Black Friday and Cyber Monday for holiday shopping are bedrocks of the nation’s economy. Where do deals fit in?

As Bloomberg reports, Yipit Data forecasts that U.S. consumers will spend $80 million to $100 million on daily deals gifts between Thanksgiving and Christmas, up from $15 million to $20 million in 2010. A separate poll of 10,000 Yipit users found that more than 90 percent said they were likely to buy a daily deal as a gift this year.

Our gut also tells us that deals will be attractive for the holidays.

• They are fun and not stigmatized as “cheap.”
• National brands account for roughly 15 percent for major sites, and will have some very attractive deals set for the major destination sites.
• Social deals that give a free deal for three or more buys lend themselves naturally to the holidays.

The sites seem like they are prepared. As the Bloomberg article notes, Groupon expanded its Grouponicus holiday site to more than 40 cities, up from 20 last year. It also added more deals involving unique experiences, including tickets to “Ellen DeGeneres” and a half-price helicopter ride in New Jersey.

Deals are prominently featured at ILM West Dec. 12-14 in San Francisco, with cutting-edge data from BIA/Kelsey and Local Offer Network; major media companies such as CBS and Belo talking about their experiences; and next wave providers including Thrillist and Scoutmob. Register here.

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Groupon’s greatly reduced IPO is apparently set to take place on Friday, Nov. 4, in an environment much less friendly than originally envisioned last spring.

The bloom has come off for a number of reasons. Groupon has almost no barriers to entry and has had to contend with dozens and dozens of copy cats — apparently 600 at the peak. The glut of services has led to consumer and merchant overload (including lower commissions in some cases), and perhaps fatigue.

The result is that “the fastest growing company ever” appears to have slowed down and perhaps even declined in its core daily deals business, per Yipit Data.

Groupon’s evident slowdown may have helped the company run through two short-lived COOs — a very unusual situation prior to an IPO. The unorthodox distribution of its last round of funding to its initial investors also appeared to signal an internal lack of confidence in the company, greed or both.

The same could be said for the unusual accounting method in the initial S-1 leading to the IPO, which sought to downplay the company’s marketing costs in the U.S. and especially abroad. These have, in part, caused the company to be heavily in the red.

At the same time, new tools and platform products that would extend Groupon’s relationships with SMBs, specifically GrouponNow instant deals, which are mobile-oriented, have had slow ramp-ups. They’ve only had a nominal impact on the bottom line.

Again, per Yipit Data, Groupon Now resulted in less than $1 million in net revenues from May to September — although results will be bolstered now that the product is offered in 25 markets and achieves greater penetration. Other new products such as Groupon Goods, Groupon Live and Groupon Getaways have had promising results, but are not yet strong enough to bet the company’s future.

Groupon’s troubles have not been suffered in isolation. They’ve had a trickle down effect on other deals companies. Most notably, BuyWithMe, the No. 3 or No. 4 player in the space, was unable to raise money in the wake of Groupon’s problems, and has apparently been forced to sell at a fire sale price to Gilt Groupe, which may now grab its technology, lists and some of its sales force — even though GiltCity currently operates as a slightly different “flash sales” site. Groupon’s problems have also apparently caused LivingSocial, the No. 2 player, to put off its own IPO plans.

Is it all bad for Groupon and the deals space? Of course not. Groupon continues to have a basically sound business. In the last quarter, it cut off most of its marketing dollars with little apparent impact on its business. This is what we’d expect. Groupon is not a new movie, and it doesn’t need to be constantly marketed.

Groupon also continues to leads the deals segment in virtually every market it is in. Its product lineup is increasingly promising too. At the same time, we see validation in the model by the major investments in the deals space being made by Google, AT&T and Amazon (but not Facebook or Yelp).

In our view, the big money may have been nice for the early investors — although they found their own path to getting paid back. Strategically, the $25 billion valuation was largely a yoke around Groupon’s neck. At a sharply reduced valuation of perhaps $12 billion — still twice the $6 billion offered by Google last winter — the company will now have a chance to grow its set of tools and platforms more organically…and, to a certain extent, in its own sweet time.

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As deals verticalize, we’re intrigued by opportunities for B2B plays. MarketSharing is offering deals tailored for SMBs (office cleaning discounts, office copier repair, etc.).

Now, Cardinal Health, a Fortune 20 company, has launched a pilot with Local Offer Network to provide up to 70 percent off professional health practitioner “consumables,” such as medical gloves, hand santizer gel, respirators, etc. Daily deals and multi-day deals are being offered.

“It boosts the purchasing power of medical, dental and veterinary practices of all sizes,” says LON CEO Dan Hess, who suggests that such “unique product and experience,” niche deal offerings are becoming one of the next big waves in the deals space. More generally, bigger ticket items are also coming on strong in the consumer market, such as medical procedures. “If all else fails, promote a deal with a laser in it,” he jokes.

Local Offer Network provides a white-label deal platform, aggregation and syndication network services. The 17-person, Chicago-based company operates in the U.S., Canada, the U.K. and Australia, and publishes about 7,000 deals a day. The company also produces and recently relaunched Dealradar, a personalized deal aggregator now in 130 markets.

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Even though it’s a seemingly dead simple and compelling concept, Truka admitted that while most local businesses have a general awareness of what Groupon is (primarily driven by their own personal use), “they still don’t exactly know how it works for the most part.” In other words, time to take a step back.

As Groupon has exploded from its Chicago roots to a 43-country phenomenon that plans to IPO at a $25 billion valuation, it has also learned a measure of patience about what works, for whom and at what threshold. In Truka’s words, “measure twice, cut once” with merchants.

BIA/Kelsey already sees the original deal-a-day concept evolving into a broader, deeper universe of marketing, promotional and transactional products and services. Similarly, Groupon is redefining itself as a “city guide.” Its entry to mobile (Groupon Now), verticals (travel, live events), consumer-packaged goods (General Mills pilot) and loyalty (Quiznos punch card deal) suggests that redefinition is well under way.

For traditional publishers, the Groupon threat is twofold. The company is stealing share of mind and wallet from merchants. It’s also grabbing local sales resources. “We definitely hire YP reps,” Truka said. “It’s a very similar industry, and they make great reps.”

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One of the questions we have about the deals space is, how social is it really? In early days, with demos leaning toward college-educated women, deals were very social as subscribers referred deals to each other in return for a free deal, typically after three references.

As deals become more oriented toward mass mailing lists, we wondered if social aspects had plateaued. Not very much, reports Second Street Media’s Matt Chaney.

On a company webinar last week, Chaney said that referrals remain a top means of bringing in business for the white-label deals and promotions company, which now works with more than 300 local sites and has processed over 1 million deal offers. Best of all, while many customers make referrals, they don’t always qualify for the free deal, making such referrals inexpensive for the publisher.

Chaney said the company has been averaging one refund for every seven purchases. But that doesn’t dissuade the referrers. “People will keep pushing out the deal to their friends and family in the hopes of getting theirs for free,” said Chaney. “That’s how the numbers can work in the favor of the site.”

A deal with WCAX-TV in Vermont for $36 worth of movie tickets and popcorn at Majestic Cinema, for instance, sold 576 via referrals. But only 32 refunds qualified. That made the referrals worth $7,396, with an “opportunity cost” of just $576. Moreover, users who receive a referral credit are 3x more likely to buy, according to Chaney.

Referred customers are also typically more engaged than “non organic” customers, perhaps acquired via a mailing list. Referred customers and other “organics” score very high in link traffic, he said. “We consistently see that the organic email list accounts for 70 percent or more of the revenue for our sites.”

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Groupon got a flying jump investing in overseas properties that have basically cloned its daily deal concept and set up local operations. International now accounts for 54 percent of Groupon’s revenues, according to the S-1 it filed with the SEC in preparation for its IPO.

LivingSocial has not been as aggressive, mostly operating in Australia and New Zealand. But it also recently purchased Ensogo, which has operations in Thailand, the Philippines and Indonesia (where it operates under the “DealKeren” brand.

Today, LivingSocial announced a deal to acquire Ticket Monster, the largest daily deal site in South Korea. “TMon,” as it is called locally, is one of more than 500 online daily deal providers in South Korea, but has about 45 percent of the market with a mixture of local deals and manufactured goods. It has more than 600 employees and earned more than $95 million in revenues in the first half of 2011. The site was launched in May 2010 and has grown 48 percent per month for the past 15 months.

In an interview with Kara Swisher at All Things D, American-educated CEO and founder Daniel Shin, 25, who was previously with a display ad company purchased by Google, said that Korea differs from the U.S. in terms of its heavy usage of e-commerce and especially location-based services. That emphasis will fit in well with LivingSocial’s recent focus on LivingSocial Walk-In Deals (and possibly, with Amazon, which has pumped $175 million into LivingSocial and is starting its own daily service).

Local services remain at the core, but “it is more than just restaurants,” said Shin. He noted that the site has 60 deals a day and is now set to expand into other parts of Asia. Earlier this year, Ticket Monster acquired Malaysia’s Everyday.com.my, a social shopping site.

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Gannett has now publicly announced that it has expanded its DealChicken platform to 10 to 15 markets, and will be in 57 markets where it has newspapers and/or TV stations.

The company obviously enters a crowded marketplace, but will likely become an immediate contender for several reasons. These include the strength of its local media outlets, existing merchant relationships and an (often underrated) ability to cross promote deals. Its ability to scale product development is also impressive. Gannett now has more than 30 products in its stable. Its various moms-oriented verticals and Datasphere-managed hyperlocal sites should be especially helpful.

We talked with Gannett Digital head Josh Resnik last month about the rollout. Resnik said the company considered several brands, but decided to roll out with DealChicken, which has done well for AZ Central for about a year. “The brand resonates, and consumers like it,” he said.

He also noted that the company will work with a deals platform first developed by its Clipper Magazine coupon subsidiary, which is branded Doubletake Deals. Using Clipper’s platform makes sense since it was created to serve multiple local markets at once.”That’s the nature of Clipper’s business,” said Resnick.

The choice to go inhouse differs from other media companies such as McClatchy, which has opted to work with Second Street Media, a white-label company. “We’ll do a lot of experimentation,” notes Resnik. “We are in so many local markets. Each one is a product innovation lab.” Resnik also expects some success right out the door, becoming a “Top 3 player” in each of its markets in a matter of time.

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Aiming to be a Top 5 deals site by the end of next year, Local.com today announced that it has bought Southern California’s Screamin’ Daily Deals to provide the infrastructure for its Spreebird daily deals site. The site has been purchased for $12.5 in stock, cash and relief of debt, with two-year, performance-based earn-outs possibly bringing the founders up to $20 million more.

Local.com hopes to leverage the existing company user base and technology and organizational infrastructure, and scale it through its own 22 million unique visitors around the U.S. SDD is currently operating in 14 markets. The vast majority are in Southern California, but the company has also set up shop in Salt Lake City. In addition to daily deals, the company has recently launched travel deals.

SDD grossed $2.4 million in 2010 and $4.4 million during the first half of 2011. If average deal sizes were $30, that would translate into 80,000 deals and 147,000 deals respectively. One differentiator to the site is its focus on “School Rewards,” which has already brought in $409,142 to 700 local schools and nonprofits. The company donates 10 percent of its share of deals — or roughly 4 percent to 5 percent of the cost of deals — to the program. Local.com says it will continue to build on the program, which complements a charity program it runs that provides 1 percent of profits to local charities — when it is profitable. Last year, it donated $140,000.

SDD’s 60 employees have been based in San Juan Capistrano, California, but will move to Local.com’s Irvine location, which is about 10 miles north. Its three C-level founders will become Spreebird’s VP of sales and marketing, product and operations, respectively. They report to Local.com SVP and Spreebird GM Malcolm Lewis. The deal fits a recent pattern of Local.com buying Southern California companies. It had also recently purchased Octane 360, a SMB optimizer based about 30 miles north of Irvine.

We spoke with Malcolm Lewis and Local.com CEO Heath Clarke about the acquisition. They say SDD gives them “a real business platform with very comprehensive back office automation.” While there had been hopes among some that the company’s $450k acquisition of iTwango at the end of 2010 would serve a similar need, iTwango’s real strength was limited to technology and it has mostly been used for personalization, says Clarke.

One of the real advantages of working with a local destination site like SDD is that it already has formed direct relationships with local merchants. As the daily deal space shakes out, this is going to be a key battleground, says Lewis.

One area that Local.com now hopes to innovate in the deal space is its marriage of merchant inventory with deals via its recent acquisition of Krillion. With 70,000 products from 15,000 retailers, “We can pull heavily discounted inventory from big-box retailers” for deals, says Clarke.

Clarke adds that the company is “already a Top 10 deals player based on revenue. Our aspiration is to be a Top 5 player by the end of next year. And we intend, ultimately, to be No. 1 in community deals.”

Local.com’s Malcolm Lewis is a featured speaker next Monday and Tuesday at BIA/Kelsey’s Deals 3D conference in San Francisco. You may register here.

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The big destination deal sites such as Groupon and LivingSocial have developed sites in most of the 150 or so large and medium markets in the U.S. How about markets with populations less than 250,000? There are 84 markets with populations between 150,000 and 249,000, and 121 markets between 100,00 and 149,000.

The major destination sites already hit many of the medium-sized markets. But smaller markets have been zeroed in on by vendors such as Matchbin, working with local media. We’ve also been closely watching Deal Garden, a five-person destination site in four small markets (Topeka, Kansas; Sioux City, Iowa; Lawrence, Kansas; and Manhattan, Kansas) powered by Nimble Commerce. Two more Deal Garden sites are set for launch: Rochester, Minnesota, and Waterloo/Cedar Valley, Iowa.

The rub against small markets is they don’t have the volume to do many deals. The deals they do have need to spread out over multiple days. Moreover, most residents don’t need to discover merchants in their tight-knit communities. Many are also spread out geographically and less attractive demographically. There’s also an interesting theory that consumers get into the deals mode when there is intense competition among many players.

But Deal Garden cofounder Pat Lazure, who previously founded WikiCity, tells us that the pros of a small town site may outweigh such negatives. Small town sites aren’t competing with 60 other deals sites, as in Boston, and you have a great word-of-mouth factor in smaller markets, he says. Moreover, consumers are very loyal with excellent open rates. He’s seeing a 33 percent open rate for emails.

It is also easier to grab market share with local media buys since media outlets are less numerous. A campaign he’s been running on Topeka’s WIBW-TV, for instance, has made giant strides. Ultimately, the gross proceeds per subscriber are many times what Groupon reported in its S1.

The negatives are there, too, he candidly concedes. Deals typically need to run three days, instead of one. Also, markets are jump-started with low cost restaurant deals, where average spending is about $11 or $12. While deal averages are up from $9 at launch, they are still less than half the major destination sites, which might see an average of more than $30.

Lazure figures local small town consumers need to get acclimated to the deals culture. “Food first, salons and spas second, and sky diving last,” he jokes. Local merchants are also more likely to use deal sites to drive customers to new selections or to bring them back into the store rather than to get introduced to new consumers.

Yet Lazure rejects the idea that small markets might be ghettoized as simple, one-deal-at-a-time Internet deal sites, even as the rest of the industry begins to move toward multi-deal, multi-channel with lots of services. They’ll get there, he says.

Lazure also says that it is important for sites to be truly local. Some of the sites run by competitors in his areas have tried to batch several markets together to get volume. No one wins when deals are spread out beyond where consumers typically shop, he notes.

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With Groupon going public, the promotions space is getting tremendously revved up. Hoping to get in on the action are promotional relatives of the deals space, including providers of grocery “cents off” coupons, retail weekly sales (circulars), retail rewards and Buy One Get One Free. While most of these don’t do much with local advertisers, they do target local consumers, and they envision a general morphing of the space (to the degree that a cents off coupon for Park’s Sausages can morph into a Groupon night on the town).

Players include such entities such as Coupons.com, ShopLocal, iCoupons.com, Valpak.com, RedPlum.com, FindnSave, Savings.com, Clipper.com and YourBestDeals.com. Each has sought to integrate the various types of promotions together, sometimes with mobile and social solutions.

Today’s news is that 300-person Coupons.com is taking new institutional investment that will pump a whopping $100 million into its development (another $100 million will be given to employees and investors in an unusual liquidity event). The effort seeks to make the company an investment alternative (and in some ways, more rounded) to Groupon and others.

The Mountain View, California-based company, which was founded in 1998, claims a network of “tens of thousands” of websites across the Internet, including retailer sites that span 46,000 store locations, as well as affiliate publishers. The network includes consumer electronics, shopping carts and kiosks, as well as mobile apps. GigaOm (via Daily Deal Media) cites sources that suggest the company earned $50 million in 2010 and will earn $100 million this year. It also says the company’s valuation is pegged at $1 billion.

The investment will be used to add 100 people and “further accelerate the company’s growing momentum in shifting the newspaper-dominated coupons industry to digital as well as expand the coupon industry.”

The success of failure of the company, of course, ultimately depends on its ability to shift with the industry, which, pre-recession, had actually been moving away from coupons toward other customer acquisition methods.

Currently, Coupons.com is focused on digital coupons that must be printed out. But major efforts are afoot to integrate Coupons.com offers into social and mobile networks, where they might attract younger users.

The company says it is also looking to “reach across the digital landscape — everywhere brands and retailers can engage with consumers.” It already has a head start in mobile via the acquisition of Free State Labs LLC, the developers of Grocery iQ, a mobile shopping list application. NFC-based transactions on mobile phones are in the works.

Coupons.com also plans a new effort to enable “smaller manufacturers, which could not place offers in the newspaper insert because of budget requirements or category exclusivity restrictions.” International is also on the wish list. The company currently offers coupons and vouchers in 12 European countries through its 50 percent ownership of U.K.-based Couponstar Ltd.

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