simply needs to create the promotion; Closely handles all aspects of the distribution. The Closely platform tracks the various offers the merchant is running, and gives the merchant the ability to start or stop the deal, change the distribution, etc. (ah, there’s the “remote control” metaphor). With the Closely platform, the merchant can also create a private deal, delivered to selected customers only.

Closely also aggregates the list of the merchant’s customers, and provides analysis, tracking and even customized campaign-creation. Collectively, these tools provide a robust tool set for targeted marketing tool, going well beyond the capabilities of even tailored email marketing.

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Deals are more than a one off when combined with merchant services such as mobile payment processing and scheduling, according to panelists at BIA/Kelsey’s Deals 3D conference in San Francisco today.

Daily deal merchants can get a higher rate of return on their daily deal offer by implementing scheduling and reminder services, noted FullSlate CEO Bill Lange. “We are focused on a higher level of service and have customers with a higher lifetime value,” he said.

Lange said that service merchants in particular are facing a common challenge: They need more business, but they are worried about cannibalizing the rest of their business by having all the “regulars” slots filled with discounters. By implementing FullSlate’s scheduling service, however, merchants can reserve key times for their regular customers. They can also send out appointment reminders to keep down the no shows. After appointments, they can send out discount coupons to keep customers coming back.

Schedulicity Executive VP Dave Galvan said that scheduling software also lets businesses scale their group buying deals. One hairdresser in Bozeman, Montana, sold 200 deals, but it took 12 minutes on average to schedule each customer via phone calls. And the slots weren’t available. “Everybody wants Saturday at 11,” he noted.

The hairdresser reached out to us for help, said Galvan. Deal management and time of deals are the two most important things we do. Email management is a valuable extra. “Getting the email address of a consumer is a very simple thing that merchants forget,” said Galvan.

But merchant services go much broader than scheduling. MonsterOffers CEO Paul Gain noted that it is especially useful for merchants to get a rich picture of what their customers are doing. His company has a prepaid mobile card that not only handles transactions, but also lets merchants see what other local activities customers were doing, and at specific times. “It is a very useful set of benefits,” said Gain.

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Who cares what happened when Harry met Sally!? The real action is here at the Deals 3D Conference, where “Mobile Meets Deals.”

In “Part I: Heavy Hitters,” host Mike Boland ran a triad of fast-past interviews with key players rooted in the local online space.

First up was Tristan Walker, Director, Business Development of Foursquare. Walker summarized the company’s guiding principal by saying “Foursquare is trying to make cities easier to use.” Foursquare now has some 500,000 participating merchants (nothing triste about that!)

To support its new deals business, Foursquare is focused on generating robust data on a customer’s business with a given merchant, in three data buckets:

* Recency
* Frequency
* Value

Walker said Foursquare gets about 750,000 check-ins daily. The data set generated by these check-ins is now used to drive the “Explore” tab in Foursquare, in which a personalized list of options is generated by Foursquare for the user. This “Explore” tab now includes daily deals (via partnerships with leading deals providers, including AT&T, Gilt, LivingSocial and others). The deal offerings use the Foursquare platform and environment, under a revenue share arrangement with Foursquare.

Tristan also commented on Foursquare’s arrangement with American Express. This is the first time a deals provider has linked with Amex for a paper-free deal path (although more such deals have since been launched). In this arrangement, once the consumer signs in with Amex, information on that consumer is sent to participating merchants, so when that consumer redeems a deal at a participating merchant using his or her Amex card, the deal terms are already in the system.

Next, Eric Singley, Consumer Product Lead, Yelp, confirmed that Yelp has recently acquired its 20-millionth review (talk about user-generated content!). He said Yelp is now in 10 countries — with more international expansion to come soon.

In the U.S., more than one-third of all Yelp.com searches now come from mobile devices. Mobile is “one of the fastest areas of growth for us,” said Singley. Partly to leverage this strong mobile presence, Yelp launched “Deals on Mobile” a few weeks ago. The product is supported by a sales force, as well as a self-serve option for local businesses.

Singley emphasized Yelp’s singular focus on distributing only high-quality deals that are relevant to a particular consumer. Yelp also has a big focus on content, building on their enormous inventory of reviews.

Next up was Evan Tana, VP of Product Management, Shopkick.

Shopkick has pursued a different model for “check-ins.” With Shopkick, the user is checked in automatically when he/she enters a participating store. A reward is given simply for walking in the store, via “Kicks” currency. (Kicks are transferable within Shopkick’s network of partners, and given the state of debt negotiations in Washington, may soon be worth more than the U.S. dollar).

This automatic check-in starts the conversation between the consumer and merchant right away, upon the consumer’s entry to the premises. Shopkick’s overall value proposition: drive incremental foot traffic to retailers. (Tangentially, Tana pointed out that on-premises conversion rates are much higher than online conversation rates.)

Consumers can participate in Deals offered by Shopkick. The deals come from 2,500 retail and 160 mall locations in Shopkick’s Retail Partner Network. Deals are generated by partners, which include Best Buy, Target, Sports Authority, Macy’s, and Crate & Barrel.

For the youngest of the three companies in this segment of the deals conference, Shopkick has really kick-started its model, having quickly ramped up to some 2 million active users.

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Cardholders will link their AMEX accounts to Facebook’s “Link-Like-Love” application. They will then be able to access special AMEX deals specifically recommended based on their social graph, including their likes and check-ins and those of their friends. Once chosen, deals will link directly to cards for seamless point-of-sale redemption by consumers and easier real-time visibility for merchants.

“Closing the loop” on deals transactions has been a persistent “last mile” problem. That’s expressly why we see credit cards, banks and other financial institutions aggressively migrating into the space — combining their payment systems and purchase data for a complete solution.

Facebook benefits through close alignment with AMEX by accessing its wide reach with businesses (big and small). It’s also a compelling experiment by the social media giant to move closer to consumer credit cards to more seamlessly layer commerce onto the platform.

Lexi Reese, Facebook’s director of local sales, defended the seminal role of the social graph in sourcing quality offers during a keynote address at Deals 3D. Among the data she cited: Sharing deals triples purchase probability; “liking” them raises that to 10x. Also, “well-curated deals sell better at higher price points,” and inherently social categories (restaurants, entertainment, fitness, recreation) perform best.

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At Deals 3D, Tippr CEO Martin Tobias, Analog Analytics CFO Oliver Gratry and HomeRun Founder Jared Kopf debated the drivers of sustainable exchanges that can operate as important connective tissue in this complicated network.

Tippr offers a white label for publishers, while also serving up its own deals across 17 markets. It has since developed software to combine both elements into a deals marketplace. Analog Analytics focuses singularly on white-label technology for hundreds of publishers, with an added syndication layer to increase scale. Kopf calls HomeRun’s Offer Engine an “integrated inventory management platform.”

Each, however, has different twists on the exchange model with different impetuses moving the flywheel. With 70 in-house Tippr sellers, Tobias ardently believes that “you must provide some level of unique inventory yourself.” Gratry counters that Analog’s pure technology platform is what allows publisher partners to optimize scale. Kopf seems to fall somewhere in-between, seeing value in using sales as an early pipeline filler, but not creating any preferential economic terms for HomeRun’s sellers.

Where all three come together is in the need for exchanges to leverage deep transactional data to establish correlations that can lead to smarter deal and audience targeting. Analog Analytics aggregates partner data to educate its customers in each market. Tippr inputs publisher audience and deal history into an algorithm that creates “deal rank.”

Increasingly, exchanges can also optimize deals for merchants by supporting publisher white and black lists and offer run periods (or “windows”).

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Lately I’ve been exploring our video archives to pull out hidden gems and relive some of the important takeaways from our past conferences.

Appropos to our Deals 3D show coming up in just over two weeks, I spent some time clipping bits and pieces of Groupon CEO Andrew Mason’s keynote from our Marketplaces 2010 conference in San Diego.

Some of the discussion is familiar territory for those close to deals and group buying models. But there are some interesting insights and good moments from the always-entertaining Mason.

Of note is his discussion about working with resellers (second video), exchange with Valpak (third video) and quotes like this (on competition):

“We kind of have a way of wiggling in there and displacing people. At some point you guys will figure that out and try to kill us harder.”

Classic Mason. See the rest below. Also note, this represents a larger effort to better mine our conference content for good material to share here. Stay tuned, as they say.

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Readers of the blog know that we believe the deals space is the springboard for the next generation of …dare I say it…Local Online Commerce. Our Deals 3D conference July 18-19 in San Francisco is the one that couldn’t wait until ILM West in December. Everything is happening right now, as daily deals become a major entry point for merchant services and marketing.

Some of the 50 cutting-edge leaders have been pre-announced. Here’s the close-to-final lineup — placed in categories that inevitably overlap. You can register here.

Keynoters
• Steven Boal, Coupons.com
• Gary Kearns, MasterCard
• David Krantz, AT&T Interactive
• Lexi Reese, Facebook

Deal Sites, White Labels and Sales Forces
• Samy Aboel-Nil, Tippr
• Derek Beckmann, Descuentro Libre
• Matt Coen, Second Street Media
• Oliver Gratry, Analog Analytics
• Jimmy Hendricks, DealCurrent
• Greg Isaacs, AT&T Interactive
• Scott Jampol, OpenTable
• Jonty Kelt, Group Commerce
• Jim Kerr, Triton Digital
• Ken Khandara, KGB Deals
• Jared Kopf, Homerun
• Malcolm Lewis, Local.com
• Lilia Martinez-Coburn, TownHog
• Andrew Moss, BuyWithMe
• Prashant Nedungadi, NimbleCommerce
• Florent Peyre, GiltCity
• Rich Razgaitis, ReachDeals
• Darren Waddell, MerchantCircle

Mobile/LBS & Deals (and Instant Deals)
• Sam Altman, Loopt
• Charles Dyer, Microsoft
• Alistair Goodman, Placecast
• Terry Kukle, Metroland Media
• Nancy Law, Navteq
• Eric Singley, Yelp
• Evan Tana, Shopkick
• Dan Visnick, The Dealmap
• Tristan Walker, Foursquare
• Samuel Yam, ChompOn

Coupon Leaders, Transactions & Deals
• Loren Bendele, Savings.com
• Robert Boniface, iCoupon
• Kimberly Cook, Greenlink Networks
• Andrea Gilman, MasterCard
• David Goldfarb, YourBestDeals.com
• Mark Marinacci, Edo Interactive
• Rebecca Watson, RadiumOne

Social, Services & Deals
• Paul Gain, Monster Offers
• Dave Galvan, Schedulicity
• Bill Lange, Full Slate
• Darin Myman, PeopleString
• Josh Walker, CityVoter
• Stuart Wall, SignPost

Vision and Critical Assessments
• Rocky Agrawal, TechCrunch Contributor
• Perry Evans, Closely
• Jim Moran, Yipit
• Greg Sterling, Opus Research
• David Strebinger, Wantsa

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Deal aggregators sort through daily deals and find the best ones for consumers in return for a piece of the action. They are primed to make up a healthy part of the extended family of deals products. But it isn’t certain whether they’ll maintain the cooperation of major deals companies. LivingSocial and others have made efforts to close off some of them.

But aggregators such as The Dealmap, Yipit, Dealradar and 8coupons are making a go of it, convinced that email fatigue is inevitable, and that consumers need help sorting through 500+ daily deals. Also convinced, apparently, are Highland Capital Partners, RRE, DFJ Gotham and IA Ventures, which each participated yesterday in a $6 million, Series B round for Yipit.

As the news broke, Yipit reported that it aggregates 500 daily deal sites in 32 different cities (although about one-third of those sites, or 161, are for New York). It also says it has 250,000 subscribers, sending roughly 20,000 people a day to third-party sites. Between 5 percent and 10 percent — or 1,000 to 2,000 — buy a deal.

My colleague Jed Williams sat down today in New York with Yipit cofounder James Moran. Moran told Jed that there are many reasons for optimism about the space, although the ramp-up hasn’t always been easy. Personalization, for instance, has struggled because there aren’t enough quality deals to match personalized preferences. “Locationized personalization” seems to have a better shot.

And then, there is the question of what is the ideal location radius. In New York, it’s 10 to 15 blocks. In Dallas, it is a 30-minute drive radius. Moran notes that Yipit has worked to tackle this issue, aggregating deals for a user’s work and home routes. But it is still mulling over how to handle subway routes. One thing that has developed nicely is that Yipit has ramped up a lot of destination and search traffic and is no longer tied so much to emails, which don’t convert as well.

Jim Moran is a featured speaker at our Deals 3D conference in San Francisco July 18-19, along with executives from The Dealmap and 40+ others.

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