According to a report by Local Offer Network, 322 deal sites exist today, compared to 61 group-buying sites the same time last year. This number represents originators of deals, companies like Living Social and Groupon selling offers to SMBs and national merchants.
Deal aggregators like Yipit and Dealradar are also playing a big role in the space taking deals from various group-buying sites and allowing consumers to search for multiple offers universally in their local area.
In March, BIA/Kelsey predicted U.S. daily deal site revenues would reach $1.25 billion this year. This growth has even the big guys joining in.
Google and Facebook have both recently announced they are adding an offers component to their business. Other major publishers are also launching group-buying platforms (e.g., The McClatchy Company and The New York Times).
How Will Daily Deals Impact the Local Search Industry?
Many deal sites are looking for ways to reach a wider audience with their merchant advertisers' offers. With the growth of group buying, daily deal sites are seeking additional distribution. For example, Groupon and Living Social have robust Google AdSense programs as they search for other avenues to promote their offers.
It's also clear that directories want a role in the group-buying industry and might just have an edge by playing to their key strength of connecting with ready-to-buy consumers performing local searches for a product or service.
In one of the first moves to tie daily deals with local search, local entertainment directory Metromix is appending deals generated by their agreements with deal sites to business listings within their search directory. So, consumers searching for a restaurant in Chicago will now be presented with relevant name, address and phone number results and restaurants that are currently offering a group-buying deal.
Business Listings Increase Deal Reach
Affixing deals to local search business listings can be very powerful. Based on the expansion of daily deals over the last year, it is clear that consumers are interested in discounts and with an offer they might just make a visit to a local business they wouldn't have otherwise considered.
Integrating daily deals with business listings increases the reach and distribution of the deal and captures consumers in an advanced stage of the buying cycle when they are specifically seeking a particular experience, service, or item.
Local Search Adds Relevance to Daily Deals
At the recent Daily Deal Summit in New York City, panelists addressed the possibility of "Inbox fatigue" with the expansion of so many players in the group-buying space. Will daily deals lose their appeal when the average consumer Inbox has deal offerings beyond the fold each morning?
Local search is a natural distribution median for daily deal providers given that deals will only be presented when the business offering the deal shows up based on the consumer's search criteria, thus giving local search a built in factor of relevance.
Deals Become Another Discriminating Factor for Consumers
The future of daily deals isn't only discounts. Companies like Thrillist are packaging deals with premium experiences for a truly unique offering. And, businesses competing for the eye of the consumer on a local search engine results page will benefit from being tagged with a daily deal offer.
Consumers will use the presence of daily deals to compare similar businesses to make an informed decision like they currently do with ratings and reviews. It's easy to see how a restaurant offering a deal may stand out over five of its competitors.
Over the next year, we'll continue to see enhanced content like daily deal offers tie back to a specific merchant business listing as search engines and directories try to make more information about a business available to customers. Merchants will get even smarter about offering discounts and will look for more ways to build loyalty and increase their chance at attracting repeat buyers.